- Beneficiary: The person or entity designated to receive the death benefit from a life insurance policy upon the insured’s death.
- Cash Value: The savings component of a permanent life insurance policy that accumulates over time. Policyholders can borrow against or withdraw from the cash value.
- Death Benefit: The amount of money paid to the beneficiary upon the death of the insured person. It is the main purpose of a life insurance policy.
- Insurance Premium: The payment made by the policyholder to the insurance company to maintain coverage under the life insurance policy.
- Insured: The person whose life is covered by an insurance policy. The policy provides a death benefit upon the insured’s death.
- Insurer: The insurance company that provides the life insurance policy and assumes the financial risk.
- Policyholder: The person who owns the life insurance policy and pays the premiums to keep the policy in force.
- Permanent Life Insurance: A type of life insurance policy that provides coverage for the entire lifetime of the insured and includes a cash value component.
- Term Life Insurance: A type of life insurance policy that provides coverage for a specified term or period, typically 10, 20, or 30 years. It does not include a cash value component.
- Underwriting: The process of assessing an individual’s risk factors, such as health, lifestyle, and occupation, to determine their insurability and the premium rates for a life insurance policy.
- Convertible Term Insurance: A term life insurance policy that allows the policyholder to convert it into a permanent life insurance policy without undergoing additional medical underwriting.
- Accelerated Death Benefit: A provision in some life insurance policies that allows the insured to receive a portion of the death benefit if they are diagnosed with a terminal illness or meet specific criteria for a qualifying event.
- Contestability Period: A specific period, usually the first two years after the policy is issued, during which the insurance company can investigate and potentially deny a claim based on material misrepresentations or omissions made by the policyholder.
- Riders: Additional provisions or benefits that can be added to a life insurance policy, such as a disability rider, critical illness rider, or a waiver of premium rider, to enhance coverage.
- Surrender Value: The cash value that a policyholder receives if they decide to terminate a permanent life insurance policy before its maturity or death benefit payout.
- Grace Period: The specified period after the premium due date during which the policyholder can make the payment without the policy lapsing.
- Lapse: The termination of a life insurance policy due to non-payment of premiums within the grace period.
- Policy Loan: A loan taken against the cash value of a permanent life insurance policy. The loan is typically tax-free and accrues interest.
- Whole Life Insurance: A type of permanent life insurance policy that provides coverage for the entire lifetime of the insured and accumulates cash value over time.
- Universal Life Insurance: A type of flexible permanent life insurance policy that combines a death benefit with a cash value component. The policyholder has flexibility in adjusting premium payments and death benefit amounts.
