Term
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Definition
| Sharing the financial consequences associated with risk. |
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Term
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Definition
| a life insurance payment. The size of the premium depends on the probability of you dying. |
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Term
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Definition
| Statisticians who specialize in estimating the probability of death based on personal characteristics. |
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Term
| Face Amount (face value of the policy) |
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Definition
| The amount of insurance provided by the policy at death. |
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Term
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Definition
| The person whose life is insured by the life insurance policy. |
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Term
| Policy owner (policyholder) |
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Definition
| The individual or business that owns the life insurance policy. |
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Term
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Definition
| The individuals designated to receive the insurance policy's proceeds on the death of the insured. |
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Term
| Earnings Multiple Approach |
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Definition
| A method of determining a rough estimate of how much life insurance you need by using a multiple of your yearly earnings. |
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Term
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Definition
| A method of determining how much life insurance you need based on the funds your family members would need to maintain their lifestyle after death. These may include: 1) cleanup costs, 2) debt elimination funds, 3) immediate transitional funds, 4) dependency expenses, 5) spousal life income, 6) educational costs fro children, and 7) retirement income. |
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Term
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Definition
| Funds needed to cover immediate expenses at the time of your death. |
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Term
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Definition
| A type of insurance that pays your beneficiaries a specific amount of money if you die while covered by the policy. |
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Term
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Definition
| A type of insurance that has 2 components: life insurance and a savings plan. when you die, your beneficiaries receive the savings. |
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Term
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Definition
| a type of term insurance that can be renewed for an agreed-on period or up to a specified age regardless of the policyholders health. |
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Term
| Variable Rate Term Insurance |
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Definition
| Renewable term insurance that can increase in premium at each renewal period, unless you pass a medical exam satisfactorily. |
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Term
| Decreasing Term Insurance |
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Definition
| Term insurance in which the annual premium remains constant, but the face amount of the policy declines each year. |
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Term
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Definition
| Term insurance provided, usually without a medical exam, to a specific group of individuals who are associated for some purpose other than to buy insurance. |
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Term
| Credit/mortgage Group Life Insurance |
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Definition
| Group life insurance that is provided by a lender for its debtors. It pays off your mortgage, and it is usually a form of declining insurance. |
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Term
| Convertible Term Life Insurance |
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Definition
| Term life insurance that can be converted into cash-value life insurance at the insured's discretion regardless of his/her medical condition. |
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Term
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Definition
| Cash-value insurance that provides permanent coverage and a death benefit when the insured dies. When the insured turns 100, the insurance pays off, even when the insured is still alive. |
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Term
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Definition
| The money that the policyholder is entitled to if the policy is terminated. |
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Term
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Definition
| The right of a policy holders to choose to receive the policy's cash value in exchange fro giving up the right to a death benefit. |
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Term
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Definition
| A type of cash value insurance that builds up a fund for retirement or education and promises to pay that fund at a specified age. |
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Term
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Definition
| A type of cash-value insurance that is much more flexible than whole life. It allows you to vary the premium payments and the level of protection. |
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Term
| All insurance contracts have the following in common: |
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Definition
| 1) a beneficiary provision, 2) a grace period, 3) a loan clause, 4) a nonforfeiture clause, 5) a policy reinstatement clause, 6) a change of policy clause, 7) a suicide clause, 8) a payment premium clause, 9) an incontestability clause, and 10) settlement options. |
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Term
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Definition
| the late payment period for premiums during which time the policy stays in effect and no interest is charged, usually 30 days. |
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Term
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Definition
| A clause that provides the right to borrow against the cash value of the policy at a specified interest rate. |
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Term
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Definition
| A clause that provides the right to restore a policy that has lapsed after the grace period has expired. |
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Term
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Definition
| A clause that provides for the right of the policyholder to change the form of policy. |
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Term
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Definition
| The alternative ways that a beneficiary can choose to receive the policy benefits after the death of the insured. |
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Term
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Definition
| A special provision that may be added to your policy that either provides extra benefits to the beneficiary or limits the company's liability under certain conditions. |
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Term
| Traditional Net Cost (TNC) Method |
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Definition
| A method of comparing insurance costs that sums the premiums over a stated period and subtracts from this the sum of all dividends over that same period. |
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Term
| Interest-adjusted Net Cost (IANC) Method (Surrender Cost Index) |
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Definition
| A method of comparing insurance costs that incorporates the time value of money into its calculations. |
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