Archives: Glossary Terms

In a variable life insurance policy, an investment account is maintained separately from the general account of the insurer. Policyholders can invest in various types of investments among several separate accounts available within the policy; however, because they are separate from the general account, the policyholder assumes any risk associated with the investments.

A provision of the Internal Revenue Code that allows s policyholder to exchange one life insurance contract for another life insurance contract or annuity contract without triggering a tax consequence.

The status given to an individual applying for life insurance who meets the insurers criteria for more favorable premium pricing based on the person’s health condition, medical history, life style habits, and occupation.

A contract issued by an insurance company to a policyholder specifying the scope of the coverage provided as well as any limitations in the policy. Any endorsements or riders added to the policy become a part of the contract.

An additional amount of fully paid up insurance purchased with policy dividends or additional premium payments. Paid up additional insurance increases both the face amount and the cash value of the policy.

An examination required of applicants for life insurance for medical underwriting purposes. Depending on the amount of coverage applied for, a medical examination could include blood work, diagnostics, or even a complete physical examination. Examinations are typically conducted by a paramedical examiner in the home or office of the applicant.

A type of term life insurance in which the death benefit and payable premiums are fixed and level over the term of the policy. Level term insurance policies are typically issued for terms of 10, 15, 20, 25, or 30 years. Premiums are higher for longer term policies.

A cash payment made to policyholders from the profits of a mutual life insurance company. The profit comes from excess premiums collected to cover the current year’s insurance costs. Dividends can be received as cash, used to pay a portion of the premium or applied to the policy to purchase paid up additions of insurance.

A type of term insurance in which the death benefit is scheduled to gradually decrease over the term of the policy. The insured pays a level premium because the cost of insurance decreases each year. Decreasing term insurance is often used to protect a mortgage.

A provision offered in certain life insurance policies to allow a policyholder to convert an existing policy into a different type of policy without evidence of insurability. The most common type of conversion is from a term policy into a permanent policy in which the new premium is based on the insured’s attained age at … Read more