Life Insurance Definitions / Glossary

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Beneficiary: The person or persons named in the life insurance policy that receive the life insurance proceeds at the time of the insureds death.

Cash Surrender Value: The dollar amount that is available in the form of cash for loans and that may be available for withdrawals. Accessing the Cash Surrender Value may reduce the death benefits paid by the insurance company and may increase the risk of the policy terminating.

Convertible Term Life Insurance: Term insurance which can be converted, as the option of a policy owner and without new evidence of insurability, for a permanent type life 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 face amount is the dollar amount that will be actually be paid in case of the insureds death. It does not include additional dollar amounts payable under riders such as accidental death or other special policy provisions.

Insurability: Insurability is the acceptability of the applicant to the company for which a application for insurance has been submitted.

Insured: The person whose life is insured through the insurance policy.

Level Premium Life: Life insurance for which the premium remains the same from year to year with no changes in premium cost.

Policy Loan: A loan made by a life insurance company from its general funds account to the owner of the policy on the security of the cash value of a permanant life insurance policy.

Paid-up Insurance: Life Insurance that will remain in force with no more requirement to pay any more additional premiums.

Permanent Life Insurance: Any form of life insurance except term insurance. Such as Universal Life and Whole Life policies.

Policyowner: The person who owns the life insurance policy. This is usually the insured, but it may also be a relative or a business partner.

Premiums: Money paid to the insurance company to purchase a policy and to keep it in continous force.

Renewable Term Insurance: Term insurance which can be renewed at the end of the term period without any evidence of insurability.

Term Insurance: Life insurance that does not build up cash value and will only be in force for a specific period of time.

Universal Life Insurance: A flexible premium life insurance plan which will allow the policyowner to change the death benefit from and vary the amount of the premium.

Whole Life: A permanent form of life insurance which can provide lifetime protection for the insured at a level premium expense.