Life Insurance Terms & Definitions

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Life Insurance Terms & Definitions

At Top Quote Life Insurance we have made it our goal to making life insurance simple for our online consumers. A part of this goal was to create a helpful life insurance guide of commonly used life insurance terms and definitions to give you a better understanding of the common terminology used when dealing with life insurance.

Be sure to reference back to this page if at anytime you run into any life insurance terms on this website that you do not understand. By understanding the basic life insurance terms and definitions, you will be better prepared in your search for coverage.

Quick Reference Guide of Life Insurance Term & Definitions

Beneficiary: The person(s) who receives the payment of the amount of insurance after the death of the insured.

Cash (Surrender) Value: Is the sum of money an insurance company will pay to the policyholder in the event his or her policy is voluntarily terminated before its maturity or the insured event occurs.

Contingent Beneficiary: The person(s) who receives the payment of the amount of insurance after the death of the insured and assuming the primary beneficiary is no longer alive at the time of death of the insured.

Convertible Term Insurance: A term insurance policy that can be exchanged (converted) to a permanent insurance policy at the option of the policy owner without evidence of insurability.

Dividend: A refund to the policy owner of a portion of life insurance premium after the company meets such obligations as claims, expenses, and reserves.

Face Amount: The amount of the that the policy will pay at the death of the insured or when the policy matures.

Insurability: Is the acceptability to the company of an applicant for insurance.

Insured or Insured Life: The person on whose life the policy is issued.

Level Premium (Life Insurance): Life insurance in which premiums do not increase from year to year but instead remain constant throughout the premium paying period.

Loan (Policy Loan): An advance of money available to a policy owner from the policy cash values.

Paid-up Insurance: A policy that has been paid in full but has not yet matured.

Participating Policy: A life insurance policy that pays a return of premium as a dividend.

Permanent (Life Insurance): A form of life insurance (except term) generally that builds up a cash-value, such as universal life or whole life insurance.

Policy Owner: The person who owns a life insurance policy.

Premiums: Annual, semi-annual, quarterly or monthly payments to the insurance company to buy a policy and to keep it in-force.

Renewable Term Insurance: Term insurance which can be renewed at the end of the term without evidence of insurability. The rates generally increase at each renewal anniversary date as the age of the insured increases.

Term Insurance: A life insurance policy that pays death benefits only if the insured survive the specific term period.  Generally 1 – 30 year term lengths.

Universal Life Insurance: A life insurance policy that offers truly flexible premiums. The policy owner has the rights to withdraw part of the cash value without having the withdraw treated as a policy loan. Universal life insurance can provide lifetime protection.

Whole Life Insurance:  A basic type of permanent life insurance which can provide lifetime protection at a level premium. Premiums must generally be paid for as long as the policy is in force.

If at anytime you run into any life insurance terms that you are unfamiliar with, please contact us and we will help.

Looking to compare life insurance policies? We can help. Enter your ZIP code to get free quotes from multiple insurers.