NEA Members Insurance Trust Glossary of Insurance Terms

Welcome to the NEA Members Insurance Trust glossary. This section offers a compilation of commonly used insurance terms and definitions within the insurance industry.

These definitions reflect a widely accepted or general interpretation of listed terms; however, alternative entities may define certain words, and/or phrases within a context where a provided definition might not apply.


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Accidental Death and Dismemberment

An insurance coverage that provides financial benefits in the event of an unintentional death or severe injury resulting in dismemberment. This coverage extends beyond typical life insurance, offering specific protection against accidental circumstances, ensuring financial support for beneficiaries or policyholders in such unforeseen events.



An Annuity is a financial product designed to provide a steady stream of income over a specified period or for the rest of an individual's life. Typically purchased with a lump sum or through regular contributions, annuities offer a reliable mechanism for managing and distributing funds, contributing to long-term financial stability.

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A beneficiary is an individual or entity designated to receive financial benefits or proceeds from an insurance policy in the event of the policyholder's death. This designation ensures that the intended party receives the specified benefits, serving as a key aspect of effective estate planning and financial protection.

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Cash Value

Cash value represents the amount available to the policyholder over time. This value grows through contributions and earns interest, providing a potential source of funds that can be accessed or borrowed against during the policy's lifespan.


Certificate of Insurance

A document providing evidence that an individual or entity holds a valid insurance policy. Typically issued by an insurance company, this certificate outlines key details of the policy, such as coverage types, policy limits and effective dates under a group insurance plan.



A claim is a formal request made by the policy holder to the insurance company, seeking financial compensation or coverage for a covered loss or damage.


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.

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Death Benefit

The amount payable to the designated beneficiaries upon the death of the individual insured under a life insurance policy.


Decreasing Term Life

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

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Face Value

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

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Level Premiums

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


Life Insurance

A financial contract between an individual (policyholder) and an insurance company, where the insurer agrees to pay a designated sum of money, known as the death benefit, to beneficiaries upon the death of the insured.


Living Needs Benefit (or Accelerated Death Benefit)

A policy provision or rider that allows the policyholder to access a portion of the death benefit while still alive if diagnosed with a qualifying terminal illness, critical condition or permanently confined to a nursing home. This benefit may vary by policy. Check the definition and terms of the coverage you are considering.

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The amount paid by an individual to an insurance company in exchange for insurance coverage. Paid regularly, typically monthly or annually, the premium ensures that the policy remains in force, and the insurer commits to providing the agreed-upon coverage.


Primary Coverage

The policy that pays out first in ethe event of a claim or loss. It takes precedence over any other applicable insurance policies, offering the initial layer of financial protection.


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.

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A rider is an additional provision or amendment attached to an insurance policy, modifying its terms or coverage. Riders can be added to customize a policy, addressing specific needs or concerns not covered in the standard policy.

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Supplemental Coverage

Additional protection that individuals can acquire to augment their existing coverage. This type of coverage is designed to fill gaps or provide extra financial support beyond what primary insurance policies offer.

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Term Life

Term life insurance provides coverage for a specified and limited period, typically from one to 20 years. If the insured individual passes away during the policy term, the death benefit is paid to the beneficiaries. The policy expires at the end of the set term, or if premium payments are stopped. Unlike permanent life insurance, term life does not build cash value.

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Universal Life

Universal life is a form of permanent life insurance that combined a death benefit with an investment account. In universal life insurance, policyholders have flexibility in adjusting the premium payments and death benefits. The cash value of the policy can grow based on interest rates and market performance.

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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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