Insurance Terms Explained

Term Life Insurance Options

Guaranteed Level Term – the insurance premium and death benefits are guaranteed to be the same for a given period of years. The most common terms are 10, 20 and 30 years. No Cash value.

Return Of Premium Term – a term life insurance policy that returns a portion or all premiums you have paid depending on how long you keep your policy in force.

Annually Renewable Term – life insurance where the premium is paid for one year, but the policy is guaranteed renewable each year for a given period of years.

Mortgage Insurance/Decreasing Term – life insurance designed to protect against debt repayment/mortgage. If you died while the mortgage/decreasing life insurance was in force, the policy pays out a capital sum sufficient to repay the outstanding debt/mortgage.

Permanent Life Insurance Options

Whole Life – life insurance that remains in force for your entire life and requires premiums a yearly premium. Premium payments are fixed. Cash value is developed by a combination of excess premium credited at the insurance company’s general account dividend rate.

Universal Life – life insurance where premium payments are flexible. Premiums paid above the cost of insurance are credited to cash value and accrue monthly interest.

Variable Life – life insurance that builds cash value. The cash value may be invested in a wide variety of separate accounts, similar to mutual funds. The choice of which accounts to use is up to the contract owner.

Specialty Insurance Options

Joint Life – insures two or more lives with the proceeds payable on the first death or second death.

Survivorship Life – insures two lives with the proceeds payable on the second (later) death.

Single Premium Life – a policy with only one premium payable at the time the policy is issued.

Group Life – covers a group of people, usually employees of a company or members of an association. Individual proof of insurability is not normally a consideration.

Final Expense Life – whole life insurance designed to “only” cover funeral expenses when you die.

No Exam Life – life insurance that doesn’t require a field exam to qualify.

Common Insurance Language

Here is some common language you will come across when reading about various policies and doing your research. If you don’t understand something or there is a question, pick up the phone and call us. We’re just a click or call away.

Beneficiary – the person/persons you choose to get your life insurance proceeds if you die.

Cash Value – accumulation of excess premiums and dividends in your policy. Value available for loans or withdrawals.

Cash Surrender Value – money you receive if you cancel/surrender a policy with a surrender value

Convertible Term Insurance – type of Term Life Insurance that can be “converted/exchanged” to a permanent policy without proving insurability.

Death Benefit – money paid out to the beneficiary at the time of death.

Dividend – a partial return of your premium on certain participating insurance based on the insurance company’s financial performance that year

Face Amount – the death benefit figure listed on the policy.

Insurability – indicates if you are an acceptable risk to the insurance company.

Insured – the person whose life is being covered in the event of death

Life Insurance – is a contract between you, the policy owner and an insurance company. You agree to pay premiums regularly or by way of a lump sum in return for the insurance company agreeing to pay out a sum of money on your death, terminal illness or critical illness.

Paid-up Insurance – a policy where no additional premiums required to remain in force.

Participating Policy – is eligible for dividend payments if you have this kind of policy.

Policy Owner – person in control terms and rights of the policy. Insured is typically owner unless designated otherwise