Beneficiary: The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured.
Cash (Surrender) Value: The amount that is available in cash for loans and that may be available for withdrawals. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse.
Convertible Term Insurance: Term insurance, which can be exchanged (converted), at the option of the policy-owner and without evidence of insurability, for a permanent 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.
Insurability: Acceptability to the company of an applicant for 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 payments 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.
Paid-up Insurance: Insurance that will remain in force with no need to pay additional premiums.
Participating Policy: A life insurance policy that is eligible for the payment of dividends by the insurer (see also Dividend).
Permanent (Life Insurance): Any form of life insurance except term; generally insurance that builds up a cash value, such as whole life.
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 generally increase at each renewal as the age of the insured increases.
Term Insurance: Term life insurance is life insurance coverage at a guaranteed rate for a specified period of time. (Example: 30-year level term would guarantee a level premium for 30 years based on a specified death benefit). Term life insurance is usually the least expensive form of life coverage.