Term Life Definition.com - Explaining and Defining Life Insurance.

Glossary - Life Insurance Terms



|J|

Joint Tenancy - Two or more people own property as joint tenants, and one of the owners dies, the other owners will automatically become owners of the deceased owner's share.

|K|

Key person life insurance - Insurance that a business purchases on the life of a key person.

Keogh Plan - A tax-favored retirement plan for self-employed people.

|L|

Level Premium (Life Insurance) - Life insurance for which the premium remains the same from year to year. The premium is normally more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The payments in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years.

Level term life insurance policy - A term life insurance policy that provides a death benefit that remains the same over the term of coverage.

Life Annuity - A policy and contract that provides income for life.

Life insurance policy - A policy under which the insurance company promises to pay a benefit upon the death of the person who is insured.

Living Trusts
- A trust set up while a person is alive and which remains under the control of that person until death.

Loan (Policy Loan) - A loan made by a life insurance company from its general funds to a policyowner on the security of the cash value of a policy.

|M|

Modified- premium whole life policy - An insurance policy for which the policyowner pays a lower than normal premium for a specified initial period and then pays a higher premium than he would for a similar whole life policy.

Mortgage Insurance - Decreasing Term is a product that provides level premiums with a decreasing death benefit. Traditionally, banks market this product for mortgage protection. This is a huge income for the banks and terrible for the consumer. Here is why!  Let's say I need $250,000 of death benefit coverage and the premium is $45.00 per month for a period of 30 years. Year 2 passes...I'm still paying my $45.00 per month but the death benefit has decreased to $235,000. This will continue for the next 30 years. 

Mortality Table - A table statistically representing the death rates at various ages.

|N|
Net Taxable Estate
- The value of all your property at death less all encumbrances and your other liabilities.

|O|
Ongoing Trust
- A trust that is designed to be irrevocable and be operational for an extended amount of time.


Original age conversion - The conversion of a term life insurance policy to a permanent life insurance policy at a premium rate that is based on the insured's age when the policy was purchased.

|P|
Paid-up Insurance -
Insurance that will remain in force with no need to pay additional premiums.

Participating Policy - A life insurance policy that is eligible for the payment of dividends by the insurer (see also Dividend.)

Permanent Life Insurance - A life insurance contract that is designed to go to age 100. These policies build cash value.

Policyowner
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Policyholder - The owner of the insurance policy.

Policy term - The specified period of coverage provided by a term insurance policy.

Preauthorized check (PAC) system - An automatic premium payment technique whereby the policyowner authorizes the insurer to generate a check against the policyowner's bank account to pay each renewal premium.

Premium - The payments you make on a life insurance contract. Premiums can be paid monthly, quarterly, semi-annually, or annually.

Premium payment mode - The frequency at which renewal premiums are payable.

Primary beneficiary - The party designated to receive the proceeds of a life insurance policy following the death of the insured.

|R|
Reinstatement
- Restoring a lapsed policy.

Renewable Term Insurance - Term insurance which can be renewed at the end of the term, at the option of the policy owner and without evidence of insurability, for a limited number of successive terms. The rates generally increase at each renewal as the age of the insured increases.

Rider - An amendment of an insurance policy that provides a modification, either by expanding or restricting certain benefits and coverage.

Right of Survivorship - The right of a surviving joint tenant to take ownership of a deceased joint tenant's share of the property.

Risk Classification - Characteristics of those individual seeking a life insurance policy based on standard criteria (age, sex, health condition, occupation).

|S|
Suicide Clause
- Says that if you commit suicide after being insured for less than two years, your beneficiaries will receive only a refund of the premiums that were paid.

Surrender - You surrender a life insurance policy when you either let it lapse or tell the company that you want to drop it. If a policy has a cash surrender value, you can receive such value in cash minus any penalties if you return the policy to the company with a written request.

Surrender charge - Expense charges sometimes imposed when a policyowner surrenders a universal life policy.

|T|

Term Life Insurance - Insurance coverage that has no cash value and is designed for a specified period of time such as 5,10,15,20,25, or 30 years.

Terminal illness (TI) benefit - An accelerated death benefit provided by some individual life insurance policies under which the insurer pays a portion of the policy's death benefit to a policyowner-insured who suffers from a terminal illness and has a life expectancy of 12 months or less.

|U|
Underwriting - The process of identifying and classifying the degree of risk represented by a proposed insured.

Universal Life Insurance - A flexible premium life insurance policy under which the policyowner may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rates which may change from time to time.

|W|

 Waiver of Premium - A provision by which the insurance company keeps an existing insurance policy in force under certain conditions when the premium is not being paid.

Will - A legal document where a person states various binding intentions about what he or she wants done with his or her property after death.

Whole Life Insurance - A basic type of permanent life insurance which can provide lifetime protection at a level premium. Premiums must generally be paid for as long as the policy is in force.

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