A
- Accelerated death benefit
- A rider that lets you receive part of your death benefit early if you're diagnosed with a terminal, chronic or critical illness.
- Accelerated underwriting
- A faster approval process that uses data such as prescription and driving records instead of a medical exam.
- Accidental death benefit
- A rider that pays an extra amount if the insured person dies in a covered accident.
- AM Best rating
- A grade from an independent agency that measures an insurer's financial strength, or ability to pay claims.
- Annual renewable term
- Term coverage that renews each year, with a price that rises as you age.
- Application
- The form you complete to request coverage. Your answers become part of the policy.
- Attained age
- Your age at a given point in time, used to price renewals or conversions.
B
- Beneficiary
- The person, people or organization who receive the death benefit when the insured person dies.
C
- Cash surrender value
- The amount you'd receive if you cancel a permanent policy, after any surrender charges.
- Cash value
- A savings component of permanent life insurance that can grow over time and that you can borrow against.
- Children's term rider
- A rider that adds a small amount of coverage for your children to your own policy.
- Claim
- A request to the insurer to pay the death benefit after the insured person dies.
- Contestability period
- Usually the first two years of a policy, when the insurer can review and deny a claim for misstatements on the application.
- Contingent beneficiary
- A backup beneficiary who receives the death benefit if the primary beneficiary can't.
- Conversion
- The option to turn a term policy into permanent coverage without a new medical exam.
D
- Death benefit
- The amount the policy pays to your beneficiaries. Also called the face amount.
- Decreasing term
- Term coverage whose death benefit shrinks over time, often matched to a mortgage balance.
- Dividend
- A payment some mutual insurers make to whole life policyholders when the company performs well. Not guaranteed.
E
- Exclusion
- A situation the policy doesn't cover, such as death during the first two years from suicide.
F
- Face amount
- Another name for the death benefit.
- Final expense insurance
- A small whole life policy, typically $5,000 to $50,000, meant to cover funeral and end-of-life costs.
- Free look period
- A window after your policy is delivered, often 10 to 30 days, when you can cancel for a full refund.
G
- Grace period
- Time after a missed payment, usually 30 or 31 days, when your coverage stays in force.
- Guaranteed issue
- Coverage that can't turn you down for health reasons. It usually has a waiting period and lower limits.
H
- Health class
- The category an insurer puts you in based on your health, such as Preferred Plus or Standard. It sets your price.
I
- Indexed universal life (IUL)
- Permanent coverage whose cash value earns interest linked to a market index, with a floor that protects against losses.
- Insured
- The person whose life the policy covers.
L
- Lapse
- When a policy ends because premiums weren't paid.
- A price that stays the same for the length of the term or the life of the policy.
- Living benefits
- Features that let you use part of your policy while you're alive, such as accelerated death benefits.
M
- Medical exam
- A short health check, often done at home, that some insurers require. It usually includes blood pressure, blood and urine tests.
- Medical Information Bureau (MIB)
- A database insurers use to share certain information from past applications to help prevent fraud.
N
- No-exam life insurance
- Coverage you can get without a medical exam, through accelerated or simplified underwriting.
O
- Owner
- The person who controls the policy, pays premiums and names beneficiaries. Often, but not always, the insured.
P
- Paid-up policy
- A permanent policy that needs no more premiums but stays in force.
- Permanent life insurance
- Coverage that lasts your whole life as long as premiums are paid, such as whole life or universal life.
- Policy loan
- A loan from the insurer against your cash value. Unpaid loans reduce the death benefit.
- The amount you pay for coverage, monthly or yearly.
- Preferred Plus
- The best health class, for applicants in excellent health with no major risk factors.
R
- Reinstatement
- Restoring a lapsed policy, usually by paying missed premiums and sometimes proving good health.
- Term coverage that refunds your premiums if you outlive the term, at a much higher price.
- Rider
- An add-on to a policy that changes or expands its coverage.
S
- Simplified issue
- Coverage approved from a health questionnaire, without an exam, usually at lower limits.
T
- Table rating
- A higher price, above Standard, for applicants with significant health risks.
- Term life insurance
- Coverage for a set number of years, such as 10, 20 or 30. It pays only if you die during the term.
U
- Underwriting
- The process an insurer uses to review your application and decide whether to approve you and at what price.
- Universal life insurance
- Flexible permanent coverage where you can adjust premiums and the death benefit within limits.
W
- Waiting period
- Time at the start of a guaranteed-issue policy, often two years, when the full benefit isn't paid for death from natural causes.
- A rider that pays your premiums if you become disabled and can't work.
- Whole life insurance
- Permanent coverage with fixed premiums, a guaranteed death benefit and cash value that grows at a guaranteed rate.
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