Glossary

 

Accidental Death and Dismemberment

A self-contained policy, or supplementary benefit to an existing policy, that provides an additional amount of money to the basic death benefit of a life insurance policy. This extra sum is payable if the insured dies or loses any two limbs or the sight of both eyes as the result of a covered accident. Certain plans pay one half of the benefit amount if the insured loses sight in one eye or one limb.

Annuity

A contract for a series of payments to be received at periodic intervals for a specified amount of time. Or, a series of payments made at regular intervals.

Beneficiary

The person or other party designated to receive the life insurance policy proceeds.

Cash Value

The sum of money that a whole or permanent life insurance plan accumulates over time which is then available for loans or paid out.

Certificate of Insurance

A document that specifies the type and amount of coverage which an individual member is entitled to under a group insurance plan.

Claim

A request for benefit payment under the terms of an insurance policy.

Conversion Privilege

The right to change insurance coverage from one policy to another; i.e., the right to change from a group life insurance plan to an individual policy.

Cost of Living Adjustment

This rider offsets the impact of future inflation (the effect of the devaluation of money over time) on the value of life insurance policies bought today. A Cost of Living Adjustment rider changes the face amount of the policy each year by a stated percentage.

Death Benefit

The amount of money paid or due to be paid when a person insured under a life insurance policy dies.

Decreasing Term Life

A type of policy where the amount of life insurance coverage decreases over time.

Face Value

The stated amount of a life insurance policy that is payable upon the insured's death.

Level Premiums

Premium payments that remain the same for the duration of the insurance policy.

Life Insurance

The insurance of an individual's life through a policy that pays a certain amount of money if that person dies while the policy is in effect.

Living Needs Benefit (or Accelerated Death Benefit)

A policy provision or rider that advances money from a life insurance policy should the insured become terminally ill or permanently confined to a nursing home. This benefit may vary by policy. Check the definition and terms of the coverage you are considering.

Premium

The amount paid to keep an insurance policy in force

Primary Coverage

An insurance plan that provides an individual's basic insurance coverage.

Property and Casualty Insurance

An insurance policy or policies that protect against the loss of real property such as a home and its contents, and protect against personal liability losses associated with the property, as defined by the policy.

Rider

Amendment to an insurance policy that becomes a part of the insurance contract and expands or limits benefits payable.

Supplemental Coverage

A separate insurance plan that is bought in addition to a primary insurance plan to provide extra benefits and more coverage

Term Life

Term life insurance provides protection for a specified and limited period of time, typically from one to 20 years. The benefit is paid only if the insured dies before the end of the specified term. The policy expires at the end of the set term, or if premium payments are stopped. These policies do not build cash value.

Universal Life

Universal life insurance is similar to whole life insurance but offers more flexibility. It incorporates two components: a term insurance policy and an investment account, from which the term insurance premiums are paid. The amount of premium paid may change the death benefit and cash value.

Waiver of Premium

A policy provision or rider under which the insurer waives its right to collect the policy's premiums in the event of total disability as defined by the policy.

Whole or Permanent Life Insurance

Coverage that can remain active for the insured's lifetime with a cash value that grows over the years. These policies provide the opportunity to build the cash value, which the insured can borrow against or take withdrawals. If the policy is cancelled, the insured receives a lump sum payment equal to the cash value amount.

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