Beneficiary
The person(s) named in the policy to receive
the life insurance proceeds upon the death of
the insured.
Cash (Surrender)
Value
The amount that is available in cash for loans
and that may be available for withdrawals.
Accessing Cash Surrender Value may reduce the
death benefit and may increase the risk of
lapse.
Convertible Term
Insurance
Term insurance which can be exchanged
(converted), at the option of the policyowner
and without evidence of insurability, for a
permanent insurance policy.
Dividend
A return of part of the premium on
participating insurance that is based on the
insurer's investment, mortality, and expense
experience. Dividends are not guaranteed.
Face Amount
The amount stated on the face of the policy
that will be paid in case of death. It does
not include additional amounts payable under
accidental death or other special provisions,
or acquired through the application of policy
dividends.
Insurability
Acceptability to the company of an applicant
for insurance.
Insured or Insured
Life
The person on whose life the policy is issued.
Level Premium (Life
Insurance)
Life insurance for which the premium remains
the same from year to year. The premium is
normally more than the actual cost of
protection during the earlier years of the
policy and less than the actual cost in the
later years. The building of a reserve is a
natural result of level premiums. The payments
in the early years, together with the interest
that is to be earned, serves to balance out
the underpayment of the later years.
Loan (Policy Loan)
A loan made by a life insurance company from
its general funds to a policyowner on the
security of the cash value of a policy.
Paid-up Insurance
Insurance that will remain in force with no
need to pay additional premiums.
Participating Policy
A life insurance policy that is eligible for
the payment of dividends by the insurer (see
also Dividend.)
Permanent (Life
Insurance)
Any form of life insurance except term;
generally insurance that builds up a cash
value, such as whole life.
Policyowner
The person who owns a life insurance policy.
This is usually the insured person, but it may
also be a relative of the insured, a
partnership or a corporation.
Premiums
Payments to the insurance company to buy a
policy and to keep it in force.
Renewable Term
Insurance
Term insurance which can be renewed at the end
of the term, at the option of the policyowner
and without evidence of insurability, for a
limited number of successive terms. The rates
generally increase at each renewal as the age
of the insured increases.
Term Insurance
Life insurance that does not build up cash
value and where the premium normally increases
as the insured gets older.
Universal Life
Insurance
A flexible premium life insurance policy under
which the policyowner may change the death
benefit from time to time (with satisfactory
evidence of insurability for increases) and
vary the amount or timing of premium payments.
Premiums (less expense charges) are credited
to a policy account from which mortality
charges are deducted and to which interest is
credited at rates which may change from time
to time.
Whole Life Insurance
A basic type of permanent life insurance
which can provide lifetime protection at a
level premium. Premiums must generally be paid
for as long as the policy is in force.
