The “language of insurance” can seem foreign to a lot of us. The lingo can be obscure; words and terminologies that are unfamiliar to those outside of the industry. LifeQuote wants you to be in the “know”, an insider in this complicated world of life insurance. That is why we provide you with this glossary of insurance terms in an effort to help our customers decipher and understand the concepts and terms relating to the insurance industry. We want you to share our knowledge because the more familiar you are with this life insurance lingo the better you will understand how to select and buy the right life insurance policy for you. If you cannot find the term or definition you are looking for let us know and we will be glad to research it and provide an explanation. 1.800.521.7873.
Choose any alphabet to get a list of life insurance terminology and definitions that can help you understand your policy:A B C D E F G H I J K L M
Accelerated Death Benefit
A provision or rider that allows you to receive all or part of the benefits of your policy before you die. These benefits are paid for terminal illnesses such as AIDS, organ transplant, nursing home confinement, etc. The allowable reasons to receive such benefits vary from company to company. Also known as "living benefits".
Accidental death benefit
A provision or rider that pays more (i.e., double) in case you die as a result of an accident. Also called "double indemnity."
An expert trained in the mathematics of insurance responsible for the calculation of reserves, premiums, and other values.
Administrative expense charge
An amount deducted from the policy to pay the costs of administering the policy.
An attachment to a policy that modifies certain policy benefits.
The process of paying the cash from a life insurance policy according to a schedule of monthly (or other) periodic payments for the lifetime of the payee or for joint lifetimes of two payees. Various guarantees of a minimum number of payment periods are also usually available. The option selected will affect the precise amount of each payment.
The person applying for a life insurance policy. He/she can apply for an individual insurance policy, a trust policy, or a business policy.
A signed request for life insurance providing detailed information about the prospective policyholder.
Giving rights and benefits under your insurance policy to someone else.
Assumed interest rate
The minimum interest rate on a variable life insurance policy.
Attained age conversion
Attained age often comes into play for convertible term policies which allow conversion to permanent insurance such as whole life with no medical examination or medical questions. The new permanent insurance policy will be issued at the age the policyholder has attained at the time of the conversion.
Automatic premium loan
If you cannot pay your premiums, the insurance company takes money from your policy's cash value to pay the premiums, assuming there is sufficient cash value.
Many top rated insurance companies will allow an applicant to request a term policy that takes effect on an earlier date that their actual application date in order to get a lower premium rate. Age, for life insurance premium purposes, is based either on the applicant's last birthday or nearest birthday. In most states, the maximum length of time that a policy can be back-dated is six months.
A life insurance policy in which most of the expense charges occur when the policy owner or contract owner surrenders the policy or makes cash withdrawals from the policy.
A spreadsheet, a ledger, or a proposal used in the sale of life insurance that shows both guaranteed and nonguaranteed elements of the policy.
The person, persons or entity designated to receive the death benefits from a life insurance policy when you die.
Blood Chemistry Profile
This is commonly ordered this laboratory test by life insurance underwriters to determine risk. The requested sample of blood may identify possible chronic diseases or other health problems.
An insurance sales agent who sells insurance products for more than one insurance company, and does not exclusively represent one insurance carrier.
A policy to cover funeral and burial costs.
Business Continuation Insurance Plan
An insurance plan designed to enable a business owner (or multiple owners) to provide for the business' continued operation if the owner or a key person dies.
An agreement in which one party agrees to purchase the financial interest that a second party has in a business following the second party's death, and (2) the second party agrees to direct his estate to sell his interest in the business to the purchasing party.
An insurance agent who is under contract to only one insurer and who is not permitted to sell the products of other insurers.
The money that accumulates in your life insurance policy while the policy is in force that the insured can borrow.
The evidence of coverage received by persons insured under group life policy.
When a new life insurance policy is purchased, the agent or broker representing the insurance company in the transaction usually receives a fee which is computed as a percentage of the premium. The percentage for a specific transaction is determined by various factors such as the type of policy and marketing agreement between the company and representative.
Some applicants may want to submit the initial premium payment with the application in order to start coverage before the actual policy is issued. The conditional receipt is found inside the insurance application and it details the carrier's terms and conditions. Life insurance companies limit the maximum amount of coverage under a conditional receipt and have specific qualifications that must be met.
A life insurance company may contest a death claim for a specified period of time after the policy is in force. The most common contestable period is two years but each policy specifies that period, which is subject to state regulations.
The person who is to receive life insurance policy proceeds, in accordance with the terms of a settlement agreement following the payee's death. This is also sometimes called successor payee.
Convertible Term Insurance Policy
A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance.
Cost of Insurance
See "mortality charge"
Permits you to purchase increasing term insurance coverage, coinciding with an estimated rise in the cost of living.
The total amount of life insurance for which the policy holder has coverage and the type of life insurance carried.
Current Mortality Rate
The monthly mortality rate actually used to calculate the monthly mortality charge in a Universal Life Insurance Policy. This amount is generally substantially lower than the guaranteed maximum mortality rate.
Amount paid to the beneficiary upon your death.
The official document that attests to the death of a person and that bears the signature, and sometimes the seal, of an official authorized to issue such a certificate.
The rejection by a life insurance company of a life insurance application.
Decreasing Term Life Insurance
Term life insurance that provides a death benefit that decreases in amount over the policy term.
Life insurance premiums due after the date of the Annual Statement but before the next policy anniversary date and the next Annual Statement date.
Sell through their own exclusive agents or through some other selling systems such as direct mail or over the Internet that deal directly with the public.
A feature of some policies for the waiver of premium if the policyholder becomes permanently and totally disabled.
Money paid annually to a policyholder as a partial return of the paid premium on participating insurance to reflect a company's favourable operating experience. Dividends are not guaranteed.
The date the insurance policy begins.
An addition to a policy that modifies its benefits.
A cash value policy payable to the policyholder on the maturity date-- if they are living-- or to a beneficiary at the time of the insured's death.
Errors and Omissions (E&O) Insurance
Insurance that protects a sales agent against financial liability for any negligent acts or mistakes.
This type of planning, usually done with the assistance of a professional financial advisor, helps clients preserve the personal assets that individuals want to pass on after death to their heirs.
Evidence of Insurability
The proof that an insurance underwriter requires during the underwriting process in order to determine that a proposed applicant meets the insurer's health and lifestyle requirements and is an insurable risk.
Extended Term Insurance Option
One of several non-forfeiture options included in life insurance policies that allows the owner of a policy with a cash value to discontinue premium payments and to use the policy's net cash value to purchase term insurance for the full coverage amount provided under the original policy for as long a term as the net cash value can provide.
For a fixed-amount whole life insurance policy, the amount of the death benefit payable if the insured person dies while the policy is in force.
Family Benefit Coverage
A type of supplementary benefit rider offered in conjunction with a life insurance policy that insures the lives of the insured's spouse and children; also referred to as dependent life insurance and spouse and children's insurance rider.
A type of life insurance policy that covers all the members of a family under one contract. The primary insured is issued a whole life insurance policy; and the insured's spouse and children receive term life insurance coverage.
A person or other legal entity who holds a special position of trust or confidence when handling the business affairs of another and who must put the other's interests above his or her own.
Financial Disclosure Form
A form that some insurers require an insurance applicant to read, understand, and sign, which provides information about an insurance product's investment options, expenses, charges, and other specifics.
A process, often done with the assistance of a professional financial advisor, to address goals related to financial needs for individuals, families, and small businesses.
A document used during the underwriting of insurance that enables an underwriter to organize an insurance applicant's financial information and to develop a clear picture of the person's financial situation.
First-to-Die Life Insurance
Insurance policies that offer benefits for two or more lives, payable on the first death, the second death, or upon each death.
When someone tries to collect benefits on a claim under which false information was provided to an insurer.
Fixed Period Option
A life insurance policy settlement option under which the insurer pays the policy proceeds and interest in a series of annual or more frequent installments for a preselected period.
Gender-based Mortality Table
A mortality table showing the ages at which men and women are expected to die.
General Agent (GA)
An independent businessperson who is under contract to an insurance company whose focus is to distribute and/or sell the products of a single company within a defined territory.
A specified length of time following a premium due date at which an insurance renewal premium may be paid without penalty. The length of the grace period may vary by insurance carrier and is specified in the life insurance policy.
Life or health insurance coverage usually provided by employers for a group of people under a "master contract" for all.
Guaranteed Death Benefit
This covers variable universal life insurance policies. It is a minimum death benefit amount that will be provided regardless of the underlying policy's cash value at the time of the death of the insured.
When applying for a life insurance policy some activities like sky diving, auto racing, etc. -- may be considered too dangerous to qualify for coverage at a standard or may cause the company to deny coverage all together. Different insurance companies have different standards.
A computer-generated printout of an insurance company's explanation of how the life insurance policy will work for a prospective policyholder. It may project each year's premium payment, cost index, dividends, and death benefit as well as guaranteed interest payments (if any). Sometimes called a "ledger statement".
Impaired Insurance Company
Refers to an insurance company that has been deemed to have financial difficulties that call into question its ability to continue to meet its obligations to customers and regulators.
An optional provision that places a time limit up to two years on a company's right to deny payment of a claim because of suicide or a material misrepresentation on your application.
Premium for a life insurance policy that may change over the policy's life, depending on the company's operating experience, but not higher than the maximum amount as stated in the policy.
A person on whose life an insurance policy is issued.
Under such an agreement you transfer all of your rights to a third party and this agreement can never be changed.
Joint Life Insurance
Insurance policies that offer benefits for two or more lives, payable on the first death, the second death, or upon each death. Also known as first-to-die life insurance.
Juvenile Insurance Policy
An insurance policy that is issued on the life of a child but is owned and paid for by an adult, usually the child's parent or legal guardian.
A type of life insurance or disability insurance that protects a business from the financial losses that occur when a key person dies or becomes disabled.
A policy terminated because of failure to pay the premium(s).
Level Premium Insurance
A policy in which the payments remain the same over the life of the policy.
Life Insurance Attorney
Attorneys who deal with matters of life insurance law. They could be life insurance company lawyers or outside practitioners who handle complex life insurance and tax issues or engage in litigation concerning such matters.
Limited Payment Life Insurance
Whole life insurance where the policyholder pays premiums for a specified number of years, or until death.
Proceeds of a life insurance policy that may be paid out before death in the event of terminal illness or need for long term care. This is also called "accelerated death benefits."
Administration costs you pay when buying life insurance.
Borrowing against your policy's accumulated cash value. The borrowed amount is deducted from the death benefit until you have repaid it.
Low Value Policy
A life insurance policy with a high premium and small death benefit.
A significant misstatement in an application form. For example, you did not tell the truth about a situation or medical condition at the time of applying for coverage which would have caused the company to deny you insurance if they had known the truth.
The time at which the insurance contract is paid to the policyholder, if still alive.
The charges a company makes against the policy to cover the policy's share of the cost of death claims, based upon a mortality table used by the insurance company. Also called the "cost of insurance".
A statistical table that shows how long people are expected to live under various situations.
Mortgage Life Policy
A life insurance policy that is intended to pay off the mortgage balance if the insured dies during the mortgage term. Frequently, a decreasing term insurance policy is used for this situation.
Choices available to a policyholder when he or she discontinues a cash-value life insurance policy before maturity. It may be in a cash payment, extended term insurance, or as reduced paid-up term insurance.
Open Enrollment Period
A limited time period in which people who were eligible, but did not choose to participate in group insurance plans, are allowed to join the plan by presenting only an application and without providing evidence of insurability.
Paid-up Life Insurance
Insurance on which no further premiums are due.
Insurance that has the possibility of paying dividends to its policyholders. Also called a par policy.
(same as settlement option).
A phrase that covers any form of life insurance with the exception of term.
A partial premium refund on a participating life insurance policy.
A loan made by a life insurance company to the policyholder on the cash value of the policy.
Funds held by a life insurance company specifically to fulfill its policy obligations.
The person or party who owns an individual insurance policy. This person may be the insured, a relative, the beneficiary, a corporation, or another person.
A contract with a funeral home that makes it possible to pay your funeral expenses in advance.
Money paid by the policy owner for coverage.
Premium Expense Charges
An amount deducted from each premium payment that reduces the amount credited to the policy.
Premium Waiver Provision
An optional provision that takes effect if the policy owner becomes disabled. The disabled person will not have to pay premiums for the duration of the disability, including lifetime disability.
A policy issued at a higher than standard premium to cover a person classified as a greater than-average risk, usually due to impaired health or a hazardous occupation. Sometimes called an extra-risk policy.
Tables that companies use to classify risks or categories in which the applicant will be placed. It also determines the premiums the policy holder will pay.
The resumption of coverage under a policy that has lapsed because of nonpayment of the premium after the grace period has ended.
A term policy that guarantees the policy owner the right to renew coverage at the end of the term, without presenting evidence of insurability. Premiums increase at each renewal since the insured's age increases.
A written addition or amendment to an insurance policy that adds or limits the benefits payable under the policy. Common riders are accelerated death benefits, accidental death benefits, automatic premium loan, guaranteed insurability, and premium waivers.
The likelihood that you will die while insured.
Things about you that affect your risk (e.g., older age, smoking, heart disease, occupation).
The several ways the insurance company can pay a policyholder or beneficiary.
Single Premium Whole Life
Type of whole life insurance where the policy owner pays one premium.
Terminating or cancelling a policy before its maturity date and cashing in its cash surrender value.
Fees that are deducted if your life insurance policy is cashed in prematurely.
Life insurance that generally offers no cash value feature payable to a beneficiary when an insured dies within a specified period.
The person who decides if the applicant is an acceptable risk and at what premium rate.
The insurance company's process for determining whom it will insure based on risk factors.
A flexible premium life insurance contract that permits policy owners to adjust their policy's premiums, timing of payments, and face amount from time to time.
An option that allows a policy owner to stop paying premiums after a number of years.
A type of whole life policy in which the death benefit and the cash value relate to the investment performance of a separate account fund that the policyholder selects. The separate account assets are invested in bonds, money market funds, stocks, and other instructions.
Waiver of Premium
A rider that suspends the payment of future premiums in the event you are disabled. What constitutes a disability varies.
Whole Life Insurance Policy
A form of cash value policy which is intended to be permanent as opposed to coverage for a specific number of years or term. Premiums are set at a level amount which will be continued for many years and maintain a continuing amount of life insurance coverage until the insured dies or discontinues the policy.
Yearly Renewable Term (YRT) Insurance
One-year term life insurance that is renewable at the end of the policy term. This is also commonly referred to as annually renewable term (ART) insurance.