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.