Life Insurance Terms

Beneficiary The person (or organization) to whom the policy proceeds will be paid.

Conversion The change from one type of coverage to another, i.e., from term to a whole or universal life policy.

Conversion Privilege An optional policy provision, which allows you to change to a different type of insurance without having to prove good health.

Guaranteed Insurability An optional life insurance policy provision that obligates the company to insure your life in the future, regardless of changes in your age or health.

Level Term A non-permanent life insurance policy with a fixed benefit and premium for a specified period of time.

Permanent Insurance Think of this as a savings account with a life insurance component. A portion of your premium funds the death benefit, while the excess accumulates for your use later.

Rider A rider is a change to a life insurance policy. In other forms of insurance it’s known as an endorsement.

Waiver of Premium An optional life insurance provision that guarantees the continuation of your life insurance protection if you become disabled and unable to pay future premiums.

Whole Life A type of life insurance that builds a cash value over time. Interest accrues at a fixed rate, stated at the time of application. Cash value can be decreased by the payment of premiums on behalf of the policy owner.

Universal Life A form of permanent insurance that permits adjustments to death benefit and premiums. The policy may lapse if cash value is insufficient to pay the premiums.

Term Insurance A generic form of temporary life insurance. Premiums for term policies may appear to be lower, but the protection only lasts for a pre-determined peried of time and no cash value accumulates.

These definitions are offered as aids to understanding. They do not change the formal definitions found within any insurance policies.

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