Wednesday, June 20, 2007
Common Life Insurance Terms
Have you ever found yourself totally confused about a certain life insurance term? You're not alone, we all have at one time or another. Well, here is a quick guide in understanding many of the common life insurance terms.
Accelerated Benefits
This insurance term is a provision in a life insurance policy allows someone diagnosed with a terminal illness to receive part of their death benefit early. It can also apply to someone who is permanently restricted to living in a nursing home.
Convertible Term Life Insurance
A convertible term life insurance policy allows you to convert to a different type of life insurance policy, such as whole life, without having to medically qualify.
Decreasing Term Life Insurance
A decreasing term life policy decreases by a set amount each year for the duration of the policy period.
Evidence Of Insurability
The medical information about you that a life insurance company uses to determine if you qualify for life insurance. This can also include other information about you such as financial and credit information.
Face Amount
This is the total amount of life insurance that will be paid upon the death of the insured to the beneficiary.
Grace Period
This insurance term describes the period of time after the due date for the premium on the policy that it can be paid without penalty. The standard grace period is 30 days, but each company may have different conditions.
Guaranteed Insurability
This is a life insurance option that allows the insured policyholder to buy additional amounts of life insurance in the future without having to medically qualify.
Insured
This is the person who is covered by the life insurance policy
Lapse
The insurance term that describes the discontinuance of the life insurance policy from not paying the required premium.
Level Term Life Insurance
This is a fixed amount of term life insurance that remains constant throughout the life of the policy.
Loan Value
The total amount that can be borrowed against the the life insurance policy.
Mortality Table
A table showing the statistical death rate for every age.
Paid Up Insurance
This life insurance term indicates a policy that is completely paid off with no further premiums due.
Premium
The cost for the life insurance policy. This may be on a monthly, quarterly, semi-annual, or yearly basis.
Rated Up Policy
A life insurance policy that is issued with a higher than normal premium due to the increased risk involved from the insureds health, hobbies, or employment category.
Reinstatement
Restoring a life insurance policy that was previously lapsed.
Settlement Option
The options given to the beneficiary in deciding how they wish to have the policy benefits paid out.
Surrender
This life insurance term is used when someone voluntarily cancels their policy for the cash value.
Term Life Insurance
A life insurance policy that provides coverage for a specified period of time.
Waiver Of Premium
A policy provision that provides a waiver of future premium payments due to the disability of the insured.
