Glossary Of Life Insurance Terms, This glossary or dictionary of life insurance terms has been provided as a basic resource to help you recognize and better understand common words and phrases used in the life insurance industry. Because certain terms are more complex than others, a subsection or more detailed definition of these underlined words is available by clicking on them.
Accelerated Benefits Rider:
Also called Living Benefits or Accelerated Death Benefit; it is a life insurance rider or policy benefit that gives you access to a portion or percentage of the policy’s eligible death benefit during the insured’s lifetime if they are diagnosed with a terminal illness and given a life expectancy of 12 months or less. This benefit can vary with each insurance company and in different states according to their insurance laws.
Accelerated Death Benefit: See Accelerated Benefits Rider or click on Accelerated Death Benefit for more information.
Accidental Death and Dismemberment:
Benefit providing a payment if the insured’s death resulted from an accident; or if the insured suffers the loss of a limb (usually above the wrist or ankle), or if the insured permanently loses their eyesight. This benefit usually has age limit restrictions and may cite specific exclusions.
Benefit providing a payment if the insured’s death resulted from an accident. It is often called Double Indemnity or the double indemnity clause because many insurers pay two times or double the face amount of the life insurance policy if the death was caused by an accident and this rider had been purchased.
Accumulation Period:
It is the time or period in a deferred annuity during which funds are accumulated at interest with the insurance company to reach the amount necessary to provide the benefits promised for a specific future date. This period or phase is followed by the Liquidation Period.
Actuary:
An actuary or team of actuaries examines, researches, and calculates life insurance premium rates, financial reserves, dividends, and other important statistics. These mathematicians who are vital in the design life insurance products look at mortality tables, interest rate, as well as current and forecasted cost.
Adjustable Life Insurance:
An adjustable life policy gives the policyowner the right to make changes in the policy’s face amount. The changes are usually allowed at specified intervals or ages. These benefits are not available in term policies or most whole life plans. Additionally, there are usually restrictions on both the minimum and maximum available face amounts. Most changes in this plan can be made without evidence of insurability; however, many insurers do require additional underwriting and or medical exams if the insured wants to increase the face amount.
Agent:
An agent is the person or representative of the agency or company who sells and can service insurance policies.
Amendment:
An amendment is a change or modification to the policy. An amendment could be as simple as a question not originally answered on the application, which was answered in a follow up conversation; and because the application must be attached to life insurance policies, the answer to the missed question is attached to the policy as an amendment. An amendment could also be adding riders or changing beneficiaries or face amounts in an existing policy.
Annual Renewable Term:
Annual Renewable Term (ART) or Yearly Renewable Term (YRT) is life insurance that provides protection for a period of one year and then permits the policyowner to renew the policy for successive periods of one year without having to prove insurability. As with most term plans the policy automatically renews at the increased rate and continues until a specified age of the insured as long as the premiums are being paid.
Annuitant:
The person or insured whose life determines the duration of benefit payments in an annuity.
Annuity:
It is an agreement by the insurer to make periodic payments which begin at a specified or contingent date and continue for a fixed period or for the duration of the life or lives of the annuitant(s).
Applicant:
This is the person or entity that applies for the insurance coverage.
Application for insurance:
The application in its simplest state is a request or offer to buy life insurance from the company to whom you are submitting the statements of information. The application provides the insurer and their underwriter with the proposed insured’s age, sex, occupation, and other relevant health, financial, and personal information. According to law the application becomes part of the contract and is to be attached to the policy. To receive more information go to the section called Understanding Life Insurance or to the article: The Life Insurance Application.
