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| Life
Insurance Definitions |
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Beneficiary |
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The person(s)
named in the policy to receive the life insurance proceeds upon the
death of the insured. |
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Cash
(Surrender) Value |
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The amount that
is available in cash for loans and that may be available for withdrawals.
Accessing Cash Surrender Value may reduce the death benefit and may
increase the risk of lapse. |
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Convertible
Term Insurance |
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Term insurance
which can be exchanged (converted), at the option of the policyowner
and without evidence of insurability, for a permanent insurance policy.
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Face
Amount |
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The amount stated
on the face of the policy that will be paid in case of death. It does
not include additional amounts payable under accidental death or other
special provisions, or acquired through the application of policy
dividends. |
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Insurability |
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Acceptability
to the company of an applicant for insurance. |
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Insured
or Insured Life |
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The person on
whose life the policy is issued. |
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Level
Premium (Life Insurance) |
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Life insurance
for which the premium remains the same from year to year. The premium
is normally more than the actual cost of protection during the earlier
years of the policy and less than the actual cost in the later years.
The building of a reserve is a natural result of level premiums. The
payments in the early years, together with the interest that is to
be earned, serves to balance out the underpayment of the later years.
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Loan
(Policy Loan) |
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A loan made by
a life insurance company from its general funds to a policyowner on
the security of the cash value of a policy. |
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Paid-up
Insurance |
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Insurance that
will remain in force with no need to pay additional premiums. |
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Participating
Policy |
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A life insurance
policy that is eligible for the payment of dividends by the insurer
(see also Dividend.) |
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Permanent
(Life Insurance) |
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Any form of life
insurance except term; generally insurance that builds up a cash value,
such as whole life. |
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Policy
Owner |
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The person who
owns a life insurance policy. This is usually the insured person,
but it may also be a relative of the insured, a partnership or a corporation. |
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Premiums |
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Payments to the
insurance company to buy a policy and to keep it in force.
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Renewable
Term Insurance |
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Term insurance
which can be renewed at the end of the term, at the option of the
policyowner and without evidence of insurability, for a limited number
of successive terms. The rates generally increase at each renewal
as the age of the insured increases. |
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Term
Insurance |
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Term life insurance
is life insurance coverage at a guaranteed rate for a specified period
of time. (Example: 30 year level term would guarantee a level premium
for 30 years based on a specified death benefit). Term life insurance
is usually the least expensive form of life coverage. |
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Viatical Settlement |
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Viatical is the one-time, lump sum purchase of an existing
life insurance policy by a licensed Viatical Settlement Provider.
The financial services industry generally refers to these
transactions as viatical settlements, senior settlements
or life settlements. The viatical settlement will always
be larger than the policy's cash surrender value. There are
no restrictions on the use of funds. Insureds of all ages
may qualify if their life expectancy is estimated at twelve
years or less. The company purchasing the life insurance
policy becomes its Owner and Beneficiary, and pays all premiums
until the policy matures. Such transactions may be subject
to federal, state and local income and/or capital gains taxation.
For more information refer to go to American
Viatical. |
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