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- Agent, General
- See General Agent.
- American College
- An educational institution within the Life Insurance business. It confers the Chartered Life Underwriter designation and is concerned with continuing agents' training and with research and publication in areas related to the Life Insurance business. It also sponsors specialty Life Insurance courses and offers a college degree in financial services. It was formerly known as the American College of Life Underwriters.
- American Council of Life Insurance, Inc.
- An association made up of several previously independent insurance groups. It is concerned with legislative matters, intercompany communications, and the exchange of information.
- Assignment
- The transfer of the ownership rights of a Life Insurance policy from one person to another. The term also refers to the document that effects the transfer.
- Attained Age
- The age an insured has reached on a given date.
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- Beneficiary
- A person who may become eligible to receive or is receiving benefits under an insurance policy other than a participant. See also Irrevocable Beneficiary, Revocable Beneficiary, Primary Beneficiary, Secondary Beneficiary, Tertiary Beneficiary, and Contingent Beneficiary.
- Business Insurance
- Policies written for business purposes, such as key employee, sole proprietorship, partnership, and corporation.
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- CLU
- See Chartered Life Underwriter.
- Cash Surrender Value
- The amount of cash due an insured who surrenders Cash Value Life Insurance. Such surrender, with consequent termination of all insurance benefits, is sometimes called "cashing out" or "cashing in" a policy. See also Nonforfeiture Values.
- Cash Value
- See Cash Surrender Value.
- Chartered Life Underwriter (CLU)
- A designation granted by the American College of Life Underwriters upon successful completion of a series of examinations.
- Collateral Assignment
- Assignment of a Life Insurance policy or its value as security for a loan. In the event of default, the creditor would receive proceeds or values only to the extent of his interest.
- Commutation Rights
- The right of a beneficiary to receive in one sum the unpaid payments remaining under an installment option which was selected for the settlement of the proceeds or values of a Life Insurance policy.
- Contestable Clause
- A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested.
- Contingent Beneficiary
- A person(s) named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.
- Conversion Privilege
- This is the right of an individual to convert a Group Health or Life policy to an individual policy should the individual cease to be a member of the group. Usually this can be done without a physical examination.
- Convertible
- A policy that may be changed to another form by contractual provision and without evidence of insurability. Most Term policies are convertible into permanent insurance.
- Credit Life Insurance
- A group life insurance contract whereby a creditor is protected in the event of death of the insured prior to the indebtedness being paid in full.
- Cross Purchase
- A form of Business Insurance in which each party to a mutual agreement (usually to buy out a disabled or deceased co-owner) insures each of the other parties.
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- Death Benefit
- The amount stated in a policy contract as payable upon the death of the person whose life is being insured (cesti que vie). See also Principal Sum.
- Death Rate
- See Mortality Rate.
- Delivery
- The actual placing of a Life Insurance policy in the hands of a policy owner.
- Dependent Coverage
- Insurance coverage on the head of a family which is extended to his or her dependents, including only the lawful spouse and unmarried children who are not yet employed on a full-time basis. "Children" may be step, foster, and adopted, as well as natural. Certain age restrictions on children usually apply.
- Double Indemnity
- Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances. For example, a Life Insurance contract may provide for twice the basic benefit if death is due to accident. Accident policies may provide double indemnity coverage for death due to an elevator accident. See also Multiple Indemnity.
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- Educational Fund
- One of the uses of Life Insurance. It is designed to provide money for a child's education should the breadwinner of the family die.
- Emergency Fund
- One of the uses of Life Insurance which provides money for the emergency expenses of a deceased's family prior to the final settlement of the estate.
- Entire Contract Clause
- A provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions and endorsements.
- Evidence of Insurability
- The statement of information needed for the underwriting of an insurance policy.
- Examination
- The medical examination of an applicant for Life or Health insurance.
- Examiner
- A physician appointed by the medical director of a Life or Health insurer to examine applicants.
- Expectation of Life
- The average number of years of life remaining for persons of a given age according to a particular mortality table. Also called life expectancy.
- Expected Mortality
- The expected incidence of death within a given group during a given period of time as shown on a mortality table.
- Expiry
- The termination of a Term Life Insurance policy at the end of its period of coverage.
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- Face
- The first page of a Life Insurance policy.
- Free Look
- A period of time (usually 10, 20 or 30 days) during which a policyholder may examine a newly issued individual policy of life or health insurance, and surrender it in exchange for a full refund of premium if not satisfied for any reason.
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- General Agent (GA)
- An individual appointed by a Life or Health insurer to administer its business in a given territory.
- Grace Period
- A prescribed period, usually 30 to 31 days from the premium due date, during which an insurance contract is in force and the premium may be paid.
- Guaranteed Renewable
- A contract that the insured has the right to continue in force by the timely payment of premiums for a substantial period of time as set forth in the contract. During that period of time, the insurer has no right to make any change in any provision of the contract other than a change in the premium rate for all insureds in the same class. Contrast with Noncancellable, from which Guaranteed Renewable should be distinguished.
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- Human Life Value
- A method of determining Life Insurance needs by considering a person's income, expenses, remaining years of earning capacity, and depreciation in the value of the dollar over time.
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- Impaired Risk
- A risk, or subject of insurance, with insurable qualifications below the standard of risks on which the premium for the coverage was based. For example, a Life Insurance prospect with heart disease would be an impaired risk. See Substandard Risk. Contrast with Standard Risk.
- Incidents of Ownership
- Various rights that may be exercised under the policy contract by the policy owner. Some of the incidents of ownership would be: (1) the right to change from monthly payments to annual payments, (2) to change the method of payment from credit card to automatic checking account and vice versa, and (3) to change the beneficiary.
- In Force
- A policy is said to be "in force" when it has been issued by the life insurance company, the policy owner has begun to pay premiums and the coverage is in effect.
- Individual Life Insurance
- (1) That type of Life Insurance which covers in one contract usually only one insured. (2) The term used to distinguish this type of Life Insurance from Group Life Insurance.
- Insurance In Force
- The total face amounts of all insurance policies issued by a life insurance company and currently in force.
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- Juvenile Insurance
- Life insurance issued on the life of a child.
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- Key Employee Insurance Key Employee Insurance
- (1) Insurance on the life or health of a key employee, the loss of whose services would cause an employer financial loss. The policy is owned by and payable to the employer.
- Key Person (Key Employee) Insurance Policy
- An insurance policy on the life of a key employee whose death would cause the employer financial loss, owned by and payable to the employer.
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- Legal Reserve Life Insurance Company
- A Life insurer that maintains the reserves required by the jurisdiction within which it operates.
- Level Premium Insurance
- That form if insurance for which the premium remains the same throughout the life of the policy.
- Level Term Insurance
- A type of term policy where the face value remains the same from the effective date until the expiration date. See also Term Insurance.
- Life Expectancy
- The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.
- Life Insurance
- An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured person.
- Life Underwriter
- Usually, a Life Insurance agent. It can be more narrowly defined as a risk appraiser. See also Risk Appraiser.
- Lump Sum
- A method of settlement whereby the beneficiary receives the entire proceeds of a policy at once rather than in installments.
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- Medical Examination
- The examination of an applicant for insurance or a claimant by a physician who acts in the capacity of the insurer's agent.
- Medical Examiner
- The physician who examines an applicant or claimant on behalf of the insurer and as an agent of the insurer.
- Medical Information Bureau (MIB)
- A data pool service that stores information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most Life and Health insurers subscribe to this bureau to get more complete underwriting information.
- Mortality Rate
- The number of deaths in a group of people, usually expressed as deaths per thousand. It can be the rate for the total population, called the crude mortality rate, or it can be refined by factors such as age groupings or causes of deaths. Same as Death Rate.
- Mortality Table
- A table showing the incidence of death at specified ages. It shows the number of persons in each age group that die, expressed in terms of deaths per thousand, and based on the deaths in a population of a million persons.
- Mortality, Experienced
- See Experienced Mortality.
- Mortgage Insurance
- In Life and Health Insurance, a policy covering the life of a borrower intended (1) to pay off the balance due on a mortgage upon the death of the insured.
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- Nonmedical (Non-Med)
- A contract of Life or Health Insurance underwritten on the basis of an insured's statement of his health with no medical examination required.
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- Occupational Hazard
- A condition in an occupation that increases the peril of accident, sickness, or death.
- Ownership
- All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insureds. Ownership may be assigned or transferred by written request of the current owner.
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- Partnership Insurance
- Life or Health Insurance sold to a partnership, usually for guaranteeing business continuity in case of the death or disability of one of the partners. For instance, two partners might buy Life Insurance on each other so that in the event of one partner's death, the other can use the insurance proceeds to purchase his share of the business from his heirs.
- Permanent Life Insurance
- A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as endowments and Whole or Ordinary Life policies.
- Primary Beneficiary
- The beneficiary named as first to receive proceeds or benefits from a policy when they become due.
- Proceeds
- The amount payable by a policy, usually in reference to the face amount of a Life Insurance policy, payable at the death of the insured.
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- Quantity Discount
- A premium discount given for the purchase of a policy with a larger face amount.
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- Rated
- Coverages issued at a higher rate than standard because of impairment of the insured. Usually used as an adjective in such expressions as "rated risk," "rated policy," and "rated up."
- Rated Up
- See Rated.
- Renewable Term
- Term Insurance that may be renewed for another term without evidence of insurability.
- Renewal
- The automatic reestablishment of in-force status effected by the payment of another premium.
- Revocable Beneficiary
- The beneficiary in a Life Insurance policy in which the owner reserves the right to revoke or change the beneficiary.
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- Secondary Beneficiary
- The second person named to receive benefits upon the death of an insured if the first-named beneficiary is not alive or does not collect all the benefits before his or her own death. See also Contingent Beneficiary.
- Settlement Options
- The various methods for the payment of the proceeds or values of a Life Insurance policy that may be selected if desired by the beneficiary instead of a lump sum.
- Spendthrift Clause
- A clause in most Life Insurance policies which prevents the creditors of a beneficiary from claiming any of the benefits payable to him before he actually receives the money. The purpose of this clause is to keep those to whom he is in debt from taking legal action to require the insurer to pay the proceeds directly to them.
- Standard Risk
- A risk that is equivalent to those on which the rate has been based in the areas of health, physical condition, and morals. An average risk, not subject to rate loadings or restrictions because of poor health.
- Substandard Risk
- See Impaired Risk.
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- Term Insurance
- The type of Life Insurance policy that provides protection only for a specified period of time. A common policy period would be one year, five years, 10 years, or until the insured reaches age 65 or 70. It does not build up any of the nonforfeiture values associated with Whole Life policies. Contrast with Whole Life Insurance.
- Trust Agreement
- (1) A supplemental agreement attached to and made a part of a Life Insurance policy setting forth the manner in which the proceeds are to be paid, in lieu of having them paid in a lump sum or under one of the other installment settlement options in the policy itself. (2) An agreement or instrument under which a corpus (fund/property) is given over to the management of the trustee named in a trust instrument for the benefit of the beneficiaries of the trust. (3) A written agreement between two parties _ the employer and the trustee _ setting forth the provisions of a pension plan.
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- Whole Life Insurance
- Insurance which may be kept in force for a person's whole life and which pays a benefit upon his death, whenever that may be. All Whole Life policies build up nonforfeiture values, but they are paid for in 3 different ways. Under a Straight or Ordinary Life policy, premiums are paid for as long as the insured lives. A single premium policy is paid for at one time in one premium. Between these two types there are many limited-payment plans, under which the insured pays premiums for a certain period or until reaching a certain age. Contrast with Term Insurance.
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- YRT
- See Yearly Renewable Term.
- Yearly (or Annual) Renewable Term (YRT)
- (1) Term Life Insurance that may be renewed annually without evidence of insurability until some stated age.
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