YOUR LIFE IS OUR BUSINESS

The definitions below will help you to understand insurance

Account Value

The cash amount offered to the policy owner by the issuing life carrier upon cancellation of the contract.

Beneficiary

The person (s) named in the policy to receive the life insurance proceeds upon the deaths of the insured.

Cash Surrender Value

The amount that is available in cash for loans and that may be available for withdrawals in a whole life insurance, universal life insurance or survivorship life insurance policy. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse.

Contestability, Non-Contestability, Clause

In an insurance policy, there is a clause which explains the conditions under which the insurer may contest or void the life insurance policy. This contestability is for a limited period of time which, in most states, is two years. After that period of time the insurance company cannot contest the policy.

Convertible Term Insurance

Term insurance which can be exchanged (converted), at the option of the policy owner and without evidence of insurability, for a whole life insurance policy or universal life insurance policy.

Face Amount

The amount stated on the face of the policy that will be paid in case of death. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends

Grace Period

Life insurance premiums are due on a certain date, if you are late in paying, policies allow a period of time where you can still pay your premium and not lose your policy. This is the grace period. Most policies allow a grace period of 30 days from the due date. After the grace period, if the premium is not paid, the policy can lapse i.e. be terminated by the insurance company.

Insurability

The insured's ability to qualify medically, morally and financially to purchase life insurance.

Insured or Insured Life

The person on whose life the policy is issued.

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 payment in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years.

Loan (Policy Loan)

A loan made by a life insurance company from its general funds to a policy owner on the security of the cash value of a policy. This is the only party that may make a beneficiary change to the policy.

Owner of a life insurance policy

A life insurance policy can be owned by the insured person or an individual, a company or a trust with an insurable interest in the insured person. Insurable interest means there would be a financial loss by the owner in the event of the death of the insured person.

Paid-up Insurance

Insurance that will remain in force with no need to pay additional premiums.

Policy Owner

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.

Premiums

Payments to the insurance company to buy a policy and to keep it in force.

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 may increase at each renewal as the age of the insured increases.

Waiver of Premium

This is an extra or add-in (called a rider in insurance lingo) that can be added to most individual life insurance policies which waives (allows you to stop paying) the payment after the insured person has been disabled (as described and defined in the insurance policy) for a specified period of time, usually six months. At that time, the six months premium paid along with future premium payments are waived.