Life Insurance, Terminology

Even though this site is dedicated to Advanced Life Insurance Solutions, it is important that you have a definition reference for terms that you may not be familiar with.

Administrative Expense

  • The life insurance company’s operating costs. It covers salaries, medical examinations, building rent, underwriting, advertising, printing costs, agency expenses and premium taxes. These expenses get lumped into what you pay and are used to calculate dividends and premium rates.

Accelerated Death Benefits (AKS “Living Benefits”)

  • The death benefits that are available prior to the death of the insured. Sometimes called Living Benefits, they are usually accessible in cases of chronic illness, terminal illness, critical illness, or critical injury.

Accrued Interest

  • Interest that has been earned and recognized but not yet paid out (or the borrower has not received the payment).


  • A person licensed by the state to negotiate insurance contracts. An agent can be independent and represent multiple companies, or a direct writer who sells policies for only one company.

Amount of Insurance

  • The coverage that is issued by a life insurance company. Also called the Coverage Amount, Face Amount, or Sum Insured.


  • A contract that pays a fixed sum of money at regular intervals, usually for life.

Annuity Certain

  • A contract that pays an income for a set number of years and will pay the annuitant’s beneficiary or estate if the annuitant dies before the end of the payment term.

Application (AKA “Approval Request”)

  • A statement of information made by a person applying for life insurance. Life insurance companies use the information from applications to determine the risk of each would-be policy-owner. Companies then determine an applicant’s underwriting classification and premium rates.


  • The legal transfer—to another person or to an entity like a financial institution—of the claim rights an individual has on an insurance policy. This is done to qualify for a loan.


  • business conducted by a bank (i.e. receive deposits and make loans).


  • The individual who receives proceeds from a life insurance policy at the death of the insured. A beneficiary who is less than 18 years old must be represented by a legal guardian or a public official. Anyone can be named as a beneficiary.

Billing Date

  • The day of the month that the life insurance premium bill is due. (You’ll want to keep track of this to make sure your policy doesn’t lapse!)

Blended Policy

  • A creative way of combining a “Term” policy and a “Perm” policy providing you your desired death benefit and gives you back your cumulative premiums at the end of a certain amount of years (usually between 20 & 30) if the insured does not die.

Bonus Rate Annuity

  • An annuity carrying an extra-high interest rate offered for only the first year, to attract new policyholders.

Buy/Sell Agreements

  • A chief concern among business owners is what will happen upon the death of one of the owners, and how will it affect the business, the other owners and the heirs of the deceased owner. Surviving owners want to ensure the continuity of ownership, and not risk having a large share of ownership fall into the hands of potentially inexperienced heirs of the deceased. In addition, they want to protect themselves and the company financially. On a personal level, owners want to also ensure that their family is financially secure and compensated fairly in case something happens to them.
    • A buy-sell agreement can address all of these concerns. It is a contract among business owners which, upon the death of one of the owners, requires the remaining owners or the company itself to purchase the deceased’s interest in the company according to the agreed-upon terms of the contract. In addition, the deceased’s heirs are required to comply by selling their inherited interest at the previously agreed-upon price.
    • There are various options for funding a buy-sell agreement, but some carry more risks than others. Some owners choose either to save money now and pay cash or to take out a loan to buy out a deceased owner’s share in the company. Both of these situations can be financially risky, both for the surviving owner(s) and the company itself.
      • The smartest method for funding a buy-sell agreement is through life insurance. This ensures that funds are immediately available when a death occurs; plus, death benefit proceeds are generally income-tax-free. In addition, the funds used to buy the deceased’s share are purchased for pennies on the dollar and the premiums will likely be significantly lower than the cost of repaying loan interest.
  • Types of buy-sell life insurance include the following:
    • Cross-Purchase Plans: Under this type of plan, the owners enter into an agreement with each other. Each owner purchases a life insurance policy on the other owners and will be named the beneficiary of the policy. Upon the death of an owner, each surviving owner receives life insurance proceeds income-tax-free and uses said proceeds to purchase the deceased’s business interests, while the heirs receive an agreed-upon payment for their business interest.
    • Entity Plans: In this type of agreement, also known as a stock redemption plan, the company purchases life insurance policies for each owner, with the company itself as the beneficiary. When an owner dies, the company receives the life insurance proceeds and uses said proceeds to purchase the deceased’s business interest, while the heirs receive an agreed-upon payment for their business interest.

Cash Accumulation (AKA Cash Value, Cash Surrender Value))

  • The cash amount you would get if you voluntarily terminate coverage before a policy becomes payable by death or maturity. The amount is the cash value stated in the policy, minus a surrender charge, any outstanding loans and interest on those loans. The cash value represents the savings component of a life insurance policy, since you can access the money relatively quickly if you need to.

Collateral Assignment of Life Insurance

  • A contract that gives a lender claim to a life insurance policy death benefit as collateral for a loan.


  • An idea, a plan, a process, or an understanding based upon an experience, reasoning, and/or imagination.

Contingent Beneficiary

  • A contingent beneficiary receives your life insurance death benefit if your primary beneficiary dies before you. Naming a contingent beneficiary keeps the benefit out of probate court.

Contingent Owner

  • The person who will become the owner of a life plan if the original owner dies before the policy ends.

Conversion Right

  • The right – granted by some term life insurance policies – to change the current policy of an individual to a permanent insurance policy within a certain timeframe, without giving proof of insurability.

Cost of Insurance

  • The amount an individual must pay for his/her life insurance policy, also known as a premium. The monthly charge for a life insurance policy fluctuates depending on the insured person’s health, age, sex and other considerations such as lifestyle and the nature of the person’s profession. Poor health and extreme hobbies are likely to increase the cost of insurance—or may even lead to denial of coverage altogether.

Coverage Period

  • The period of time the life insurance covers the policy-holder.

Coverage End Date

  • The day the insurance coverage ends.

Coverage Start Date

  • The day the insurance coverage becomes effective.

Critical Period Mortgage Protection

  • Critical Period Mortgage Protection insurance is a whole life policy that covers your mortgage payments for 6 months, 1 year, 2 years, etc., the most critical period after death. For seniors it becomes very hard to qualify for a complete mortgage payoff using a Term policy, and if you can, it is either too expensive or will have a short Term that you most probably will outlive.

Death Benefit

  • The amount of money paid to the beneficiary when the policyholder dies. If loans are taken on these benefits, the payable amount will decrease. The amount of the benefit might also increase if there are more benefits payable when certain conditions are met.

Debt Free Life

  • Debt Free Life is an insurance solution that builds a cash value over time. As your cash value grows, you can eliminate all your debt incrementally and save the balance for retirement – without spending any additional money. With Debt Free Life, you can create a long-lasting legacy for your family by achieving financial freedom and retiring with tax-favored income.

Debt Protection Insurance

  • When deciding on a coverage amount for a life insurance policy, financial experts recommend including your total debt amounts to ensure whoever receives the money in the event of your death will have enough to pay off your outstanding balances in full. The largest debt for most Americans is a mortgage, but you should also consider your student loans, if you have them.
    • Federal student loans are forgiven upon death, but private loans may not be. If you have a co-signer on your private student loans or you live in a community property state, you may want to consider a life insurance policy.

Disability Waiver of Premium

  • A condition that states that the life insurance company will not require the insured to pay the usual recurring fee to maintain the life insurance policy if the insured person becomes disabled. The definition of a disability can vary from one life insurance company to another, and policies can vary based on when and for how long they will waive a premium in the event of a disability. Adding a disability waiver usually leads to a higher premium.

Direct Response

  • The direct sale of a policy by an insurance company to the insured, through the company’s own employees, by mail or over the counter.

Disclosure Statement

  • A document explaining the details of the policy for the benefit of the consumer.


  • The return that some policyholders will receive as part of the distribution of a portion of an insurance company’s profits, as decided by the Board of Directors of the company.

Evidence of Insurability

  • A statement of the prospective policyholder’s physical health and other information, such as assets and income, which helps the insurance company decide whether the applicant is eligible for insurance, the amount of risk they pose to the company and what premium the company will charge.

Face Amount

  • The amount of insurance that an individual buy. The Face Amount will be paid in the event of the policyholder’s death or when the policy reaches maturity. It does not include any extra benefits that might be payable under accidental death or other special provisions. Face Amount can also be called Amount of Insurance, Coverage Amount or Sum Insured.

Field Underwriter

  • Usually refers to the initial decision an insurance agent or producer makes about a potential client’s ability to meet the insurer’s underwriting requirements. The agent decides after performing an initial evaluation of a person’s insurability.

Final Expense Life Insurance

  • Final expense insurance is a whole life insurance policy that has a small death benefit and is easier to get approved for. Final expense insurance is also called “funeral insurance,” “burial insurance,” “simplified issue whole life insurance,” or “modified whole life insurance.” All are marketing terms that the insurance industry uses to sell small whole life policies with a face value (death benefit) of $2,000 to $50,000

Financial Needs Analysis

  • The analysis that reviews the policyholder’s current financial goals, with the objective of helping to determine how much insurance he or she might require.

Fixed Amount Option

  • An option for death benefits to be paid in a series of fixed-amount payments until the proceeds and interest earned run out.

Fixed Period Option

  • The option in a life insurance policy that makes death benefit payments for a set length of time. The death benefit is left on deposit with the insurance company and accrues interest. The life insurance company makes payments of the specified amount until the benefit and interest run out.

Free Look Provision

  • The amount of time a life insurance policyholder has to look over the insurance policy and, if not totally satisfied, can make alterations up or down.

Grace Period

  • The period of time a policy remains valid even after a premium payment is due and goes unpaid. It’s usually a month so don’t wait too long to make things right.

Graded Death Benefit

  • If you pass away after the first or second year of owning the policy, it might pay the beneficiary a refund of premiums paid, plus interest. How much interest is paid varies, but can be 10% the first year and 20% in the second year. In the third year and after, it might pay 100% of the death benefit if you die.
  • If you die in an accident, such as a car crash, a life insurance policy with a graded death benefit would pay the full amount of coverage regardless of when the accident occurs.
  • Once you pass the time limit for a graded death benefit, your beneficiaries will receive the full coverage amount of the life insurance policy.
  • Graded death benefits are not found in standard term life insurance and whole life insurance policies. These types of life insurance generally pay out the full amount of the death benefit, regardless of when you pass away (usually excluding suicide in the first couple years of the policy).

Group Life Insurance

  • Group life insurance is a type of life insurance in which a single contract covers an entire group of people. Typically, the policy owner is an employer or an entity such as a labor organization, and the policy covers the employees or members of the group. Group life insurance is often provided as part of a complete employee benefits package. In most cases, the cost of group coverage is far less than what the employees or members would pay for a similar amount of individual protection. So, if you are offered group life insurance through your employer or another group, you should usually take it, especially if you have no other life insurance or if your personal coverage is inadequate.

Guaranteed Issue Life Insurance

  • Guaranteed issue life insurance (also called guaranteed life insurance or guaranteed acceptance life insurance) is a type of whole life insurance. It’s best for seniors between the ages of 50 and 80, or those who can’t qualify for a traditional life insurance policy due to a serious medical condition or terminal illness. You can’t be turned down, and the application process has no medical exam or health questions. These policies are sometimes referred to as burial insurance, funeral insurance or final expense insurance.
  • Often available only in small coverage amounts, such as $20,000.
  • May include cash value, but since coverage amounts are small, the potential cash value is small.
  • Guaranteed issue life insurance has a graded death benefit: Your beneficiaries won’t get the full payout if you pass away within two or three years after buying the policy, unless the death was due to an accident. Exact rules on graded death benefits can vary, so make sure you understand them before buying guaranteed issue life insurance.

Income Protection Life Insurance

  • If people depend on an individual’s income, life insurance can replace that income if the person dies. The most common example of this is parents with young children. Insurance to replace income can be especially useful if the government- or employer-sponsored benefits of the surviving spouse or domestic partner will be reduced after their companion dies. If you are responsible for the welfare of aging parents, or disabled family members, the loss of your contribution could be devastating.

Incontestable Clause

  • The clause in a life insurance policy that enables an insurance company to cancel the contract for up to two calendar years from the original policy issuing date if the policyholder did not disclose critical information that would have made him or her ineligible for coverage.


  • An index is a method to track the performance of a group of assets in a standardized way. Indexes typically measure the performance of a basket of securities intended to replicate a certain area of the market. These could be a broad-based index that captures the entire market, such as the Standard & Poor’s 500 Index or Dow Jones Industrial Average (DJIA), or more specialized such as indexes that track a particular industry or segment.


  • limitless; having no measurable parameters.

Infinite Banking

  • At its core, infinite banking is a concept or strategy of using some financial vehicle as a private banking system where the cash accumulation or growth in this chosen financial vehicle is used to “self-finance” various purchases, including, but not limited to, other assets, paying down debt, or buying vehicles.
  • The concept teaches that you are the banker and the borrower. The concept’s focus is on the idea that when you take over the role of financier in your own affairs you will be able to gain financial freedom and independence unparalleled to any other financial strategy available.


  • the concept of inflation is that the price of goods and services increases over time.

Insurance Policy

  • The legal document that the life insurance company issues to the policyholder outlining the policy terms.

Insurable Interest

  • Proof that a person who takes out a life insurance policy on someone else has a substantial and lawful emotional or financial interest in that person’s continued wellbeing. An insurable interest is mandatory when applying to purchase life insurance on another person.


  • The person who is insured by a life insurance policy. When his or her death occurs, a payment will be made to the insured person’s named beneficiary.


  • The life insurance company.

Interest Option

  • The primary beneficiary of a life insurance policy chooses to receive only interest payments, allowing the original death benefit principal to pass to a secondary beneficiary when the primary beneficiary dies.


  • Describes the situation in which someone dies without having a written will.


  • IRS Section 7702 defines what the government thinks of a valid life insurance policy and how taxes affect the proceeds. Section 7702 clearly outlines the tax advantages of the death benefit of those covered under the life insurance policy. The death benefit paid to the beneficiary and any gains paid regularly for their life isn’t taxed.  This is the basis of Privatized Banking and “Pri-Pan” policies. There are definitive calculations done on these policies by the insurance carriers to be sure that they are within the guidelines of this code.

Joint First-To-Die

  • A life insurance policy that provides coverage for two people and makes payment to the survivor as soon as the first person dies. This policy is often used to cover estate tax expenses.

Joint Last-To-Die

  • A life insurance policy that provides coverage for two people and makes payment only after both people have passed away. This type of policy is mostly used to cover estate tax expenses in order to protect value for children in a situation in which there might be significant taxes due at the time of the last parent’s demise.

Juvenile Life Insurance

  • is permanent life insurance that insures the life of a child (generally under age 18). It is a financial planning tool that provides a tax advantaged savings vehicle with potential for a lifetime of benefits. Juvenile life insurance, or child life insurance, is usually purchased to protect a family against the sudden and unexpected costs of a funeral and burial with much lower face values. Should the juvenile survive to their college years it can then take on the form of a financial planning tool.

Key Person Life Insurance

  • A life insurance policy that a company purchases on the life of an owner, a top executive, or another individual considered critical to the business. The company is the beneficiary of the policy and pays the premiums. This type of life insurance is also known as “key man (or “keyman”) insurance,” “key woman insurance,” “business life insurance,” and “Key employee insurance.”


  • The closure of an insurance policy because of failure to pay the premiums within the grace period. The option to reinstate the coverage with similar premiums and benefits exists, but the policy holder will have to re-qualify for the coverage, as well as pay the unpaid premiums. The premiums may go up after a lapse.

Last Conversion Date

  • The last day a policy can be converted from term life insurance to whole life insurance to avoid losing money paid on premiums.


  • The concept of using a little to get a lot, primarily via using other people’s money to greatly enhance your potential return. Financial leverage is the eighth wonder of the world.

Life Expectancy

  • The age to which a person is likely to live, according to actuarial life tables.

Life Income Option

  • An arrangement in which the payout from a life insurance policy will go to the beneficiary as equal payments paid for the duration of the beneficiary’s life (payments will continue even if the principal is exhausted).

Life Insurance

  • A contract between an insurance policyholder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person (often the policyholder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum.


  • The level of access to an asset. The more access to the asset the more liquid the asset will be.

Living Benefits (AKA “Accelerated Death Benefits”)

  • An advance cash payment of a portion of the insurance before the insured person dies. It allows for financial assistance to the insured individual while he or she is still alive. Not all policies will cover all 4 categories. There are 4 typical categories of Living Benefits:
    • Terminal Illness
      • An insured has a terminal illness if they have been diagnosed and are suffering from a terminal illness that will result in death within 24 months (typically) with certification of the terminal illness by a physician.
    • Critical Illness
      • An insured qualifies under the Critical Illness for: • Diagnosis of ALS (Lou Gehrig’s disease) • Blindness • Diagnosed with cancer • Diagnosis of End stage renal failure (kidney failure) • Heart attack • Major organ transplant • Stroke
    • Critical Injury
      • An insured qualifies under the Critical Injury rider for: • Coma • Paralysis • Severe burns • Traumatic brain injury
    • Chronic Illness
      • Being chronically ill means you’re unable to perform at least two of the Six Activities of Daily Living (eating, bathing, getting dressed, toileting, transferring, continence)  

Living Will

  • A will that details the author’s desires regarding their medical treatment in case they are no longer able to express informed consent.

Medical Report

  • A report on the health of the life insurance applicant that is filled out by a physician and based on a physical examination of the prospective policyholder.

Medical Information Bureau (MIB)

  • The Medical Information Bureau – also referred to as MIB Group today – is a member-owned corporation that has operated as a non-profit entity for over 100 years in the United States and Canada. The MIB Group’s underwriting services are often used in assessing an applicant’s risk and eligibility during the underwriting of life, as well as health insurance coverage.

Misstatement of Age

  • When an applicant for life insurance lies about his or her birth date.

Modified Endowment Contract (MEC)

  • A modified endowment contract (MEC) is a tax qualification of a life insurance policy whose funding exceeds federal tax law limits. The taxation structure and IRS policy classification change after a life insurance policy morphs into a modified endowment contract.


  • A medium of exchange; a promise


  • The rate of death at a given age. This is used to calculate life insurance risk.

Mortgage Protection Life Insurance

Non-Direct Loan Recognition

  • A “privatized banking” policy has a specific feature designed to allow the policy owner access to money through non-direct loan recognition from the insurance company. In other words, the insurance company will loan you money from their assets using your death benefit, cash value, and cash surrender value as collateral up to the amount of cash surrender value you have in the policy. This allows for your entire cash value to remain inside the contract and continue earning dividends and interest as if you did not take any money from the policy.

Non-Forfeiture Clause

  • A clause in an insurance policy with cash value that entitles the insured to all or a portion of the benefits, or a partial refund on premiums paid, if the insured person misses premium payments and the policy lapses as a result. This clause is usually only in effect for a limited period of time.

Non-Participating Life Insurance Policy

  • An insurance policy that stipulates that the insurance company will not distribute any parts of its profits to the policy owner. You pay your premiums, and your beneficiary receives a lump sum when you die. This sum will not grow or shrink based on the insurance company’s investment portfolio returns.

Non-Smoker Rates

  • A lower rate acknowledging that non-smokers are expected to live longer than smokers. Anyone who has not been a smoker for at least a year before applying for a life insurance policy can benefit from this discount.


  • The individual who purchased the life insurance policy. He or she is usually the same person as the insured but in certain cases, the owner could be a different individual who has been authorized to be the owner, such as a spouse, a child, a parent, a business partner with an insurable interest or a corporation.

Paid-Up Insurance

  • A life insurance policy for which all premiums have been paid and the coverage is still effective.

Participating Whole Life Insurance

  • A life insurance policy where the entities or individuals who own the policy receive a portion of surplus earnings from the life insurance company’s investments and business (subject to approval from the company’s Board of Directors). A “policy dividend” gets distributed to all policy owners who have participating policies.


  • The legal document, issued by the life insurance company to the policyholder, stating the terms of the life insurance contract.


  • The policyholder is the person who “owns” the policy. They pay the premiums, they deal with the claims, etc. A policyholder can buy life insurance to insure someone else. For example, a wife can purchase a term life insurance policy with her husband as the insured and name her adult son and herself as the beneficiaries. As policyholder, she controls the life insurance policy. If her husband dies during the coverage period, the wife and her son will receive the death benefit payout.

Policy Loan

  • A loan a life insurance company makes to a policy owner. The security for the loan is the cash value of the owner’s policy.

Policy Owner

  • The person who has ownership rights in an insurance policy, usually the policyholder or insured.

Policy Proceeds 

  • The amount of money that is actually paid out on a life insurance policy at death, or when the policy owner receives payment at surrender or maturity of the policy.

Preferred Rates

  • Cheaper insurance for people who can prove they are a lower risk to the insurance company. Considerations to determine risk include gender, smoking habits and other health-related factors, such as lifestyle, physical build and nature of profession, as well as an individual’s personal and family health record. Preferred rates lead to large cost savings to life insurance applicants who qualify.


  • The payment required by the life insurance company in order for the insured’s policy to remain in effect. Depending on the terms agreed upon, the premium might be paid at once or in a series of payments.

Privatized Banking (aka Infinite Banking, Cash Flow Banking, Bank on Yourself, Specially Designed Life Insurance)

  • Becoming your own banker means you use your specialy constructed participating whole life, or indexed universal life insurance policy as your personal bank, drawing money from it through withdrawals, or preferably, life insurance loans, and using the money you borrow from your life insurance to purchase income-producing assets. It enables you to borrow money while still earning interest on it, at a higher rate than the interest you pay on the loan.

Rated policy 

  • A policy that insures a person who poses a greater-than-average risk to the life insurance company, such as someone with weakened health or a dangerous occupation. This type of life insurance policy sometimes gets issued with particular specifications and exclusions, as well as more costly premiums.


  • The practice of charging more than the regular rate for a life insurance policy because the applicant has a greater-than-average risk of death.

Reduced Paid-Up Insurance 

  • A life insurance policy in which a customer uses a cash value from a surrendered non-forfeiture policy to purchase a reduced amount of fully paid-up insurance of the same kind as the surrendered policy.


  • The restoration of a life insurance policy that has lapsed. The life insurance company requires the policyholder prove that he or she is in continuing good health. The policyholder must also pay premiums that are past due, along with any interest.


  • The process of buying a new individual life insurance policy that will replace an existing individual policy (or a portion of it). Prospective insurance policyholders must fill out a Life Insurance Disclosure Form in order to guarantee that they fully understand the strengths and weaknesses of each policy.

Return of Premiums Life Insurance 

  • A return of premium life insurance policy is a type of term life insurance, meaning it lasts a set period of time and then expires. Unlike traditional term life insurance, however, return of premium insurance returns your premiums at the end of the term.


  • A provision of an insurance policy that can be purchased separately to provide further benefits beyond those included in the original policy, at additional cost.

Risk Classification 

  • The step in the life insurance underwriting process in which a company assesses and classifies an applicant’s risk of mortality.

Senior Life Insurance 

  • There are multiple programs that are available for senior citizens, mostly centering around “Final Expense” and “Critical Period Mortgage Protection”.
    • Final expense insurance is a whole life insurance policy that has a small death benefit and is easier to get approved for. Final expense insurance is also called “funeral insurance,” “burial insurance,” “simplified issue whole life insurance,” or “modified whole life insurance.” All are marketing terms that the insurance industry uses to sell small whole life policies with a face value (death benefit) of $2,000 to $50,000
    • Critical Period Mortgage Protection insurance is a whole life policy that covers your mortgage payments for 6 months, 1 year, 2 years, etc.  For seniors it becomes very hard to qualify for a complete mortgage payoff Term policy, and if you can, it is either too expensive or will have a short Term.

Settlement Options 

  • The ways a policyholder or beneficiary can choose to receive benefits from a policy.

Simplified Issue 

  • Simplified issue insurance is a life insurance policy you can be approved for with minimal health questions. This type of insurance is typically geared towards people who need to obtain life insurance right away and/or those who don’t wish to submit to a medical exam.

Smart Start Insurance

  • SmartStart is life insurance for children that allows a cash value to build inside the policy. Your child can later access this fund to cover college expenses, a down payment on a home, and more.  The cash value of the policy accumulates tax-free and its growth is indexed to several indexes with no exposure to market loss. The life insurance component covers your child’s life and protects their future insurability if he or she were to develop a condition later in life that would make it harder to qualify.

Standard Risk

  • The risk that is considered normal at standard rates by an underwriter and does not require extra rating.

Substandard Risk

  • The risk that is considered above average for an individual who does not meet insurance policy requirements when applying. Insurance companies charge higher premiums to customers with substandard risk.

Suicide Clause

  • The clause in a life insurance policy that indicates the policy coverage amount will not be paid out if the insured person takes his or her own life within a set period immediately after the policy is issued.

Supplementary Contract

  • A contract allowing the life insurance company to retain the cash sum payable under an insurance policy. In return, the company makes payments in accordance with the terms of the contract.

Surrender Charges

  • The fee deducted from a life insurance policy pay-out when a policyholder


  • The concept of measuring the past, present, and future taken in totality.

Time Value of Money

  • The idea or concept that describes the phenomenon that present money is worth more than future money.


  • The person who determines whether the life insurance applicant is insurable, and what the rate should be for that person.


  • The procedure a life insurance company uses to decide whether to insure an applicant, and at what rate.


  • A legal document detailing how the author’s assets should be distributed upon his or her death.

10, 15, 20, 30-Year Insurance Policy

  • A term life insurance policy that covers the policyholder for a duration of 10, 15, 20 or 30 years (or however many years the insured person chooses as the coverage term). If the policyholder dies during that period, the life insurance company will make a payment to the selected beneficiaries. If the policyholder does not die, the contract expires with no pay-out.

(If I have failed to define any life insurance terms, please advise me so that I can revise this list.)

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