Life Insurance Glossary

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.

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.

Primary Beneficiary
The beneficiary named as first to receive proceeds or benefits from a policy when they become due.

Revocable Beneficiary
The beneficiary in a Life Insurance policy in which the owner reserves the right to revoke or change the beneficiary.

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."

Ordinary Life Policy
A Whole Life policy for which premiums are paid continuously as long as the insured lives. Same as Straight Life Policy. See also Whole Life Insurance.

Limited Payment Life
A Life Insurance contract providing protection for the whole of life with premiums paid for an indicated number of years. See also Life Paid Up At Age.

Modified Life Policy
"An Ordinary Life contract under which the premiums are modified so as to be lower than normal for the first three to five years and higher than normal after that. A special case is a level Term policy, under which no part of the premium goes towards savings, that is automatically converted to a Whole Life policy at a designated time."

Lifetime Policy
(1) A policy guaranteed renewable or noncancellable to age 65 or some later date. (2) A policy paying disability benefits for life.

Life Paid Up At Age
"A form of limited payment Life Insurance that provides protection for the whole of life but with payment of premiums to stop at a particular age, thus paying up the policy. A common form would be Life Paid Up At Age 65."

Life Insurance Trust
A type of Life Insurance policy where a trust company is named as the beneficiary and distributes the proceeds of the policy under the terms of the trust agreement

Life Insurance (Narrow)
"An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured, or under other circumstances specified in the contract, such as total disability."

Life Expectancy Term Insurance
"A form of Term Life Insurance that provides protection for a person's expectation of life."" This becomes the term of the policy, as opposed to the ordinary Term policies which are for a given number of years or to a stated age, such as 65."""

Juvenile Insurance
Life insurance written on a child.

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.

Joint Insurance
Insurance written on two or more persons with benefits usually payable only at the first death.

Jumping Juvenile
"A popular name for a Life Insurance contract written on the life of a child, usually in units of $1,000. When the child reaches a prescribed age, generally 21, the face of the policy is increased automatically without the imposition of either an additional premium charge or a medical examination. Hence the term jumping"" juvenile."""

Industrial Life Insurance
"One of the major classes of insurance. It is generally sold in amounts of less than $1,000 by agents who service insureds on debits. The premiums are collected weekly or monthly at the address of the insured. See also Debit."

Irrevocable Beneficiary
A beneficiary that cannot be changed without his consent.

Guaranteed Insurability
An option in Life and Health Insurance contracts that permits the insured to buy additional prescribed amounts of insurance at prescribed future time intervals without evidence of insurability.

Group Permanent Life Insurance
A form of Life Insurance under which members of a group are provided one of several plans of Permanent Life Insurance on a group basis instead of the more usual plan of Term Life Insurance.

Group Life Insurance
"Life Insurance provided for members of a group. It is most often issued to a group of employees but may be issued to any group provided it is not formed for the purpose of buying insurance. The cost is lower than for individual policies because administrative expenses per life are decreased, there are certain tax advantages, and measures taken against adverse selection are effective. See also Franchise Insurance, True Group, and the first definition of Master Policy."

Family Maintenance Policy
"A policy that pays an income to the beneficiary starting after the death of the insured and continuing for a stated period of time. At the end of the income period, the face amount of the policy is paid to the beneficiary."

Family Income Policy
"A policy that pays an income up to some future date designated in the policy to the beneficiary after the death of the insured. The period of payment is measured from the date of the inception of the contract, and at the end of the income period the face amount of the policy is paid to the beneficiary. If the insured lives beyond the income period, only the face amount is payable in the event of his death."

Extended Term Insurance
A provision in most policies which provides the option of continuing the existing amount of insurance as Term Insurance for as long a period of time as the contract's cash value will purchase. This is one of the nonforfeiture options available to the insured in case a premium is not paid within the grace period

The termination of a Term Life Insurance policy at the end of its period of coverage.

Extended Death Benefit
"A group policy provision which will pay the life benefit when (1) the insured is totally and continuously disabled at the time the policyholder stops paying premium until the insured's death, and (2) if the insured dies within one year of the date the premium payments stopped, or prior to age 65."

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."

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 basisChildren"" may be step, foster, and adopted, as well as natural. Certain age restrictions on children usually apply."""

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)

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.

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.

Contingent Beneficiary
A person(s) named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.

Combination Plan
In pensions this is a term applied to the combining of Life Insurance contracts with a fund called a side fund or auxiliary fund. The purpose is to increase the amount of money available for a pension or annuity at some future date.

Collection Fee
An Industrial Life Insurance agent's fee allowed as his compensation for making policy premium collections for which he is not being paid a commission.

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.Collection Book. The debit agent's record book showing the amount collected on each policy, the week of the collection, and the policy period for which the premium has been paid."

Cleanup Fund
A commonly used term to designate policies whose express purpose is to pay final expenses of death.

"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."

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.

Amount At Risk
"The difference between the face amount of a Whole Life Insurance contract and the cash value which it has built up. The net amount at risk declines throughout the life of the contract, while the policy reserve increases along with the cash value. It is the amount the insurer would have to draw from its own funds rather than the policy reserve were the contract to become a death claim."

Adjustable Life
"A form of life insurance which allows changes on the policy face amount, the amount of premium, period of protection, and the length of the premium payment period. See also Flexible Premium Adjustable Life Insurance Policy."

Accelerated Endowment
"A dividend option allowing dividend accumulations to be applied to convert a life insurance policy into an endowment, or to shorten the endowment term."

Accidental Death Benefit
"An extra benefit which generally equals the face of the contract or principal sum, payable in addition to other benefits in the event of death as the result of an accident"

Accumulation Value
"A term used in Universal Life policies to describe the total of all premiums paid and interest credited to the account before deductions for any expenses, loans or surrenders."

Split Life Insurance
A combination of Installment Annuity and Term Insurance under which the amount of annuity consideration (premium) paid determines the amount of one-year renewable Term Insurance an annuitant can purchase and place on the life of anyone designated.

Survivorship Benefits
Funds available to pay an annuitant who survives longer than statistically expected from premiums paid by annuitants who died before they had collected amounts equal to their contributions.

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."

"The cessation of premium paying for a Whole Life or Endowment policy before the agreed upon time. This ends the coverage, and the insured receives one of the nonforfeiture values. The cessation of a policy that does not or has not yet developed a cash value is termed a lapse."" """

Universal Life
"A combination flexible premium, adjustable life insurance policy. The premium payer may select the amount of premium he or she can pay and the policy benefits are those which the premium will purchase. Or, the premium payer may change the amount of insurance and pay premium accordingly. Many believe this is the only true solution to the buy term invest the difference"" problem."""

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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