GENERAL POLICY TERMS

  • Policyholder (Owner): The person who owns and controls the policy.
  • Insured: The individual whose life is covered.
  • Beneficiary: Person(s) or entity receiving the death benefit.
  • Premium: Regular payment to keep the policy active.
  • Face Amount (Death Benefit): Amount paid upon the insured’s death.
  • Policy Term: Duration the policy is active (e.g., 10, 20, 30 years).
  • Underwriting: Risk assessment process (may include a health exam).

TYPES OF POLICIES

  • Term Life: Coverage for a specific time. No cash value.
  • Whole Life: Lifetime coverage with fixed premiums and cash value.
  • Universal Life: Flexible premiums; builds cash value.
  • Variable Life: Includes investment options; value fluctuates.
  • Indexed Universal Life (IUL): Cash value linked to a market index.

CASH VALUE TERMS (Permanent Policies)

  • Cash Value: Savings portion that grows over time.
  • Surrender Value: Cash received if the policy is canceled.
  • Surrender Charges: Fees for early cancellation.
  • Loan Value: Amount you can borrow from cash value.

COMMON RIDERS (Optional Add-ons)

  • Accelerated Death Benefit: Access part of death benefit if terminally ill.
  • Waiver of Premium: Premiums waived if disabled.
  • Accidental Death Benefit: Extra payout if death is accidental.
  • Guaranteed Insurability: Buy more coverage later, no new exam.
  • Conversion Option: Convert term to permanent without underwriting.

POLICY STATUS TERMS

  • In Force: Policy is active and premiums are current.
  • Lapsed Policy: Ended due to missed payments.
  • Grace Period: Usually 30 days to pay after a missed premium.
  • Contestability Period: First 2 years—insurer can investigate claims.