Agent - An individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Application - A statement of information made by a person applying for life insurance. It helps the life insurance company assess the acceptability of risk. Statements made in the application are used to decide on an applicant’s underwriting classification and premium rates.
Beneficiary - The person named in the policy to receive the insurance proceeds at the death of the insured. Anyone can be named as a beneficiary as long as they have insurable interest. (see definition for insurable interest)
Bestow - to give, or grant someone something of value.
Body Mass Index (BMI) - According to the World Health Organization, BMI is a simple index of weight-for-height that is commonly used to classify underweight, overweight, and obesity in adults.
Contingent beneficiary - (or secondary beneficiary) The person who will receive your life insurance benefits if your primary beneficiary dies before you.
Claim - a formal request to an insurance company asking for a payment based on the terms of the insurance policy. The insurance company reviews the claim for its validity and then pays out the beneficiary once approved.
Contestable Period - Life insurance policies have a 2 year contestable period. If you die within this period, the company has the right to investigate the cause of death and review the information you provided on the application. If the company learns you gave inaccurate information, it can deny the payment of the life insurance benefit.
Dependent - a person who relies on another, especially a family member, for financial support.
Death benefit - the payment given to the beneficiary upon the death of the insured.
Exclusions - The cases for which the insurance company does not provide coverage.
Evidence of Insurability - A statement or proof of your health, finances, or job, which helps the insurer decide if you are approved for life insurance.
Expiry Date - is the date on which the insurance coverage under your policy ends.
Face amount - The value of a policy to be provided upon death of the insured, also referred to as death benefit.
Free look provision - A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.
Grace period - The length of time (60 days) after a premium is due and unpaid during which the policy remains in force.
Insurable interest - is when any person would suffer a financial, emotional, or any other type of loss because of the death of the person insured. An insurable interest is required when purchasing life insurance on another person.
Insured - The person whose life is covered under the policy.
Insurer - The company providing the life insurance.
Level term - Whether you purchased a 10, 15, 20, 25, or 30 year term, the premium (payment amount) will stay the same during that period of the term.
Life insurance - Insurance that pays out a sum of money (death benefit) upon the death of an insured person.
Lapse - The termination of an insurance policy if premium is not paid by the end of the grace period.
Misstatement of Age and/or sex - If, while the Insured is alive, We learn that the age or sex of the Insured has been misstated, We will adjust the Face Amount to the amount which would have been purchased by the most recent Premium paid at the correct age or sex. Thereafter, Premium due will be based upon the adjusted Face Amount and the Insured’s correct age and sex.
Premium - The payment, or one of the periodic payments, a policy owner agrees to make for an insurance policy. Depending on the terms of the policy, the premium may be paid in one payment or a series of regular payments, e.g., annually or monthly
Policy period - time period during which insurance coverage is in effect as long as payments are made
Policy - The printed legal document stating the terms of insurance contract that is issued to the policyowner by the insurance company.
Policy owner - The policy owner is responsible for paying the premium on the policy and it can be a person, trust, or estate.
Policy schedule - Part of the insurance policy that identifies the policyholder and details of the person covered, the amount of coverage, the exclusions, and the payment mode and schedule.
Reinstatement - Restoring a lapsed policy to its original premium paying status, upon payment by the policy owner, possibly with interest, of all unpaid premiums, and presentation of satisfactory evidence of insurability by the insured.
Term life - Life insurance which pays a benefit if the insured dies during a specified period.
Underwriter - Another name for a life insurance company or a person that underwrites an insurance risk.
Underwriting - The process by which a life insurance company determines whether it can accept an application for life insurance, and if so, on what basis so that the proper premium is charged.