Life Insurance Glossary

Agent

A state-licensed representative of an insurance company who solicits and negotiates insurance contracts, as well as providing customer service to the policyholder. An agent may represent multiple insurance companies independently or directly represent one company.

 

Beneficiary

A person who receives the proceeds of a life insurance policy upon the death of the insured. Legal guardians or public officials must represent beneficiaries younger than 18 years. Beneficiaries can be anyone.

 

Cash Surrender Value

Upon voluntary termination of a policy with accumulated cash value before you die or before the policy matures, the insurance company pays you a lump sum payment.

 

Death Benefit

The amount that the life insurance company will pay to a beneficiary upon the policyholder’s death. The face value of the policy is the death benefit amount.

 

Face Amount

Amount due in case of death or maturation of the policy. Additional amounts are not included for accidental death or other special provisions, or dividends paid on policies.

 

Lapse

Nonpayment of life insurance causes the policy to become inactive. In some cases, premiums may increase once the policy has been reinstated. 

 

Policyowner

A person who owns an insurance policy. A policy usually covers the insured individual, though the policy may also name another insured individual. Also known as the policyholder.

 

Premium 

An agreement to pay a periodic payment for an insurance policy. In accordance with the policy terms, the premium may be paid in one payment or a series of regular payments, such as annually, semi-annually, quarterly, or monthly. Premiums reflect the expectation of losses, expenses, and profits.

 

Rider 

The ability to purchase additional insurance benefits, at an additional cost, to expand the benefits of an existing policy.

 

Underwriting 

Assessment of your eligibility for insurance and classification of your risk.

 

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