Life insurance contract
accumulates a principal sum to benefit the beneficiary upon the insured's death.
Owner (of a life insurance policy)
controls the pol-icy; chooses the beneficiary; may borrow against any cash value.
Beneficiary
receives the death benefit under an insurance policy.
Cash value
is the accumulated amount of excess payments received in the early years of a level-payment policy.
Term life insurance
covers a specified number of years of the insured's life and pays beneficiaries on-ly if the insured dies during the coverage period.
Permanent life insurance
covers the insured until death.
Mortality rate
is the probability of death in a given year of life.
Mortality table
is a collection of data representing survival and death rates of a selected population ob-served over a period of time.
Net amount at risk
equals the policy's face amount minus its legal reserve.
Settlement options
are the methods by which policy proceeds may be paid to the beneficiary.
Variable life insurance
increases the policy face amount above the guaranteed face amount if the in-surer has favorable investment experience in its separate side fund.
Separate account
is an asset portfolio held by the insurer for an individual insured.
Face amount
is a life insurance policy's death bene-fit.
Death benefit
equals the face amount of life insurance plus any accrued dividend minus any policy loan and loan interest.
Level term life insurance
has level benefits, but in-creasing premiums.
Yearly renewable term (YRT)
provides insurance for a one-year period, without requiring evidence of good health or insurability for successive one-year renewals.
YRT
abbreviates yearly renewable term.
Underwriting
decides which insurance risks to accept, what premium to charge, and the terms and conditions of the contract, and then monitors those decisions.
Evidence of insurability
is proof that the insured meets the insurer's underwriting standards.
Re-entry provision
lets the insured submit evidence of insurability at the time of life insurance policy renewal to get a lower premium rate and an in-creased renewal rate guarantee period.
Term conversion
lets the policyowner exchange a term life insurance policy for a permanent life insurance policy.
Traditional whole life insurance
provides an inside buildup in cash value and permanent protection at a level premium throughout the insured's life.
Universal life insurance
allows the policyowner to change the death benefits and to change the amount and timing of premiums and also allows the policy-owner to make partial withdrawals of cash.
Nonforfeiture options
protect the policyowner from losing cash values upon termination of a policy that builds cash values.
Surrender charge
is a fee for premature withdrawals from an annuity or universal life insurance policy.
Cost of insurance (COI)
equals the net amount at risk multiplied by the cost of insurance rate for the insured's attained age.
COI
abbreviates cost of insurance.
Limited payment life insurance
provides lifetime permanent protection but only requires premiums to be paid for a set number of years or until a set age.
Single premium life insurance policy
provides life-time permanent protection for a single lump sum premium payment.
Combination policy
incorporates different types of insurance into a single policy.
Long-term care (LTC) insurance
covers long-term (over 12 consecutive months) medical care not in a hospital acute care unit.
LTC
abbreviates long-term care.
Accelerated death benefit
is a life insurance benefit paid during the lifetime of a terminally-ill insured.
Portfolio rate
is the rate of return on an insurer's general account assets.
Variable universal life insurance
combines the flexible premiums and death benefit design of universal life insurance with the policy owner investment decisions of variable life insurance.
Securities and Exchange Commission (SEC)
is the federal regulatory agency that oversees the stock market.
SEC
abbreviates Securities and Exchange Commission.
Key person
is one whose death or disability or resignation before normal retirement age will cause a substantial economic loss to a business.
Buy-sell agreement
is a legal agreement for the pur-chase and sale of a business at a mutually agreeable price upon the owner's death, disability, or retirement.
Cross purchase agreement
is a buy-sell agreement in which each owner (surviving partner or co-stockholder) agrees to buy a prearranged percentage of the deceased owner's business interest; compare entity plan agreement.
Entity plan agreement
is a buy-sell agreement in which the business entity (partnership or corpora-tion) agrees to buy the business interest of an owner who is deceased, disabled, or retired; compare cross purchase agreement.