Life Insurance Terms

Life Insurance Terms
Life Insurance Terms

The following life insurance terms are common among most life insurance policies and will assist you in understanding your life insurance coverage.

Beneficiary – The person or persons named in the life insurance policy to receive the death benefit upon the death of the named insured.

Cancellation – Policy termination by insured or insurer under terms agreed upon in the insurance policy.

Claim – Request of insured for indemnification by insurer for loss resulting from an insured peril.

Convertible Term Insurance – Term life insurance policy that can be converted at the request of the insured to a permanent life policy without evidence of insurability.

Deductible – The amount of the claim that must be paid by the insured before benefits are paid by the insurance company.

Face Amount – The amount stated on the face of the life insurance policy (death benefit) that is paid to the beneficiary upon the death of the named insured.


Insurability – Acceptability of an applicant for insurance provided by the insurance company.

Insured – The person who is named as insured or whose life is insured on a life insurance policy.

Lapse – Policy coverage termination due to non-payment of premium within a specified period of time. This is one of the more important life insurance terms to understand in your policy.

Level Premium – Life Insurance that has a constant premium, it remains the same each year of the policy.

Life Insurance – A contract providing protection against the death of an individual in the form of payment to a beneficiary in exchange for premiums paid.

Policy Owner – The owner of the life insurance policy. The owner is usually the insured person, but it may be another party such as a compay, partner, spouse or relative of the insured.

Policy Period – Interval of time during which the insurance policy is in force.

Premium – Payment made to the insurance company to maintain the coverage in force.

Renewable Term Insurance – Term life insurance that can be renewed at the end of the policy term by the insured without providing proof of insurability. This type of policy may be renewed for a specified and limited number of successive terms. Policy premium rates increase with age as each term renews.

Term Insurance – A form of life insurance that has no cash value build up within the policy.