Providing for honest things, not only in the sight of the Lord, but also in the sight of men.

To help you understand life insurance, we have provided below a general explanation of some frequently used terms. Note that the exact definitions of these terms can vary from company to company, from state to state, and from policy form to policy form, even between forms of the same company. Always consult the actual policy for the meaning of the terms applicable to your situation.

Absolute Assignment

Assignment by the policyowner of all control and rights to a third party

An event that is unforeseen and unintended.

When included, provides an extra benefit generally equal to a multiple of the face amount in the event of accidental death.

Allows policyholders who are terminally ill to collect part of their death benefit while they are still alive.

Accidental Death and Dismemberment insurance.

Accidental Death Benefit.

The ages above or below which a company will not issue a given policy to a proposed insured.

An individual licensed by the state and appointed by a company to solicit and negotiate insurance contracts on its behalf.

A form attached to the policy bearing the language necessary to change the terms of the policy to fit special conditions. Amendments must be agreed to in writing by the policyholder and the company.

The individual named as submitting an application to the insurance company for a policy.

A form on which the proposed insured states facts requested by the company and on the basis of which (together with other information, such as that received from medical examiners, attending physicians, hospitals, investigators, and the agent) the company decides whether or not to accept the risk, modify the coverage offered, or decline the application.

Clause in the insurance policy that governs any transfer by the policyholder of his rights in the policy.

The age an insured has reached on a given date.

A company permitted to sell insurance within a state.

Allows the company to use, automatically, whatever portion of the cash value is needed to pay premiums as they fall due when the provision is included.

Limits or excludes coverage when the insured is participating in specified types of air travel. Coverage is usually confined to regularly scheduled flights of commercial airlines.

A person who may become eligible to receive, or is receiving, benefits under a life insurance plan as a result of the insured's death.

A secondary beneficiary, designated to receive proceeds of a policy if the primary beneficiary does not survive the insured. Must be named in the beneficiary designation

A named beneficiary whose status as beneficiary cannot be changed without his or her permission, except by his or her death.

The person first designated to receive the proceeds of a policy. Must be named in the beneficiary designation.

Termination of contract of insurance in force by voluntary act of the company or insured, effected in accordance with provisions in the contract or by mutual agreement.Carrier

An insurance company which "carries" the insurance. (The term "company" is preferred because of the possible confusion of "carrier" with transportation terminology.)

That value in a policy which is the property of the policyowner, and which may be expected by him should he surrender the policy for cash.

A term used to identify a particular part of a policy or endorsement.

Assignment of a life or health insurance policy as security for a loan or debt, the creditor to receive the proceeds or values only to the extent of its interest.

The part of an insurance contract setting out the responsibilities of both the insured and the company.

The exchange of value on which a contract is based. In life and health insurance, the consideration from the applicant is the premium and the statements in the application.

A clause in a life policy specifying the premium due for the insurance protection and the frequency of payment.

Person or persons named to receive benefits if the primary beneficiary is not alive.

A contract whereby a company agrees to indemnify an insured for losses, provide other benefits, or render services to, or on behalf of, an insured. (The contract of insurance is often called an "insurance policy," but "policy" is merely the evidence of the agreement.)

A term policy which can be converted to a permanent type of coverage without proof of insurability.

The policy proceeds to be paid upon the death of the insured.

A formal request for payment by the company occasioned by the death of the insured. Can be made through the agent, but may be made directly to the home office. Requires Proof of Death (usually a certified copy of death certificate and a claim form) and is made by beneficiary.

The portion of an insurance policy containing the demographic information regarding the risk.

Term insurance under which the amount of coverage starts out at a certain face amount, and then gradually decreases until the expiration date of the policy

A rider providing decreasing term coverage added to a permanent insurance policy.

Loss, or loss of use of specified members of the body, resulting from accidental bodily injury.

Payment of twice the basic benefit in event of loss resulting from accidents or under specified circumstances.

The date on which an insurance policy goes into effect, and from which protection is provided.

A form attached to the policy bearing the language necessary to change the terms of the policy to fit special circumstances and generally attached at the request of the policyholder or to comply with statutory regulation.

A permanent life policy for which premiums are paid for a limited number of years. If the insured is alive at the end of this premium-paying period, he receives the face amount of the policy then or at a later date. If the insured dies before maturity of the policy. The beneficiary receives the proceeds.These policies are usually not offered today.

Assets of an individual comprising total worth. Includes life insurance in force

The manner in which property will be disposed of at death.

Stated exceptions to prior provisions in a policy. Common exclusions would be death through flying in a private airplane, riot, or state of war.

A person named in a will to settle an estate.

The amount indicated on the face of the policy that will be paid at death or when the policy matures.

An intentional misrepresentation made by a person with intent to gain advantage, and relied upon by a second party to his or her detriment.

A period of time (commonly 31 days) after premium-due date during which a policy remains in force without penalty even though the premium due has not been paid.

A rider that provides that the insured can purchase more insurance at specified ages or events without proof of insurability.

A clause in an insurance policy typically providing that (except for fraud) after the policy has been in force for a given length of time the company shall not be able to contest it. Other policies usually use a variation of the clause entitled "Time Limit on Certain Defenses."

Independent checking on facts about an applicant or claimant, usually by a commercial inspection agency.

That condition of the proposed insured as to age, occupation, physical condition, medical history, moral fitness, financial condition and residence which makes him an acceptable risk to an insurance company.

The proposed policy owner cannot buy the insurance unless the death or disability of the insured would result in a significant emotional or financial loss to the proposed owner.

A contract or device for the transfer of the risks of individual entities to a company, which agrees, for a consideration, to indemnify or pay a specified amount for losses suffered by the insured.

An age upon which current premium rates may be established. The most common variations seen are based on age at last birthday, age next birthday, or age at nearest birthday.

Common title for the head of a State Department of Insurance. (In some states called "Superintendent" or "Director".)

A governmental agency in each state charged with administration of the insurance laws including licensing of agents and companies and regulation and examination of them. In some jurisdictions, a division of some other state department or bureau.

The entire written contract of insurance, usually including the application.

A sum of money which, when paid to the insurance company, puts into or maintains in force an insurance contract. It reimburses the company for the risk assumed.

The chance of occurrence of an event; in some usage, refers to the insured person.

The party to an insurance arrangement to whom, or on behalf of whom, the company agrees to indemnify for losses, provide benefits, or render service. It is preferred to such terms as "policyholder," who may not be the insured.

The party to an insurance arrangement who undertakes to indemnify for losses, provide other pecuniary benefits, or render service. It is desirable to use the word "insurer" in preference to carrier or company since it is a functional word and insurer is generally used in statutory law.

The clause in a policy that specifies in brief the contract's intent and the parties thereto.

A policy that insures the lives of two or more people, paying the face amount upon the first death of the persons covered.

Life insurance written on the life of one not yet considered an adult for life insurance purposes.

Termination of a policy because of failure to timely pay enough premium to keep it in force.

A policy for which the policyholder has failed to timely pay enough premium to keep it in force beyond the grace period.

The amount an insurer is required to hold as a reserve, using the mortality table and a maximum assumed interest rate prescribed by state law.

An insurance premium which remains constant during the entire policy period.

Insurance for which the amount of premium remains constant during the policy period.

The amount of insurance protection in the term policy remains constant during the policy period.

A level amount of term insurance added to a permanent insurance policy.

A state license which enables an insurance agent to do business in that state. Renewable periodically.

Average number of years of life remaining for persons at any given age.

Insurance paying a specified amount on the death of the insured, to his estate or to a named beneficiary.

That amount of cash value in a policy which may be borrowed by the owner.

Proceeds of a policy taken all at once. A single amount.

An organization serving as a clearinghouse of medical information on impaired risks reported to it by companies who are members of the service and reported by the organization to member companies as a source of underwriting information on applicants.

The use of written or oral statements falsely representing the terms, benefits, or privileges of a policy, or the health or condition of the proposed insured.

Provides that if misstatement of age is discovered after the policy's issued, the company can, if the insured is currently alive, adjust the premium amount on future premiums and request payment of any additional premium the policyowner should have paid; or if the insured has died, adjust the face amount of the policy to fit the premium that was paid at the correct age before paying the claim.

The average number of people who die each year, providing one's chance or risk of dying at any given age.

A statistical table showing the number of deaths for all ages from 0 to 100.

An association of state insurance commissioners, active in discussions of regulatory problems and in the formation and recommendation of uniform practices and legislation.

The contract effecting insurance, or the certificate thereof, by whatever name called, and including all clauses, riders, endorsements, and papers attached thereto and made a part thereof.

A loan taken by the policyholder from the company using the insurance cash value as collateral.

The person who has the right to exercise the rights and privileges in the policy contract. Such person may or may not be the Insured, depending on policy ownership and assignment, if any.

(1) Part of the consideration for the insurance. (2) The periodic payment made to keep a policy in force.

The premium paying frequency selected by the policyowner; that is, monthly, quarterly, semiannual, or annual (or any other mode acceptable to the company).

A usual requirement before paying a death claim is that a formal proof of death be submitted to the company.

The person on whose life the policy will be underwritten.

Provides the conditions under which a lapsed policy may be reinstated.

A contract modification attached to a policy that changes the conditions of the policy by expanding or decreasing its benefits or excluding certain conditions from coverage.

A person or thing insured. (Impaired or sub-standard risk; an applicant whose physical condition -or moral habits- do not meet the standard on which the rate is based.)

A method of receiving life insurance proceeds other than in a lump sum.

A person entitled to life insurance protection without extra rating or special restrictions.

A risk less acceptable (more expensive) than standard.

States that if the insured commits suicide within a specified period of time, the policy will be voided. Paid premiums are usually refunded. The time limit is generally one or two years.

Life insurance which normally does not have cash accumulation and is issued to remain in force for a specified period of time, following which it is subject to renewal, convertibility, or termination as per policy provisions.

A person trained in evaluating risks and determining the rates and coverages that will be used for them.

The process of evaluating a risk for the purpose of deciding whether to issue insurance coverage.