Life insurance terminology
This is a general list of terms useful in understanding, your life insurance policies. This is for your information only and is not an advertisement, promotion, or endorsement of any specific product. I have tried to make it as complete and accurate as I can, however, use at your own risk. Always talk with your own insurance, tax or legal professionals before you take action. If you don’t have an insurance agent you trust, let me know.
Life insurance glossary of terms
Accidental Death Benefit or Rider – A life insurance policy option that pays your beneficiary an extra amount above the death benefit if your death is due to an accident.
Accelerated Death Benefit or Rider – A life insurance policy option that pays you part of the death benefit before you die, if a doctor says you have a limited time left to live (usually 12 months or less).
Agent – Your friendly neighborhood insurance sales and service specialist, associate, or representative.
Beneficiary – The person you choose to receive the money after you die.
Cash Surrender Value – The amount of money the insurance company will give you if you cancel your policy.
Child Term Benefit or Rider – A life insurance policy option that gives you additional term insurance on your dependent children.
Contestable Period – A time period (up to 2 years) when the insurance company can cancel the insurance policy if you gave them false information or failed to disclose information, or deny a claim your claim for policy exclusion. If you know you’re going to die, tell them. You may not get insurance but you won’t spend money for nothing.
Coverage – The total amount of money, including optional riders, paid by the policy.
Death Benefit – The amount of money to be paid to your beneficiary when you die.
Dependent – You know who they are, someone who relies on you for support.
Evidence of Insurability – proof of your health, finances, etc. needed by the insurance company for them to decide if they are going to insure you.
Exclusions – Loopholes? – Reasons the insurance company might not pay your family, such as suicide, death whiles diving, flying a plane, or during commiting a crime.
Final Expenses – How much it costs to put you in the ground, buy boxes of Kleenex, your casket, grave stone, cemetery plot, the funeral, and much, much more (average around $14,000 now).
Free Look Provision – The amount of time you have (usually 10-30 days) to look over your new insurance policy, and if not satisfied, give it back to the insurance company for a full refund.
Guaranteed Insurability Rider – A life insurance policy option that allows you to buy additional insurance without proving you are still insurable. In other words, with this option, if you got cancer and new you’re going to die soon, you still would be able to buy additional life insurance.
Inheritance Tax – The tax your inheritors have to pay after getting your estate. Also called the “Death Tax.”
Insurance – A contract where the insurance company agrees to protect you against a type of loss.
Insured – You, if the insurance policy is your life policy.
Permanent Life Insurance – Life insurance that protects you for your entire life.
Policy – The actual printed documents showing the terms and conditions of the insurance contract. Always read yours very carefully.
Premium – The money you pay the insurance company each, month, or year.
Rider – Any insurance policy options – these can be added on to give you additional benefits, for a price of course.
Secondary Beneficiary – A second person, listed on the insurance policy who will get the money if the first beneficiary is also dead. Handy, I have my wife as beneficiary, and my children as my secondaries.
Term – The length of time your insurance policy will be in effective.
Term Life Insurance – Life insurance that covers you for a specific period of time.
Universal Life – A type of life insurance where your payments and the benefits can be adjusted.
Underwriting – The process that a life insurance company uses to decide if they will be able to insure you.
Waiver of Premium (or disability) Rider – A life insurance policy option that will, in effect, make your life insurance payments for you if you become disabled.
Whole Life Insurance – Life insurance That gives you coverage for you whole life, instead of a specific term. It may also have a cash value, dividends, and be used for savings or in a number of ways.
This is not a complete list of life insurance terminology, if you want the definition of any other life insurance policy terms just let me know.