Life Insurance Glossary
A.M. Best
A leading credit rating agency evaluating the financial strength of insurance companies.
Accelerated Death Benefit Rider
A no-cost rider allowing the policyholder to access up to 50% of the death benefit if diagnosed with a terminal illness and given a limited life expectancy.
Accidental Death
Death resulting from an unexpected accident, such as a car or plane crash.
Accidental Death Insurance
A policy that pays a death benefit only if death is accidental. It excludes deaths from natural causes like illness.
Accidental Death Rider
An optional policy add-on that doubles the death benefit if death is accidental. This rider often costs extra, though some policies include it by default.
Age Band
A grouping of ages used to determine premiums for insurance products.
Age Limit
The minimum and maximum age range for applicants eligible for a specific life insurance product.
Agency
A business entity authorized to sell life insurance on behalf of one or more carriers.
Agent
A licensed professional authorized to sell life insurance. Also referred to as a “producer.”
Annual Premium
The total yearly cost of a life insurance policy.
Application
The process of submitting personal, health, and financial details to an insurance company to determine eligibility for coverage.
Apptical
A third-party service used by insurers to process applications electronically or via phone.
APS (Attending Physician’s Statement)
A report requested by an insurer from a medical professional who has treated the applicant, typically used to verify health history.
Automatic Premium Loan Provision (APL)
A no-cost feature in cash value policies that automatically borrows from the policy’s cash value to cover missed premiums, preventing policy lapse.
Backdating
Setting the effective date of a life insurance policy to an earlier date, often to secure lower premiums based on the applicant’s previous age.
Beneficiary
The person(s) or organization(s) entitled to receive the death benefit upon the insured’s passing.
Broker
An agent who works with multiple insurance carriers to provide policy options.
Build Chart
An underwriting tool that sets minimum and maximum weight limits for applicants based on their height.
Burial Insurance
A small whole life insurance policy with simple underwriting, designed to cover funeral or cremation costs. Also called “final expense insurance.”
Cash Value
The savings component of a permanent life insurance policy that grows over time. It can be borrowed against or withdrawn if the policy is surrendered.
Certificate
A legal document issued to policyholders by fraternal benefit societies, serving as the insurance contract.
Child Rider
An optional add-on to an adult policy providing life insurance coverage for children.
Children’s Life Insurance
A permanent life insurance policy designed to cover minors.
Commission
Compensation paid to agents or agencies for selling insurance policies.
Common Carrier Accidental Death
Death occurring while traveling on public transportation, such as buses, trains, or planes.
Conditional Receipt
Provides temporary coverage while a policy application is being reviewed.
Contestability Clause
A period (typically 12-24 months) during which the insurer can investigate claims to ensure there was no misrepresentation on the application.
Contingent Beneficiary
A secondary beneficiary who receives the death benefit if the primary beneficiary is deceased at the time of the insured’s death.
Conversion Privilege
Allows a term policyholder to convert their policy to permanent coverage without proving insurability.
Cremation Insurance
A small whole life policy designed for seniors, covering cremation costs.
Death Benefit
The amount of money paid to the beneficiaries upon the insured’s death. The “face value” of the policy is another term for “death benefit.” Final expense insurance death benefits are always tax-free.
Death Claim
A formal request submitted to the life insurance company to release the death benefit after the insured’s passing.
Death Insurance
Another term for life insurance, this is a contract where the insured agrees to pay premiums, and the insurer promises a death benefit payout upon the insured’s death.
Effective Date
The date a life insurance policy officially begins, activating its terms and coverage.
End of Life Insurance
A small whole life policy with lenient underwriting designed for seniors with health issues. It provides quick, tax-free cash benefits to beneficiaries and is also referred to as “final expense insurance,” “funeral insurance,” or “burial insurance.”
Extended-Term Insurance
A nonforfeiture option in whole life policies where accrued cash value is used to extend coverage temporarily if premiums are unpaid.
Face Value
The monetary amount payable to beneficiaries upon the insured’s death. It is another way of referring to the death benefit.
Final Expense Insurance
A small whole life policy designed to cover end-of-life costs, such as funeral expenses. It features lenient underwriting, ensuring accessibility for seniors with health conditions. Also called “burial insurance” or “funeral insurance.”
First to Die Policy
A joint life insurance policy for two married individuals that pays out upon the first person’s death. Afterward, the surviving spouse is no longer covered unless insured by a separate policy.
Fraternal Benefit Society
A non-profit membership organization that offers benefits like life insurance to its members.
Free-Look Period
A period (usually 15-30 days, depending on the state) where a policyholder can cancel a policy for any reason and receive a full refund of paid premiums.
Funeral Insurance
A small life insurance policy marketed to cover funeral expenses. It is also called “final expense insurance,” “burial insurance,” or “cremation insurance.”
Grace Period
The time after a missed premium payment during which the policy remains active before it lapses.
Graded Benefit
A type of health rating for final expense insurance. Policies with this rating may have a limited payout or waiting period for deaths occurring in the first two years.
Grandchild Rider
An optional policy add-on providing life insurance coverage for the policyholder’s grandchildren
Guaranteed Acceptance
A policy that requires no health or lifestyle questions for approval. Acceptance is guaranteed, provided the insured is mentally capable of agreeing to the policy. Often referred to as “guaranteed issue,” it is commonly offered as whole life insurance.
Immediate Coverage
A policy that offers full death benefit payout for natural or accidental death immediately after issuance, without a waiting period.
Insurable Interest
A financial or emotional stake that a person or entity has in the life of the insured, justifying their need for life insurance coverage.
Insurance
A contract between a person or entity and an insurer, ensuring financial reimbursement or compensation for specified losses or events.
Insurance Carrier
A company authorized to issue life insurance contracts, also referred to as an “insurance company.”
Insurance Company
An entity that issues life insurance contracts and provides the agreed-upon coverage in return for premium payments.
Insured
The person or entity whose life is covered under a life insurance policy.
Irrevocable Beneficiary
A beneficiary designation that cannot be changed without their written consent.
Issue Ages
The age range (minimum and maximum) during which a person can apply for a specific life insurance product.
Joint Life Insurance
A policy covering two individuals (usually a married couple), which pays the death benefit after the first death. Also known as a “First to Die Policy.”
Knockout Questions
Questions in a life insurance application designed to identify disqualifying health conditions. Applicants with such conditions are typically declined coverage.
Lapse
The termination of a life insurance policy due to non-payment of premiums.
Level Benefit
A health rating for final expense insurance policies. Level benefit plans are typically the most affordable option and have no waiting period during the first two years.
Level Premium
A fixed premium amount that remains consistent throughout the life of the insurance policy.
Life Insurance
A contract between an insurer and a policyholder that guarantees a monetary payout (death benefit) to designated beneficiaries upon the insured’s passing.
Life Insurance for Seniors
Policies specifically designed for seniors, which can include whole life, universal life, or term life insurance, depending on the insurer.
Line of Authority
The specific types of insurance products that an agent or producer is authorized to sell.
Loan
A withdrawal taken against the cash value of a permanent life insurance policy. Loans accrue interest and reduce the death benefit until repaid.
Medical Exam
A procedure in which a life insurance applicant meets with a medical technician who collects blood and urine samples, records vital signs, and measures height and weight. This is also called a “paramedical exam.”
MIB (Medical Information Bureau)
An information exchange database used by life insurance companies to share and verify health details provided by applicants. Information from medical exams, applications, and health records may be stored in the MIB database to help assess risk.
Milliman Intelliscript
A service that provides insurers with access to an applicant’s prescription history and medical diagnoses. Applicants must provide consent before their health records can be accessed.
Modal Premium
The frequency at which premiums are paid—typically monthly, quarterly, semi-annually, or annually.
Modified Benefit
A fixed premium amount that remains consistent throughout the life of the insurance policy.
Mortgage Protection Insurance
A term life insurance policy designed to cover a mortgage balance in the event of the policyholder’s death. This is different from private mortgage insurance, which protects the lender.
No Exam
A type of life insurance underwriting that doesn’t require a medical exam. Approval is based on answers to health questions, prescription history, and medical records. Also called “simplified issue” or “non-med” policies.
No Health Questions
A policy type that doesn’t require applicants to answer any health or lifestyle questions. Approval is guaranteed, and these policies are typically whole life contracts. Also known as “guaranteed acceptance” or “guaranteed issue” insurance.
No Waiting Period
A life insurance policy that pays the full death benefit for both natural and accidental causes of death immediately after issuance. Also referred to as “immediate coverage life insurance.”
Non-Med
A simplified underwriting process where applicants are not required to undergo a medical exam. Approval is based on health questions, prescription history, and other non-invasive assessments.
Non-Participating Whole Life Insurance
A whole life policy that doesn’t pay dividends to the policyholder.
Owner
The individual or entity that owns and controls the life insurance policy. The owner has the right to make changes to the policy, such as naming beneficiaries or borrowing against its cash value.
Paid-Up Life Insurance
A policy that remains in force indefinitely without requiring further premium payments.
Paramedical Exam
A medical evaluation performed by a trained technician to collect information for life insurance underwriting. This includes gathering blood and urine samples, measuring height and weight, and recording blood pressure.
Partial Waiting Period
A life insurance policy feature where a portion of the death benefit is paid during the first two years. Typically, the payout increases over time, with full benefits available after two years. Often referred to as a “graded” plan.
Participating Whole Life Insurance
A whole life insurance policy that pays dividends to policyholders based on the insurer’s profits.
Payor
The person or entity responsible for paying the policy premiums. The payor may differ from the insured or the policy owner.
Permanent Life Insurance
A category of life insurance that provides lifelong coverage and includes a cash value component. Permanent policies include whole life and universal life insurance.
Personal Health Interview
A phone or in-person interview conducted by the insurer to clarify health-related questions provided in the application.
Policy
The legal contract between the insured and the insurance company. The insured agrees to pay premiums, and the insurer promises to provide benefits for covered losses.
Policy Fee
An administrative charge included in the overall premium cost. This fee is already accounted for in the premium and isn’t billed separately.
Pre-Existing Condition
A health condition that existed before the issuance of the policy. While not all pre-existing conditions disqualify applicants, they may affect premiums or coverage options.
Pre-Need Policy
A life insurance policy with the funeral home as the beneficiary. It covers pre-arranged funeral expenses based on an agreed-upon cost.
Pre-Paid Funeral Plan
An agreement with a funeral home where the client pre-pays for funeral services in full or through installments. Once paid, the plan guarantees services regardless of future price changes.
Preferred Rating
A health rating classification for final expense insurance policies. Applicants with this rating qualify for the lowest premium costs and immediate coverage.
Primary Beneficiary
The individual(s) or entity(ies) first in line to receive the policy’s death benefit after the insured’s passing.
Producer
A licensed professional authorized to sell life insurance. Also known as an “agent.”
Quote
A preliminary estimate of life insurance premiums based on basic information provided by the applicant.
Reduced Paid-Up
A nonforfeiture option allowing the policyholder to convert their policy to a smaller amount of paid-up insurance without requiring further premiums.
Reinstatement of Insurance
The process of reactivating a lapsed policy by meeting the insurer’s requirements, such as paying overdue premiums and providing proof of insurability.
Replacement of Insurance
Applying for a new policy with the intention of canceling or modifying an existing policy if the new one is approved.
Return of Premium
A type of policy where the insurer refunds the premiums paid if the policyholder outlives the term of the policy.
Rider
An add-on to a life insurance policy that provides additional benefits or coverage options, often for an extra cost.
Risk Assessment
The evaluation process where an agent or insurer determines an applicant’s eligibility and premium rates based on health, age, and lifestyle factors.
Risk Assessment
A preliminary discussion between an insurance agent and a client to evaluate eligibility for coverage across various insurance companies.
Save Age
The practice of setting a life insurance policy’s effective date to a time before the application date to secure lower premiums based on the applicant’s age before their most recent birthday. This is also called “backdating.”
Senior Life Insurance
A broad category of life insurance products marketed to seniors. These can include term life, whole life, or universal life insurance, depending on the provider.
Simplified Issue
A no-exam life insurance underwriting process where applicants answer health questions instead of undergoing a medical exam. Insurers may also review prescription history and medical records. Also referred to as “non-med” or “no-exam” policies.
Standard Rating
A health classification for final expense insurance policies. It represents the second most affordable rate offered by insurers and typically has no waiting period.
State Availability
The list of states where a specific insurance product can be sold or offered.
State-Regulated Life Insurance
A deceptive marketing term that makes life insurance appear as though it is sponsored or endorsed by a government entity. In reality, these plans are privately issued and often marketed using misleading tactics.
Suicide Clause
A standard provision in life insurance policies that excludes payout of the death benefit if the insured dies by suicide within a specified time, usually 24 months.
Surrender
The act of canceling a life insurance policy. Upon surrender, the insurer pays the policy owner the cash value accumulated, minus any fees or outstanding loans.
Surrender Value
The amount the policy owner receives upon surrendering a life insurance policy. It is typically slightly higher than the total cash value.
Temporary Life Insurance
Coverage that lasts for a specific period, such as 10, 20, or 30 years, after which the policy expires. Also referred to as “term life insurance.”
Term Life Insurance
A type of temporary life insurance designed to provide coverage for a fixed term or until the insured reaches a certain age.
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A consumer review platform where users can leave feedback about businesses, including insurance providers.
Underwriter
A professional employed by an insurance company who evaluates applications and determines eligibility and premiums for life insurance policies.
Underwriting
The process of assessing an applicant’s risk level by analyzing health, age, and lifestyle information to determine eligibility and premium rates for insurance.
Unit of Insurance
A pricing structure where the cost per unit is fixed, but the coverage amount varies based on the applicant’s age, gender, or other factors.
Universal Life Insurance
A type of permanent life insurance offering cash value growth and flexible payment options. Policyholders can adjust premium payments and coverage amounts, but accessing or depleting cash value may impact policy longevity.
Waiting Period
A period during which the full death benefit will not be paid for non-accidental deaths. Instead, premiums paid (plus interest) are refunded.
Whole Life Insurance
A permanent life insurance policy with guarantees. Premiums never increase, coverage lasts for life, and the death benefit remains fixed. Additionally, the policy accrues cash value that the owner can borrow against or withdraw.