Life Insurance Glossary
It is true that insurance products are sometimes complex, but you don't need to be an expert to understand your options. We've listed for you the most common life insurance definitions and terminologies.
An insurance agent is a professional who sells insurance products, such as life, health, car or home insurance, to meet the needs of his customers.
There are two types of agents. A captive agent usually represents one insurance company only. An independent insurance agent represents multiple insurers and offers products from several insurance providers.
Simply put, this rider allow the insured to receive at least a portion of the death benefit after being diagnosed with a terminal medical condition.
The accelerated benefit can be used while the policy holder is still living, and can amount up to 50 to 80 percent of the policy value.
There are sometimes contain complex legal conditions, for this rider and it best to get professional advice.
Sometimes called “double-indemnity” riders, they allow for a doubled death benefit in the case of accidental death.
A insurance is a professional who sells insurance products for a commission. A broker typically works with a large number of insurance companies. They have access to a wider variety of insurance policy options to offer and can search multiple companies to find the best deal for you based on your particular needs.
Insurance brokers work exclusively for you, they are not tied to one specific insurance company. You can generally secure all of your insurance policies – home, auto, business, life and more – through one broker.
A captive insurance agent is an agent who represents a single insurance company and is paid by that one company, either by salary, commission, or both, to sell their insurance products. A captive agent can offer policies and quote you rates from that company, only.
If you’ve decided you want insurance from a specific national insurer, calling a captive agent working for that company is the right move.
A child insurance rider usually covers all current and future children in the household for a small premium.
A policy with a child term rider will pay a specific death benefit if a minor child dies before a designated age. If the child does not die, the policy can be converted into a more traditional kind of permanent life coverage with no need for medical underwriting.
The death benefit is the money paid out to the beneficiary of a life insurance policy, if the insured dies while the life insurance policy is in effect.
This rider replaces a sole earner’s regular income so the surviving family members don’t face severe financial problems.
This rider is also called Guaranteed Purchase Option. During a stated time period, the insured purchase more coverage without a medical exam.
Parents who plan on having large families typically use these riders to bump up their insurance coverage as their families grow.
Guaranteed issue life policy is a type of whole life insurance that doesn't require any medical questions or exam. Applying for a guaranteed issue policy is very simple and requires answers to a just few questions about the applicant's age, state and general health. Guaranteed issue policies are usually more expensive.
It is a good option if you have pre-existing conditions and do not qualify for traditional life insurance or simplified issue policies.
Also called Guaranteed Insurability Rider.
Independent insurance agents are usually employed by an insurance agency, but may also be self-employed professionals. They sell policies from several insurers and are not captive to one insurer only. When you consult an independent agent, they’ll match you with the insurance company most likely to offer the best rate with the coverage you need.
A life insurance ladder strategy refers to buying several term life insurance policies that have different expiration dates to optimize the overall cost of life insurance.
Insurance ladders allow policyholders to stagger their coverage in a decreasing amount over time, while locking in rates based on their current state of health and age.
A life insurance policy is a contract between you, the policyholder, and a life insurance company, the insurer. In exchange for a monthly premium payment, the insurer will pay a sum of money, known as a death benefit, to the named beneficiaries when the insured dies. The beneficiaries can use the money for whatever purpose they choose.
The long-term care rider offers the equivalent of long-term care coverage without the need of having to buy a separate policy. It covers the insured person’s care expenses, such as nursing home care or home health care.
A no-exam (or no medical exam) life insurance is a type life insurance policies that doesn't require to undergo a medical examination to qualify for coverage. Usually, a simplified underwriting process will use information about your age, overall health, lifestyle, and family medical history to determine your premium.
The premiums for no-exam life insurance are higher than for traditional policies because of the lack of a medical exam, and the coverage is usually capped.
If the insured outlives the term of his life insurance policy, the return of premium rider allows the insured to receive the premiums paid in, minus a small add-on cost to each premium, when the policy’s term is up.
Return of premium riders usually increase the cost of the life insurance premium substantially.
A rider is a specific amendment to your main life insurance policy, that covers a stated situation. Riders are an ideal way to customize an existing life insurance policy.
You have to pay an additional fee for riders, but there’s no better way to tailor an insurance policy based on your particular financial needs. These benefits usually add very little to your current premium.
There are dozens of life insurance riders. The most popular are: return of premium, child term, long-term care, accelerated death benefit, family income, waiver of premium, accidental death, and guaranteed insurability.
A simplified issue policy is a type of no-exam life insurance, where the applicant is asked to answer a detailed questionnaire that includes questions about their health and medical history, as well as their family medical history. The applicant is required to submit medical records, but doesn't have to undergo a medical exam.
Term life is a type of life insurance that offers temporary financial protection during a set period of time. Policyholders must choose the term of the policy - the amount of time they want coverage, usually 10, 15, 20 or 30 years - and the death benefit, which is the amount of money beneficiaries will receive if the insured dies while the policy is in force.
A term life policy does not increase in value over time and premiums are not refundable. Once the term is completed, the policy expires and no benefit is payable.
Also called life insurance term. It is the length of your coverage. Once you reach the term of your insurance, your coverage expires.
Often legally complex, the primary form of this type of rider lets totally disabled individuals stop paying their policy premiums.
Premium waivers are especially valuable for sole income earners who have higher-than-average policy premiums.
Whole life insurance is a type of permanent life insurance: it does not have a set term and doesn't expire as long as you are current on your premium payments.
A whole life insurance policy consists of two parts. The life insurance portion pays beneficiaries a set amount of money upon your death. The savings portion serves as a retirement benefit for the insured person and is accessible after a certain period of time while the insured is still alive.