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Guide to Life Insurance Terms

Listed below is a useful guide to life insurance terms. It is a list of
definitions of life insurance terms that may or may not be familiar to
you.

Accelerated Benefit Provision

A provision in many new policies which will allow the policy owner to
receive a portion of the death benefit early if the insured person is
diagnosed with a terminal illness or permanently confined to a nursing
home.

Accidental Death Benefit

A provision added to a policy that provides an additional benefit if the
insured dies from accidental causes.

Certificate

A document provided to a person insured under a group insurance policy
that provides evidence that the coverage exists.

Convertible Term Insurance

These policies allow conversion, without further medical evidence, to a
different type of policy from an insurance company's range.

Decreasing Term Insurance

The sum assured decreases each year throughout the term of the policy.

Dependent protection

Where the protection is required on a permanent basis rather than just
for a specified term.

Evidence of Insurability

Medical and other information about a person applying for insurance that
the life insurance company keeps confidential, but uses to decide whether
the policy can be issued and what premiums will be charged.

Face Amount

The amount to be paid to the beneficiary when the insured dies.

Free Look

The right of the policy holder to have a period of ten or more days to
examine an insurance policy, and if not satisfied, return it to the
company for a full refund of all amounts paid.

Grace Period

A period of time after the premium due date when an overdue premium may
be paid without penalty. The policy remains in force throughout the
period.

Guaranteed Insurability

An option that permits the policyholder to buy additional stated amounts
of life insurance at certain times in the future, without having to
provide new evidence of insurability.

Illustration

A document used in life insurance sales presentations showing
year-by-year numbers indicating how a policy will work.

Increasing Term Insurance

Under this option, the benefit payable on death increases and is
particularly useful to avoid the sum assured being eroded by inflation.

Insured

The person whose life is covered by a life insurance policy.

Lapse

The discontinuation of insurance without cash value when the required
premium is not paid.

Level Term Life Insurance

In this form a policy will pay out a fixed sum on death during the term.

Loan Value

The amount which can be borrowed by the policy holder from the company
using the value of the policy as collateral.

Mode of Premium Payment

The frequency of premium payments during the policy year. Premium
payments can usually be made on annual, quarterly, or monthly basis.

Mortality Table

A statistical table showing the death rate for each age.

Nonforfeiture Options

A provision in the policy that allows the policy holder to choose how the
cash value of the policy will be used if the policy is surrendered or
lapses due to non-payment of premium.

Ownership

All rights, benefits, and privileges under a policy controlled by the
insured.

Paid-Up Insurance

A life insurance policy where all premiums have already been paid, with
no further premium payment due.

Policy

The printed document issued to the policy holder by the company stating
the terms of the insurance contract.

Policy Year

A one-year period starting on the day and the month the policy was
issued. The first policy year starts on the date of issue, and ends on
the day before the policy's first anniversary date.

Premium

The payment a policy holder is required to make to an insurance company
to purchase insurance coverage and to keep the policy in force.

Rated Policy

A policy issued with an additional premium to cover the extra risk
involved if an insured has impaired health, a hazardous occupation or
hobby.

Reinstatement

The restoring of a lapsed or surrendered policy to full force and effect.

Renewable Increasable Convertible Term Insurance

This contract combines the options of increasing the sum assured,
converting the policy and renewing the contract.

Reviewable Term

Level term assurance with an option to renew the contract at the end of
the term, without the need for further medical evidence.

Rider

A provision added to a policy that provides additional benefits.

Settlement Option

The manner in which the insured or beneficiary may choose to have the
policy proceeds paid.

Suicide Clause

A policy provision which reduces or eliminates the amount to be paid if
the insured dies from suicide.

Surrender

To voluntarily terminate or cancel a policy for its cash value.

Term Life Insurance

This type of policy runs for a specified time period.

Underwriting

The process of evaluating applicants for insurance and classifying them
fairly, so the appropriate premium rate may be charged

Waiver of Premium

A provision added to a policy that will waive the premium payments
required by an insured during the total disability of the insured.

You may freely reprint this article provided the author's biography
remains intact:

About the Author

John Mussi is the founder of Direct Online Loans who help UK homeowners
find the best available loans via the directonlineloans.co.uk website.

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