LIFE INSURANCE

CHECKLIST OF TERMS
Beneficiary - Person or organization named in the policy that will be the recipient of the life insurance or other benefit payment in the event of the insureds death. Cash Value - Life insurance policy that not only pays benefits at death, but also includes a savings element while the insured person is alive. Convertibility - Insurance offering the policyholder the option of exchanging a term policy for a cash-value policy without evidence of insurability. Credit Life Insurance - Insurance against the outstanding balance of a loan in the event of death of the debtor. Decreasing Term Insurance - Policy in which the face amount declines annually, and the premiums remain constant. Deferred Premium Life Insurance - Life insurance that allows for the deferral of premium payments; the payment deferral is accompanied by a signed promissory note. Disability Clause - A clause in a life insurance contract that may contain either a waiver-of-premium benefit or a waiver of premium coupled with disability income. Endowment Insurance - Insurance providing payment of the face amount either at the death of insured or at some previously agreed-upon date, whichever occurs first. The date of payment, called the endowment date, is commonly some specified number of years after issuance of the policy (20-30 years). Extended Term Insurance - A nonforfeiture option in which the insured uses the accumulated cash value to buy a term life policy for the same face value as the lapsed policy. Face Value (Face Amount) - Dollar amount of protection as listed in the policy and used to calculate the premium. Final Expenses - One-time expenses occurring just prior to or after death: funeral, emergency travel, and other family disruptions. Forced Savings - Automatic withdrawal from your paycheck placed in some investment vehicle; saving through a cash-value life insurance policy through payment of premiums. Guaranteed Insurability - Option that permits the cash-value policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability. Group Life Insurance - Term life insurance issued to people as a group, typically a group of employees. Human Life Approach - Method of calculating life insurance needs that focuses on the inherent value of the insureds life. Insurability Option - Option in a life insurance policy that guarantees that the purchaser will be eligible for more insurance without having to prove his/her insurability.

Level Term Insurance - Term life insurance in which the premium stays the same throughout the life of the policy. Life Annuity - Payment option for life insurance that pays a stipend monthly for the rest of the beneficiarys life. Life Expectancy - Number of years a person is estimated to live. Limited Payment Whole Life Policy - Insurance that allows premium payments to cease before you reach the age of 100. Two common examples are twenty-pay life policies (premium payments cease after 20 years) and pay to 65 policies (payments only until age 65). The policy may also be paid for all at once. Living Benefit Rider (Accelerated Death Benefit) - Allows for payment of all or a portion of the death benefit prior to death if the insured is terminally ill. Load Charges - Commission payment made to sales agents for writing a life insurance policy. Multi-Life Insurance (first-to-die / last-to-die) - Policy that is held jointly (usually by husband and wife) and that pays benefits whenever the first spouse dies. Mortgage Life Insurance - A term insurance policy on the borrowers life that names the lender as beneficiary, allowing for the mortgage balance to be automatically paid off in the event of the borrowers death. Multiple Earners Approach - A method of determining the amount of life insurance coverage needed by multiplying gross annual earnings by some largely arbitrarily selected number. Multiple Indemnity Clause (accidental death benefit) - A clause in a life insurance policy that typically doubles or triples the policys face amount in the event of the insureds accidental death. Needs Approach - A method of determining the amount of life insurance needed that considers the persons available financial resources (including life insurance), along with specific financial obligations. Nonforfeiture Options (Right) - Provides the policyholder with some benefits when a policy is terminated prior to its maturity. Paid-up Insurance - A nonforfeiture option; the policyholder receives a policy exactly like the terminated one, except with a lower face value. In other words, the policyholder uses the cash value to buy a new, single premium policy. Participating Policy - A life insurance policy that pays dividends that reflect the difference between the premiums that are charged and the amount of premium necessary to fund the insurers actual mortality experience. Policy Dividends - Payments made to participating policyholders that represent a refund of overcharges, which result from the insurance companys overestimation of its mortality experience. Policy Loan - An advance made by an insurer to a life insurance policyholder that is secured by the cash value of the policy. Renewability (renewable term insurance) - A provision in term policies that allows the insured to renew his or her policy for another term without proof of insurability. Settlement Options - A specified way of paying the death proceeds from a life insurance policy, such as a lumpsum cash payment, payments for a stated period, payments of a stated amount, or income for life.

Social Security Survivors Benefits - Benefits included in the social insurance provision of the social security system that are intended to provide basic support for families who have lost their principal wage earners. Straight, Ordinary, or Whole Life - Life insurance policy in which the individual pays the level premium each year until they die or exercise a nonforfeiture right. Life insurance that is designed to offer financial protection for the entire life of the insured; allows for the accumulation of cash values, along with providing stipulated death benefits. Survivorship Life Insurance - Life insurance that also covers two persons, but only pays when the second one dies; also known as last-to-die insurance. Term Insurance - Insurance that provides only death benefits, for a specified period of time, and does not provide for the accumulation of any cash values. Universal Life Insurance - A type of insurance contract that combines term insurance (death benefits) with a taxdeferred savings/investment account that pays competitive money market interest rates. Viatical Settlement - Sale of a life insurance policy (usually for fifty to eighty cents on the dollar) where the purchaser becomes the beneficiary when the seller dies. Variable Life Insurance - Life insurance in which the benefits payable to the insured are related to the returns being generated on the investments that support the policys payment obligations. Waiver of Premium Clause - Standard in disability clauses, this option waives premiums that come due while you are disabled.