Protecting yourself and your loved ones
Guaranteed Insurability Rider: An option that allows the policyholder to purchase additional life insurance coverage at specified times without providing evidence of insurability.
Living Benefit: A feature that allows the policyholder to access part of the death benefit while still alive, usually in the case of a terminal or critical illness.
Surrender: The act of canceling a life insurance policy before it matures or before the insured passes away. The policyholder receives any accrued cash value minus fees.
Cash Value: The savings component of a permanent life insurance policy that builds over time and can be borrowed against or withdrawn.
Indexed Universal Life (IUL): A type of permanent life insurance where the cash value is tied to the performance of a stock market index, such as the S&P 500, providing potential for higher growth.
Universal Life Insurance: A flexible type of permanent life insurance that allows the policyholder to adjust premiums and death benefits. It includes a savings element that earns interest.
Term Life Insurance: A life insurance policy that provides coverage for a specific period (term), typically 10, 20, or 30 years. It does not build cash value and expires at the end of the term unless renewed.
Beneficiary: The person or entity designated to receive the death benefit from a life insurance policy upon the insured’s passing.
Death Benefit: The sum of money paid to the beneficiary upon the death of the insured, usually tax-free.
Premium: The amount of money the policyholder pays to the insurance company for coverage, typically on a monthly or annual basis.
Whole Life Insurance: A type of permanent life insurance that provides lifelong coverage and includes a cash value component that grows at a guaranteed rate.
Rider: An additional provision or amendment to a life insurance policy that adds extra coverage or benefits, such as a waiver of premium or accidental death rider.
Policy Loan: A loan taken by the policyholder against the cash value of a permanent life insurance policy. Interest is charged, and the loan reduces the death benefit if not repaid.
Conversion Option: A feature in some term life policies that allows the policyholder to convert the policy into permanent insurance without undergoing another medical exam.
Contingent Beneficiary: The person or entity designated to receive the death benefit if the primary beneficiary predeceases the insured or cannot be located.
Face Value: The amount of the death benefit that the life insurance policy will pay out to the beneficiary upon the insured’s death.
Grace Period: A specified period (usually 30-31 days) after a missed premium payment during which the policyholder can pay without losing coverage.
Underwriting: The process an insurance company uses to evaluate the risk of insuring an individual and determining their premiums.
Dividend: A payment made to the policyholder from the surplus profits of the insurance company. This applies to certain types of life insurance policies like participating whole life insurance.
Lapse: The termination of a life insurance policy due to non-payment of premiums.
Accelerated Death Benefit: An option that allows the policyholder to receive a portion of the death benefit early if diagnosed with a terminal illness.
Free-Look Period: A specific period (usually 10-30 days) during which a new policyholder can cancel their life insurance policy without penalty and receive a full refund.
Estate Planning: The process of arranging for the distribution of an individual’s assets, including life insurance, in preparation for their death to minimize taxes and ensure wishes are honored.