Life Insurance Terms you need to Know and understand

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Hotforex Pamm V2Accelerated benefit - This means that when the benefit of a rider in an insurance policy is payable, the amount will be advanced from the basic life cover. 
Accident - Unintentional act or unforeseen, unusual or unexpected event which directly causes an injury.
Accidental death benefit - This is an additional amount to be paid if the cause of the insured's death is accident.
Accidental disablement benefit
 - An amount payable upon loss of function of body parts caused by an accident.
Accidental dismemberment benefit - 
An amount payable upon loss or removal of body parts caused by accident.
Activities of daily living - Shall mean any of the following: Continence (The ability to voluntarily control bowel or bladder functions or to clean up or perform external care of a catheter or appliance), dressing, bathing, feeding, mobility, and transferring.
Annual management charge (For VUL policies)
 - The charge imposed by the company managing the funds linked to a VUL policy.
Annually Renewable Term
- Is a form of insurance that provides protection for a period of one year and can be renewed annually.

Anti-selection - Refers to the tendency of individuals with medical impairments or pose higher risks to buy life insurance in order to reap its benefits.
Assignment of policy - A policy assignment provision in a life insurance contract is one that permits the owner of the policy to sell, give or to pledge the policy as collateral. It is a common, but not universal, provision in modern policies. (
Beneficiaries - Persons or entities designated to receive the proceeds of the policy upon death of the insured.
Benefit - The amount payable for occurrence of an event listed in the policy contract.
Cash Value - Is also known as the cash surrender value of Traditional Whole life or Endowment policies. Upon maturity of the Plan, cash value will then be equal to the face amount of the plan.
Conditional Receipt - Given to policy owners when they pay a premium at the time of application. Interim coverage during the underwriting process is provided subject to terms and conditions of the receipt. (
Contingent/Secondary Beneficiary
- Person or persons named to receive proceeds in case the original beneficiary is not alive. Also referred to as a secondary or tertiary beneficiary. (
Convertibility provision
- Option to change a term insurance to whole life, endowment, or VUL before the contract expires WITHOUT undergoing a medical exam.
Cooling-off period - the period in which the policyholder can review the contract and if owner decides that the policy is not suitable for him/her, the policy can be returned to the life insurance company with refund.
Critical Illness
- Life threatening disease.
Critical illness benefit (CIB) - The amount payable upon diagnosis of any critical illnesses listed in the policy contract.
Death benefit
- Total amount payable to the beneficiaries upon death of the insured.
Decreasing Term Insurance
- Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually. (
Double indemnity benefit
- Doubles the accidental death benefit if the life insured dies due to accident while travelling as a ticketed or officially listed passenger in a commercial bus, automobile, train, monorail, boat or airplane over an established land, sea or air route.
- Written for a definite number of years and guarantees to pay the face amount to the insured if he lives, or to the beneficiary if the insured dies before reaching the maturity date.
Extra charge/Flat Extra - The charge used to cover the increased in mortality or morbidity associated with the risks that the insurance company is exposed to.
Face amount/Sum assured/Sum insured
- Basic life coverage.
Fund Switching (VUL)
- The feature of a VUL plan in which the policyholder can transfer from one fund to another.
Grace period - The policy remains in force during this period even without payment of premium due. Grace period is usually 30 to 31 days from the due date.
Hospital income benefit (HIB) - The benefit amount payable to the life insured for every day of hospital confinement.
Incontestability - Life insurance companies cannot contest the policy contract after it has been in force, except for non-payment of regular premiums, lapsed policies, or any other grounds recognized by law and jurisprudence. Incontestability usually starts 1 to 2 years from the effective date of the policy contract.
Insurable interest - Exists if a person or entity stands to suffer an economic loss if the insured dies.
Insurance charge - The charge used to cover the cost of providing the face amount/sum assured. (VUL)
Insured - The person whose life is given protection.
Interest/Dividends - Earnings from premiums paid (participating traditional policies).
Irrevocable Beneficiary - If any beneficiary is designated as “irrevocable”, notwithstanding any contrary provision, the consent of all such irrevocable beneficiaries is required before the policyholder can exercise any and all other rights and privileges under a policy contract.
Juvenile policy - A life insurance plan in which the insured is a minor.
Lapsation - Termination of insurance policy due to non-payment of premiums or insufficient units (VUL).
Level premiums - Premiums which remains the same all throughout the paying period..
Mortality rate - is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time. (Wikipedia)
Natural premiums - Premiums which increase as one ages.
Non-accelerated benefit - The benefit amount payable is not deducted from the basic life coverage.
Payor term benefit - Amount payable upon death of the policyholder.
Payor waiver - Payment of future premiums will be waived upon death or total and permanent disability of the policyholder. Usually seen in juvenile policies.
Policy - Written contract of insurance.
Policy fee - The charge used to cover administrative charges (VUL)
Policyholder - Owner of the life insurance contract.
Policy year/anniversary - Means a period of 12 months from the effective date of the policy.
- The amount of money paid in exchange of an insurance policy/protection.
Premium payment term - The maximum years payable.
Reinstatement - Activation of previously lapsed policy due to non-payment of premiums.
- Option to extend their contracts for a specific period WITHOUT undergoing a medical exam.
Revocable beneficiary
- If any beneficiary is designated as “revocable”, the policyholder may delete and beneficiary or designate new beneficiaries and exercise any and all other rights and privileges under the policy contract while in force.
Rider charge - The charge used to cover the optional benefits added in an insurance plan. (VUL)
Riders - Optional benefits that can be attached to a basic life insurance plan.
Single premium - Premium paid in lump sum.
Smoker Ratings - Insurers will give a lower premium rate to consumers who do not smoke or use tobacco. If you have smoked in the past, most carriers will consider you a non-smoker, if you have not smoked for one year prior to applying for coverage. Consumers should be aware that nicotine can be detected in a variety of routine screenings tests that are now commonly required by most insurance companies. (
Standard risk - with expected risk or normal risk.
Substandard risk
- Higher than usual mortality.
Suicide clause - A clause in a life insurance contract stating the limitations of the policy when it comes to death due to suicide. Example: “In case of suicide by the insured within the first 2 years from the effective date of the policy, then the suicide shall not be compensable unless suicide is committed in the state of insanity”
Term insurance - a contract that pays the benefit only upon occurrence of a specific event within a specific period. No cash accumulation.
Term of Policy
- Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance. (
Top-up/excess premium (VUL)
- Additional payments to buy units of investments.
Total and permanent disability (TPD)
- If the person is working at the time of disablement or disability, disability is considered TPD when the life insured is prevented from engaging in any occupation or from performing any work for compensation or profit. The disability must have existed continuously for not less than 6 consecutive months. If life insured is not working at the time of disablement, disability is considered TPD when the life insured is permanently unable to undertake, without assistance, 3 or more activities of daily living. Complete and irrevocable loss of sight of both eyes or total and permanent loss by removal or disease of both hands or both feet, or of one hand and one foot are considered as total and permanent disability.
Unacceptable risk
- uninsurable or declined.
Unallocated premium/Premium charge (VUL)
- The portion of the premium in a VUL plan that is not used to buy units of investment. 
- The process of identifying and classifying risks. Also known as risk -selection.
Upgrade - Refers to the increase in the benefit and premium upon application of the life insured.
Waiver of premium on total and permanent disability (WTPD)
 - Payment of future premiums will be waived upon TPD of the insured.
Waiver of premiums on critical illness WCI
- Payment of future premiums will be waived upon diagnosis of any critical illness listed in the policy.
Whole life - pays the face amount when death occurs during the entire life span (age 100) of the insured.

HotForex Pamm V2

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