Life Insurance Definitions

Beneficiary
The person named by the owner of the policy to receive the life insurance proceeds upon the death of the insured.

Cash Value/Cash Surrender Value
The amount that is available in cash for loans or withdrawals during the life of the insured.  Withdrawals may be subject to surrender charges and could have a permanent effect on the overall cash value.  Loans reduce the cash value and death benefit by the amount of the loan outstanding plus interest.  If the policy is surrendered, the cash surrender value is paid to the policy owner.

Convertible Term Insurance
Term insurance that can be converted or exchanged to a permanent insurance policy at the option of the policy owner without evidence of insurability.

Death Benefit
The amount paid to the beneficiary at the time of the insured’s death.

Face Amount
The death benefit stated on the policy.  It does not include additional amounts acquired through the application of policy dividends or amounts payable under accidental death or other special provisions.

Insured or Insured Life
The person on whose life the policy is issued.

Level Premium Term Life Insurance
Term Life Insurance is where the premium remains the same for a specific number of years.  This is usually for 10, 20 or 30 years.  At the end of the specified term, coverage can usually be continued, but the premium payments would increase each year.

Loan
A loan made by a life insurance company to a policy owner based on the cash value of a policy. This will reduce the policy's death benefit and cash value by the amount of the outstanding loan plus interest.

Paid-up
Insurance that will remain in force with no additional premiums needed.

Permanent Life Insurance
Insurance that can last the insured’s lifetime and may build up a cash value that can be accessed. Whole Life, Universal Life, Variable Universal Life and Survivorship Life are all examples of Permanent Life Insurance.

Policy Owner
The person who owns a life insurance policy.  This is usually the insured person, but may also be a relative of the insured, a partnership, a trust or even a corporation.

Premium
Payment to the insurance company to buy and keep a policy in force.

Term Life Insurance
Life insurance that does not build up cash value and provides coverage for a specified period of time.  This is usually in 10, 20, or 30 year “terms”.

Universal Life Insurance
Permanent Life Insurance policy which allows you some flexibility to change the death benefit and vary the amount or timing of premium payments.  A part of your premium can go towards building cash value that grows at an interest rate that varies over time, but not below a guaranteed minimum. Your cash value is available for you to use in a variety of ways, including paying premiums.1

Variable Universal Life Insurance
Universal Life Insurance policy that allows you to place your cash value in various funding options that invest in items like stocks and bonds.  You decide how your net policy values are invested, and you bear the investment risk.

Whole Life Insurance
A type of Permanent Life Insurance which can provide lifetime protection with a guaranteed death benefit and cash value.  It also carries a level premium that must be paid for as long as the policy is in force.  Most Whole Life policies are eligible to receive dividends which can be used to reduce or eliminate out-of-pocket premiums in later years.

This information is for general informational purposes only.  Please refer to your policy for specific details and definitions regarding your coverage.

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