This provision allows a person to receive a portion of their life insurance money while they are still alive. If the insured becomes terminally ill or needs severe medical care, payments will be made and deducted from the death benefits to beneficiaries.

An additional benefit that will increase the policy death benefit amount if your death was caused due to an accident – these riders are optional.

Usually the owner of the policy or spouse who receives income from an annuity contract.

The beneficiary will receive the due value of the annuity if the contract owner dies before the payment phase (annuitization).

Life insurance glossary – PMB Senior Services

Where a third party settles disputes between the insured and the insurance company.

An authorization you make allowing the insurance company to automatically pay premiums from your bank account – this is usually on a monthly basis.

The named person/s or party that you designate to receive benefits from your life insurance policy.

Brokers who sell life and health insurance must be licensed in each state where they sell policies – they serve as the intermediary between the client and the insurance company.

The money accumulated in the policy and due to you if the policy is surrendered or cancelled.

Most permanent and whole life policies have a cash value component.

This receipt is issued to the policy owner after the premium has been paid at the time of application.

Contingent beneficiaries can be named to receive the proceeds of a life insurance policy if the primary beneficiary is no longer alive at the time the death benefit is payable.

A term insurance policy which allows you to exchange the policy for a permanent life policy without having to undergo a new medical exam. The permanent life policy premium will be based on the age of the insured at the time of conversion.

The amount to be paid to beneficiaries after the death of the insured – the amount is calculated after adjustments (if any), for example, late premium payment, policy loans etc.

Applies to term life insurance where the death benefit decreases in amount over the term of the policy.

An annuity where payments begin at a predetermined point in time, for example, retirement. Premiums contributed are intended to grow tax deferred for future use.

Commonly found in disability insurance policies – this is a waiting period and acts like a deductible; the elimination period is determined in days from the start of the illness or injury.

A provision that eliminates coverage for certain people and risks.

The death benefit amount that is paid if the insured person dies while the policy is in force.

Giving false information when filling a claim to try and collect benefits that would otherwise not be paid.

Life insurance glossary – PMB Senior Services

Usually lasts from 10 to 30 days where the purchaser of an insurance policy can cancel the contract without any penalty. If the purchaser is not satisfied with the policy, a full refund is issued.

The guaranteed death benefit amount under a variable annuity contract.

A single insurance policy (master policy) covering a group of people, for example, employees of the same company.

The named person who is insured by the policy – this could be in your name or someone else.

Some insurance companies use an insurance score to determine underwriting criteria. These scores are based on confidential rankings and credit information. They help determine how well the applicant manages their financial affairs.

A beneficiary who cannot be cancelled on a policy without his or her consent.

Used to protect a business interest – to cover an individual who’s death or disability could cause substantial financial loss to a business.

If the premium is not paid by the end of the grace period, the policy will terminate or lapse.

Premiums that will remain unchanged (level) each year – this will be for a specified duration as determined in the policy.

Life insurance provides financial protection caused by the death of the person insured.

The maximum amount of insurance that can be paid for an insured loss.

An insurance company owned by its policy holders. Part of its profits are paid to policyholders as dividends while the rest are retained as reserves.

Life insurance glossary – PMB Senior Services

The price of an insurance policy to receive coverage – premiums are typically paid monthly but can also be paid annually or semi-annually.

The named person specified in the policy to receive the proceeds first.

A fixed or variable annuity that ends payments when the annuitant dies.

These agencies determine and monitor the financial strength of insurance companies.

An insurance company cannot deny coverage based on where the applicants live – the determination must be based on risk.

These are premiums payable after the initial premium has been paid to keep coverage in force.

If your policy lapses, in certain cases, the policy can be restored by providing acceptable evidence of insurability and be getting unpaid premiums and interest brought up-to-date.

Insurance companies reduce their own risk by having themselves insured through reinsurance. Reinsurers do not pay policyholder claims.

An insurance policy provision to the basic policy that provides additional benefits at an additional cost. For example, a Return of Premium rider on a term Life policy will pay all the premiums back if the individual outlives the guaranteed term.

Your insurance premiums will be higher if you smoke or if you have smoked during the past year.

A person with a standard risk rating will be considered for coverage without special restrictions.

If the insured commits suicide within two years after the issue date of the policy, the insurers’ liability will be limited to a return of premiums paid – most life insurance policies have this clause.

An annuity that pays out over a fixed period.

A life insurance policy that covers the insured person for a specified period of time. The designated beneficiary is paid when the insured dies within the specified policy time period. Coverage ends when the term period ends but can be renewed. Renewal premiums will be increased with age.

This is the methodology used by insurance companies to classify and determine their risk of insuring an applicant.

When underwriting has determined that the applicant is uninsurable due to high risk.

A flexible type of permanent life insurance offering the protection of term life insurance as well as a savings element which is invested to provide a cash value buildup. Subject to conditions the death benefits can be changed during the life of the policy.

A permanent life insurance policy with an investment component that can consist of stocks, bonds and other investments.

Life insurance glossary – PMB Senior Services

A policy can become void and free of legal effect if certain conditions have been met, for example, when it has been proved that the applicant provided false information.

Is an act or surrendering a right or claim. For example, a Waiver of Premium rider that waives the policyholder’s obligation to pay any further premiums should he/she become seriously ill or disabled.

Is a policy with level premiums. The policy pays a stated amount upon the death of the insured. Premiums are level, fixed, and guaranteed throughout the policy’s lifetime. For example, a final expense insurance policy.