Terms and Definitions
Annual renewable term life insurance [ Back to Top]
A level term life policy that lasts for one year. Also called yearly renewable term, it guarantees coverage for one year, and can be renewed annually at a higher premium or converted to a permanent life insurance policy. Usually, this is purchased as a supplement to existing insurance for temporary needs. [...]
Annuity [ Back to Top]
The death benefit can be paid out in annuity, meaning it is dispersed in installments over a course of years. [...]
Beneficiary [ Back to Top]
A beneficiary is the recipient of a life insurance policy’s death benefit. This can be one person, several people, or an organization, as determined by the life insurance policyholder. [...]
Cash value life insurance [ Back to Top]
A component of a whole life insurance policy that works like an investment or savings account. The cash value of the policy accumulates over the policyholder’s lifetime and can be withdrawn at any time or paid out upon the policyholder’s death. [...]
Company ratings [ Back to Top]
Company ratings define where a life insurance company stands from a financial and customer satisfaction standpoint. The best life insurance companies have company ratings that place them in good financial standing with credit agencies and have excellent customer service reviews. [...]
Contingent beneficiary [ Back to Top]
The person you designate to receive the death benefit if your primary life insurance beneficiary is unable to collect the money. Without a contingent beneficiary in place, a court will decide what happens with the life insurance death benefit if the primary beneficiary is unable to claim the death benefit. [...]
Death benefit [ Back to Top]
An untaxed lump sum that the life insurance policy pays to the beneficiary upon the policyholder’s death. The death benefit amount is considered the face value of the policy. [...]
Effective date [ Back to Top]
The date a policy is considered to be in force, or active. A policy with the effective date of February 1, 2021, means that if the insured passes away on or after that date, the policy will pay out the death benefit to any listed beneficiaries. [...]
Exclusions [ Back to Top]
Provisions in an insurance policy that clarify coverage and explain under which circumstances the benefits will not be paid out to the listed beneficiaries. Exclusions can be lying or omitting information during the contestability period, death by suicide, or dying while participating in illegal activity. [...]
Final expense life insurance [ Back to Top]
A permanent life insurance policy designed to cover immediate expenses related to the policyholder’s death, such as the cost of the funeral or medical bills. Final expense life insurance policies are typically guaranteed issue, never expire, and are level premium. [...]
Grace period [ Back to Top]
A mandatory provision that gives the policyholder a period of time to pay the required premium. During the grace period, the policy remains in force even if you have not made your premium payment. [...]
Group coverage [ Back to Top]
Life insurance coverage offered by an employer, union, or organization. It is often easier to qualify for than an individual life insurance policy but doesn’t provide the amount of coverage most people need. Group coverage is best utilized as supplemental life insurance coverage. [...]
Irrevocable [ Back to Top]
A feature on the life insurance policy where the policyholder cannot make any changes to the life insurance contract or eliminate a beneficiary from the policy without the beneficiary’s consent. [...]
Joint life insurance [ Back to Top]
It is a policy with multiple policyholders — usually a couple or marriage — is called joint life insurance. [...]
Life Insurance Claim [ Back to Top]
Submitting the necessary paperwork to get the life insurance payout is called filing a claim. It usually requires proof of the death of the deceased and proof of identity for the beneficiary. [...]
Life Insurance Policyholder [ Back to Top]
The owner of a life insurance policy. The policyholder is the only person that can make changes to a life insurance contract. [...]
Mortgage protection insurance [ Back to Top]
This is a life insurance policy that covers mortgage payments if you die unexpectedly and can no longer make them. Mortgage protection insurance pays out directly to your lender and ensures your family won’t be stuck making costly mortgage payments. [...]
Open enrollment [ Back to Top]
The each year period where people can acquire or make changes to their health insurance policy. It tis also the period of time where employees can enroll in or waive insurance policies or adjust their dependents. [...]
Primary beneficiary [ Back to Top]
The person you designate to receive the life insurance death benefit when you die. If you have multiple beneficiaries, this person is the first to receive the life insurance payout. [...]
Riders [ Back to Top]
Add-ons to a life insurance policy that create more robust coverage, sometimes at an extra cost. Riders that come at no additional charge can be great supplements to a life insurance policy, while some riders that increase the cost of your premiums may not be necessary. A Policygenius agent can help you determine if a specific rider is a worthwhile consideration. [...]
Settlement [ Back to Top]
The process of paying out a claim on a life insurance policy or distributing assets in an annuity. [...]
Term date [ Back to Top]
The day the coverage on the policy ends. A 10-year term policy would no longer be in effect 10 years and one day from the effective date. [...]
Variable life insurance [ Back to Top]
A type of whole life insurance that has a cash value that can build savings over time. Variable life insurance policies tend to have high premiums and are a risky investment vehicle due to the fact that the cash value can be lost to market trends. [...]