Life Insurance Glossary - kcentv.com - KCEN HD - Waco, Temple, and Killeen

Life Insurance Glossary

Annually Renewable Term: A type of term life insurance that allows you to renew your policy on an annual basis without providing a new medical exam.

Beneficiary: The beneficiary (or beneficiaries – you can have a primary and secondary) named in your policy to receive policy proceeds after your death.

Cash Value: The amount of money in your policy that is available for loans or withdrawal should you cancel the policy.

Convertible Life Insurance: Term life insurance that you can convert to permanent insurance without providing a new medical exam.

Dividend: A cash return on the investments made by the life insurance company if the company chooses to do this.

Face Amount: The blanket amount that is paid to your beneficiary upon your death. This does not include dividends or additional money received due to accidental death or other special circumstances.

Illustration: Part of an insurance company’s proposal meant to show you your future payments, cash value, and death benefits. This is based on the company’s current rates and cannot be guaranteed.

Insurability: Your ability to be insured by an insurance company based on your medical exam, credit history, driving record, etc.

Level Premium Life Insurance: Life insurance that does not fluctuate on value or premiums while you hold the policy.

Medical Exam: A standard exam performed by your physician that will enable an insurance company to place you in what they feel is a correct category. An example of these categories would be “high risk” meaning you have many health problems, are overweight, and smoke, or “low risk” meaning you don’t smoke and have low blood pressure, cholesterol and are within what they consider healthy weight.

Mortality Charge: This is the portion that you pay that will go directly to your beneficiaries. During the first years of your policy you are paying some mortality charge, but most of your money goes towards the investment portion of your policy.

Policy Loan: A loan that you can take against the value of the policy. Taking out loans normally reduces the benefit (money) received by your beneficiary.

Premiums: Payments to the insurance company towards your policy.

Term Life Insurance: Life insurance that does not build up cash value as it is based on the amount of insurance, not the amount plus another chunk used for investments. It covers you for a fixed span of time –up to 30 years.

Universal Life Insurance: A flexible type of insurance that would allow you to change your beneficiary if necessary as well as the amount or schedule of payments. Like whole life insurance, there is a savings piece (an accumulation fund) that is meant to earn interest to help pay your premium.

Variable Life Insurance: Similar to universal and whole life insurance, this type of life insurance has an investment component that is placed in a portfolio similar to mutual funds.

Whole Life Insurance: This type of insurance includes term life insurance as well as a chunk used for investment purposes. This additional money is intended to earn you interest as you pay for your insurance.

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