| Term | Definition |
| Actuary | A person who uses math and statistics to calculate the likelihood of certain events, such as someone passing away, and determines the pricing and financial stability of insurance policies. |
| Beneficiary | The person or entity that will receive the payout from your life insurance policy when you pass away. You can name one or more beneficiaries on your policy. |
| Cash value | The savings portion of a permanent life insurance policy that grows over time and can be borrowed against or used to pay premiums. |
| Death benefit | The amount of money that will be paid out to your beneficiary when you pass away while your life insurance policy is in effect. |
| Exclusions | Certain situations or circumstances that are not covered by your life insurance policy, such as suicide within the first two years of the policy. |
| Face amount | The amount of coverage your life insurance policy provides, also known as the death benefit. |
| Grace period | The amount of time after your premium due date during which you can still make a payment without your policy lapsing. Usually 30 or 31 days. |
| Guaranteed insurability rider | A rider that allows you to purchase additional life insurance coverage at certain points in the future without having to go through the underwriting process again. |
| Incontestability clause | A provision in your life insurance policy that prevents the insurer from disputing the validity of your policy after a certain period of time has passed, usually two years. |
| Insurability | The measure of your risk level and eligibility for life insurance coverage, based on factors such as your age, health, and lifestyle. |
| Insured | The person whose life is covered by a life insurance policy. |
| Level term life insurance | A type of life insurance policy where the death benefit and premiums remain the same for the duration of the term, which is usually 10, 20, or 30 years. |
| Lapsed policy | A life insurance policy that has ended due to non-payment of premiums. |
| Life insurance | A type of insurance policy that provides a death benefit payout to your chosen beneficiaries when you pass away while the policy is in effect. |
| Living benefits | Benefits that allow you to access a portion of your life insurance policy’s death benefit while you are still alive, such as for terminal illness or long-term care. |
| Long-term care rider | A rider that can be added to your life insurance policy to provide coverage for long-term care expenses if you become unable to care for yourself. |
| Medical exam | A physical examination and other tests that you may need to undergo as part of the life insurance underwriting process. |
| Non-medical underwriting | A simplified underwriting process that does not require a medical exam and is based on your answers to health questions on the life insurance application. |
| Paid-up policy | A life insurance policy that requires no further premium payments because you have already paid the entire premium amount, or the policy’s cash value is sufficient to cover future premiums. |
| Permanent life insurance | A type of life insurance policy that provides coverage for your entire life, as long as you pay your premiums, and accumulates cash value that grows over time. |
| Policy loan | A loan that you can take out against the cash value of your permanent life insurance policy. |
| Policy owner | The person who owns the life insurance policy and has the right to make changes to the policy and designate beneficiaries. |
| Policy period | The length of time that your life insurance policy is in force. |
| Policy premium | The amount of money that you pay to the insurance company to keep your life insurance policy in force. The premium can be paid on a monthly, quarterly, semi-annual, or annual basis. |
| Preferred risk | A person who is considered to be in excellent health and has a low risk of passing away, making them eligible for lower life insurance premiums. |
| Premium mode | The frequency at which the policy owner pays the premium, such as monthly, quarterly, semi-annually, or annually. |
| Rider | An additional provision that can be added to a life insurance policy to modify its coverage, such as a waiver of premium rider, which waives premium payments if the policyholder becomes disabled. |
| Settlement option | A choice made by the beneficiary of a life insurance policy on how to receive the death benefit, such as a lump sum or installment payments. |
| Suicide clause | A provision in a life insurance policy that states that the policy will not pay a death benefit if the insured person commits suicide within a certain time period, typically two years from the policy’s start date. |
| Term life insurance | A type of life insurance that provides coverage for a specified period, typically ranging from 1 to 30 years, and pays a death benefit if the insured person passes away during that period. |
| Underwriting | The process used by insurance companies to evaluate the risk of insuring a person and determine the premium rate that will be charged for the policy. |
| Universal life insurance | A type of permanent life insurance that combines a death benefit with a savings account that earns interest, allowing policyholders to adjust their premium payments and death benefit amount over time. |
| Variable life insurance | A type of permanent life insurance that allows policyholders to allocate the cash value of their policy towards various sub-accounts that can grow over time, but also carry risk. The death benefit amount can also vary depending on the performance of these sub-accounts. |
| Waiver of premium | A rider that can be added to a life insurance policy, which waives the premium payments if the policyholder becomes disabled and unable to work. |
| Whole life insurance | A type of permanent life insurance that provides a death benefit and a savings component, with premiums and death benefit amount remaining fixed for the life of the policy. |
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