An optional provision in a life insurance policy
that allows a specified percentage of the death
benefit to be paid prior to the insured's death, if
a doctor certifies that the insured's life
expectancy is limited (usually 12 months or less).
A benefit from a life insurance policy that is paid
when an insured's death is the direct result of an
accident and has occurred within a certain period of
time following the accident.
The cash accumulation component of an annuity,
universal life insurance policy or variable life
insurance policy. The accumulation value reflects
premiums received, withdrawals made, expenses
charged, cost of insurance deducted and interest
credited.
The insured's age at the time coverage takes effect.
Insurance plans typically define issue age as either
the age at the insured's last birthday or nearest
birthday.
An authorized representative of an insurance company
who solicits and services insurance contracts. Also
known as an Associate.
The percentages of each premium payment to be
invested in the investment options that you have
requested. You may at any time change the investment
options into which future premiums you pay will be
invested. Your allocation for each option must be a
whole percentage and all allocations must total
100%.
The individual whose lifetime is used to calculate
the pay period of a life annuity.
To select a settlement option beginning periodic
payments from an annuity contract.
A contract issued by an insurance company where
guaranteed or variable periodic payments begin at a
specified time.
The date when an annuity contract begins to make
periodic benefit payments; the beginning of the
payout period.
A written form provided by an insurance company that
is typically completed by the insurer's agent and,
in the case of most life insurance policies, also by
its medical examiner. The form provides information
about the physical condition, occupation and
avocation of the proposed insured. The policy
application is signed by the applicant (typically,
but not always, the insured) and becomes a part of
the information an insurance company considers when
deciding whether or not, and on what terms and
conditions, a policy should be issued.
The person or party who receives a transferred right
when a life insurance policy is assigned. See
Assignment.
The act of transferring all or part of one's rights
and benefits in a life insurance policy or annuity
contract from an assignor (typically the policy
owner) to an assignee.
See Agent.
The insured's age on the policy date plus the number
of full years since the policy date.
An optional policy in a universal life contract that
provides scheduled increases in face amount based on
a designated percentage, beginning in a designated
policy year. This option must be applied for at the
time of issue of the base policy. You may be charged
an additional premium.
If invoked, an option that allows the insurer to
automatically borrow money from a policy's cash or
accumulation value to pay any premium in default at
the end of a grace period in order to keep a policy
from lapsing.
If operative, an option that allows the insurer to
automatically withdraw money from a policy’s
accumulation value to pay a due premium. The option
is available only for certain Excess Interest Whole
Life plans, and is limited to the excess values
only. Excess values are those in excess of the
guaranteed cash values.
A provision in some annuity contracts whereby, if
the interest rate being credited to the annuity fund
ever falls below a specified rate, the policyholder
may withdraw the initial premium amount paid without
a surrender charge.
An arrangement by which a policy owner allows a bank
to withdraw money from his or her account on a
scheduled basis and transfer the money to an
insurance company to be applied as payment to a
policy. Also known as an Electronic Funds Transfer.
The individuals or entities designated to receive
the death benefits from a life insurance policy or
annuity contract.
The individual(s) designated to receive a death
benefit in the event the primary beneficiary(ies)
is/are no longer living at the time the insured or
annuitant dies.
The beneficiary(ies) specially designated by the
owner as the first in priority to receive policy or
contract proceeds.
An individual who acts as an intermediary between a
buyer and seller, usually charging a commission.
Also, the insurance sales representative who, on
behalf of his or her clients, solicits in the
insurance market and generally sells various kinds
of insurance for several companies.
A business entity licensed and registered with the
Securities and Exchange Commission (SEC) and the
Financial Industry Regulatory Authority ("FINRA"),
www.finra.org. A broker-dealer has the legal
right to offer securities products to the public. An
agent selling variable life, variable annuity
products and other securities, such as mutual funds,
must be registered with a broker-dealer.
An agreement in which either a business or its
surviving shareholder owners (or both) will purchase
the shares or interests owned by a deceased or
retiring shareholder owner at a value or formula
previously agreed upon by the parties and stipulated
in the agreement.
Activity related to loan interest charged or
reversed for a policy loan. It is the interest
charged for a new loan, or for the interest added to
the loan for each policy anniversary. It is the
unearned interest reversed whenever the loan is paid
off or a loan payment is applied.
The amount available to a policy owner when a life
insurance policy is terminated for a reason other
than the insured's death.
An optional policy rider that provides level term
insurance on children of the primary insured.
The act of the owner of a life insurance policy or
an annuity contract transferring certain rights to
another party as security for a debt, usually a
temporary assignment. Under a collateral assignment,
the creditor is entitled to be reimbursed only to
the extent that "his interest may appear," i.e.,
policy or contract proceeds will be payable only for
the amount owed by the policy owner to the creditor
at that time. Any death benefit or cash surrender in
excess of the debt owed by the policy owner to the
creditor is paid to the policy's or contract's
beneficiary. A collateral assignment may also place
restrictions or limitations on life insurance policy
loans.
A situation in which the insured and the beneficiary
appear to die simultaneously with no clear evidence
of who died first.
A clause sometimes added to a life insurance policy
that provides a means for the insurer to distribute
the proceeds of the policy in the event of a COMMON
DISASTER.
A provision in a life insurance policy that states
the time (called the contestable period) during
which the policy may be contested or voided by the
insurer based on misrepresentations contained in the
application or medical examination. By law, the
maximum contestable period is two years.
A person or entity designated to receive the policy
proceeds if the Primary Beneficiary predeceases the
Insured.
The basic written agreement between the insurer and
the policy owner or contract owner (sometimes
referred to as "contract holder").
A policy may contain a provision providing that
under certain circumstances the policy may be
exchanged for another life insurance policy,
typically without further underwriting requirements.
For instance, term insurance can be converted to
whole life or, in some cases, another form of
permanent life insurance.
A term used to describe a policy that contains a
conversion provision, typically the right under
certain circumstances to convert a term life to a
permanent life insurance policy.
A universal life or variable life insurance policy
contract provision; the "cost of insurance" is the
amount deducted monthly from the accumulation value
to cover the pure insurance protection provided by
the policy. The amount deducted is calculated based
on a number of factors such as age, premium class
and net amount at risk.
The accumulated totals for the pure cost of
insurance for the periods indicated.
Maximum amount payable for each Insured as stated in
the Policy Schedule, subject to applicable policy
limitations and reductions. Typically, coverage on
an Insured terminates after 100% of the Critical
Illness Maximum Benefit Amount has been paid for
that Insured.
The effective date of the policy or contract as
issued by the insurer.
The amount paid to the beneficiary upon the death of
the insured regardless of cause.
The method by which the death benefit payable is
calculated for a Universal Life or Variable
Universal Life insurance policy. For level, the
death benefit is the face amount of the policy
reduced by the existing loan, if present. For
increasing , the death benefit is the face amount
plus the cash value, reduced by the existing loan,
if present.
The notification to an insurance company of the
insured's death and request for payment of policy
proceeds according to the terms of the policy.
Percentages representing the portion of required
Policy deductions that will be taken from the
identified investment option. You may designate the
investment options and the portion (as a percentage)
from which we deduct all monthly charges and any
applicable surrender charges.
An annuity in which periodic benefit payments do not
begin until after a specified number of years or the
annuitant reaches a specific age.
The amount of an insurer's surplus that is available
for distribution to the owners of participating
policies. The dividend results from actual
mortality, interest and expenses that were more
favorable than expected when premiums were set.
An arrangement by which a policy owner allows a bank
to withdraw money from his or her account on a
scheduled basis and transfer the money to an
insurance company to be applied as payment to a
policy. Also known as a Bank Draft.
The point in time when a life insurance policy's
cash value equals the face amount.
Proof of a person's physical condition, occupation,
or other factors, utilized by an insurance company
to determine the acceptability of the applicant for
insurance.
The difference (always zero or positive) between the
rate of interest an insurer actually pays and the
guaranteed amount to be paid.
The amount expected to be received by an annuitant
under an annuity contract, based on the periodic
payment and the annuitant's life expectancy or the
guaranteed number of payments, as calculated when
benefits begin. The expected return is utilized to
calculate federal income tax of interest received in
each annuity payment.
A monthly charge paid to an insurance company based
on various characteristics of the insured, such as
age. Charges are defined for a specified period of
time as provided in the life insurance policy.
The amount stated on the insurance policy that will
be paid in the event of the death of the insured or
at the policy's maturity, whichever occurs first.
The face amount does not include additional amounts
which may be payable under accidental death or other
special provisions or amounts acquired through the
application of policy dividends, if any.
Payments made in a specified amount that will
completely exhaust a principal sum over a specified
time period.
An annuity that guarantees a minimum rate of
interest during any accumulation period and provides
a guaranteed periodic payment.
An annuity that allows additional payments after the
initial funding when the payout begins after a
specified number of years.
A provision in a life insurance policy or annuity
contract that gives the policy owner or contract
owner a stated amount of time to review a new policy
or contract after issuance and receipt. The policy
or contract can be returned and voided within this
time frame for a refund of all premiums paid; for
life insurance policies, cancellation of coverage is
effective from date of issue.
As provided for under a policy, the time period
following a monthly anniversary during which a life
insurance policy will continue in force while the
net cash surrender value is not sufficient to cover
the monthly expense charge then due.
A rider to a life insurance policy that gives the
policy owner the right to purchase additional
insurance on the insured of the same type as
provided in the original policy. The additional
insurance amount, based on terms outlined in the
rider, can be purchased at specified ages and face
amounts without providing new evidence of
insurability.
Each policy or contract contains a minimum
guaranteed interest rate. The current interest rate
may be greater than or equal to the guaranteed
interest rate. Interest earned over and above the
guaranteed interest rate is the excess interest. The
total amount of interest earned on a policy or
contract is the sum of the guaranteed and excess
interest amounts.
An annuity that begins payments within 12 months of
the purchase date. An immediate annuity usually
makes a payment at the end of each period of
payment. The interval may be monthly, quarterly,
semiannually or annually.
An annuity, available as a retirement account, to
someone who is employed. IRAs receive favorable tax
status under Section 408 of the Internal Revenue
Code. IRAs are sometimes referred to as Individual
Retirement Accounts.
A reasonable economic expectation held by an
individual or entity in the continuance of another
person's life, or a reasonable expectation of
economic loss by an individual or entity resulting
from a person's death. The beneficiary must have a
reasonable expectation of economic loss by an
individual or entity resulting from a person's
death. If there is no insurable interest, a policy
cannot be written.
The person whose life is covered by an insurance
policy.
This is the current interest rate credited to the
policy or contract.
The guaranteed minimum annual interest rate used in
calculating items such as policy reserves from year
to year. Also the guaranteed factor used to
calculate interest payable on proceeds held under a
settlement option. This term also refers to the
minimum rate credited each year to any cash values.
The current rate at which interest is charged for a
life insurance policy loan.
A beneficiary designation that cannot be changed
without the beneficiary's consent.
The insured's age at the time coverage takes effect.
Insurance plans typically define issue age as either
the age at the insured's last birthday or nearest
birthday.
An annuity payable to two or more annuitants until
one of the two annuitants dies. The joint annuity
may provide for continuation of payment or a reduced
payment during the life of the surviving annuitant.
The termination of an insurance policy resulting
from nonpayment of premiums or, in the case of
variable life and universal life insurance policies,
the depletion of cash value below the amount needed
to keep the policy in force. Under certain
circumstances, coverage might continue under a
settlement option.
An annuity that pays a fixed income during the
annuitant's lifetime. Payments cease at the
annuitant's death, even if the annuity has not yet
returned an amount equal to the premiums paid.
The average number of years a person is expected to
live. Life expectancy is projected from a mortality
table and is used to calculate benefit payouts.
Income paid for the life of the annuitant,
guaranteeing payment for a certain number of years
if the annuitant does not survive. In the event the
annuitant dies within the certain period, the
beneficiary receives benefits for the remainder of
the designated period.
A sum granted by a life insurance company to the
owner of a life insurance policy, secured by the
policy's cash surrender value.
The total amount of policy loans, including both
principal and interest accrued.
A policy provision that grants the owner of a life
insurance policy the right to take a loan from the
insurance company secured by the policy's cash
surrender value.
For life insurance policies, the maturity date is
the end of the contract term.
Your Policy's cash surrender value less the loan
interest that will be payable on your loan to your
next Policy anniversary.
An independent entity that collects and stores
medical data on life and health insurance
applicants. The information is exchanged among
member insurance companies upon written
authorization from the insured. Its purpose is to
guard against fraud and concealment by helping
insurers discover pertinent, yet undisclosed, health
facts.
The act of giving the wrong age for oneself on an
insurance application or for a beneficiary who is to
receive benefits on a basis involving a life
contingency. In most life insurance policies, the
policy sets forth the action to be taken if a
misstatement of age is discovered after the policy
has been issued. Typically, the Face Amount is
adjusted to reflect the amount of coverage (face
amount) that would have been purchased if the
correct age had been used on an issue date.
The same day as the policy date for each succeeding
month.
The difference between the face amount of a life
insurance policy and the policy's accumulation or
cash value.
The cash surrender value less any outstanding loans
and/or surrender charges.
The current interest rate for new premium payments
received.
The values or benefits in a life insurance policy
that the policy owner does not forfeit, even if he
or she chooses to discontinue payment of premiums.
They usually include cash value, reduced paid-up
insurance and extended term insurance values.
An optional policy rider that provides convertible
term insurance to a spouse or an immediate family
member of the primary insured. You may be charged an
additional premium.
An individual or entity that owns an insurance
policy. The owner might be the insured on the
policy, the beneficiary or another party. Generally,
the policy owner pays the policy's premium and is
the only one who is permitted to make changes to a
policy, such as to change the beneficiary, withdraw
cash values, or make loans on the policy.
The cash value of dividends earned that were used to
purchase paid-up additional insurance.
A life insurance policy in which the policy can be
created with a dividend payable from the life
insurance company's surplus (profits). Other policy
provisions are substantially similar to whole life
insurance. Dividend payments are not guaranteed and
will depend on whether the insurance company
declares a dividend.
The person named to receive annuity payments from an
annuity contract.
The person making premium payments on a policy or
contract. If the payor is not also the owner, he or
she may not be entitled to exercise the rights and
provisions of the policy or contract.
An annuity with a predetermined guaranteed number of
payments, at equal intervals made over a specified
period. The payments are payable whether or not the
annuitant dies prior to the end of the stipulated
period.
Literally "by branches." Distribution of property
between or among two or more beneficiaries with the
provision that if one dies before the insured, the
beneficiary's heirs shall have the beneficiary's
full share distributed among them. Contrast with Per
Capita.
The premium designated at the time of application as
the amount planned to be paid at specific intervals
until the maturity date.
An anniversary of the policy issue date.
The basic written agreement between the insurer and
the policy owner or contract owner. The policy or
contract, together with the application and all
endorsements and attached papers, constitutes the
entire contract of insurance. A policy is usually
life insurance; a contract is usually an annuity.
The contract number assigned to the policy
displayed. Generally, this policy number will appear
on the data page of your insurance contract.
The date on which coverage becomes effective, as
shown on the policy date page.
An individual or entity that owns an insurance
policy or annuity contract. The policy
owner/contract owner may be the insured or the
beneficiary. The policy owner pays the premium and
is typically the only individual or entity who is
permitted to make changes to a policy or contract,
such as to change the beneficiary, withdraw cash
values, or make loans on the policy. He or she may,
or may not, also be the insured on the policy. Such
rights may be limited in the event the policy has a
collateral assignment.
The current status of the policy. For a more
complete explanation of the policy's status, please
click on 'Help/FAQ' (Frequently Asked Questions) on
the left-hand side of this page.
The year commencing with the policy date and ending
on the day before the first policy anniversary, or
any following year commencing with a policy
anniversary and ending on the day before the next
policy anniversary.
Payments to the insurance company to purchase a life
insurance policy and to keep it in force.
The frequency with which the payments are made, as
selected by the policy owner. Typical premium modes
available are annual, semiannual, quarterly or
monthly.
A person or entity designated to receive the policy
proceeds in the event of the insured's death.
An optional policy rider that provides level term
insurance on the primary insured. When the primary
insured rider is combined with base coverage, it can
reduce premium costs for the amount of coverage as
compared to the cost of permanent plan of the same
face amount. For the same premium, it can improve
policy performance on universal life or variable
life insurance policies.
A rated policy is one issued on a substandard risk
with higher-than-standard premiums.
A policy provision defining a life insurance policy
owner's right to reinstate a lapsed policy within a
certain time after lapse, as well as the conditions
necessary for reinstatement which may include
evidence of insurability and/or payment of back
premiums and interest. The right is usually
forfeited once a policy has been surrendered for its
cash surrender value.
A written agreement attached to a life insurance
policy or annuity contract that limits or expands
the policy's or contract's terms or coverage. Riders
may increase the premium you pay to the insurance
company. Examples of riders include:
- Accelerated death benefit - An optional
provision in a life insurance policy that
provides for a specified percentage of the death
benefit to be paid prior to the insured's death
in the event a doctor certifies that the
insured's life expectancy is limited (usually 12
months or less).
- Accidental death benefit - A benefit that
provides coverage for loss of life due to an
accident that was the direct cause of death and
for a death that results within a certain period
of time following the accident.
- Automatic increase rider - An optional
policy rider in a universal life insurance
policy that provides scheduled increases in face
amount based on a designated percentage,
beginning in a designated policy year. This
option must be applied for at the time of issue
of the base policy.
- Children's term rider (or children's
insurance benefit) - An optional policy rider
that provides level term insurance on children
or the lives of the primary insured.
- Guaranteed insurability option - An
amendment to a life insurance policy that gives
the policy owner the right to purchase
additional insurance of the same type as
provided in the original policy. The additional
insurance amount, based on terms outlined in the
policy, can be purchased at specified ages and
rates without providing new evidence of
insurability.
- Other insured rider - An optional policy
rider that provides convertible term insurance
for a spouse or immediate family member of the
primary insured.
- Primary insured rider - An optional policy
rider that provides level term insurance on the
primary insured. When the Primary Insured Rider
is combined with base coverage, it can reduce
premium costs for the amount of coverage as
compared to the cost of a permanent life
insurance plan of the same face amount. For the
same premium, it can improve policy performance
on universal life or variable life insurance
policies.
- Waiver of monthly deduction - An optional
life insurance policy rider that waives the
monthly Cost of Insurance charges on a universal
life or variable universal life policy for the
length of a qualified disability as outlined in
the policy contract.
- Waiver of Specified Premium-An optional life
insurance policy rider that waives a specified
premium on a traditional product for the length
of a qualified disability as outlined in the
policy.
An annuity purchased with a single, lump-sum payment
that earns interest for a period of years before the
payment period begins, and which is taxed only when
distributions are taken.
A life insurance policy provision whereby if the
insured commits suicide within a specified period,
usually one or two years after date of issue, the
company is not liable to pay the face amount of
coverage; instead, liability is limited to a return
of premiums paid.
The policy owner's right to terminate policy
coverage in exchange for the policy's cash surrender
value or other equivalent non-forfeiture values.
As provided in the provisions of a life insurance
policy or annuity contract, surrender charges are
charges an insurance company may deduct if the owner
surrenders a life insurance policy or annuity
contract for the cash or accumulation value.
Companies may also deduct this charge if the owner
borrows money on his or her life insurance policy,
if the policy lapses for nonpayment, or if the
policy owner elects to decrease the face amount of
the policy.
A plan of insurance that covers the insured for a
specified period of time (term) and not for his or
her entire life. The policy pays a death benefit
only if the insured dies during the term and if the
policy has not lapsed for nonpayment of the premiums
due.
The total amount of all premium payments applied to
the policy, less any payments reversed.
The risk class for a life insurance policy, as
determined at the time policy is issued, or after
subsequent underwriting approval.
A flexible-premium, current-assumption, adjustable
death benefit policy. Similar to traditional life
insurance policies, universal life pays a death
benefit and accumulates cash value; however, unlike
traditional life insurance policies, a universal
life insurance policy allows the policy owner to
adjust the death benefit and to vary the amount
and/or frequency of premium payments.
A date in which the New York Stock Exchange is open
for business when a value or credit is given for
funds.
A period in which unit values are determined for
each variable investment option at the close of each
business day, usually 3:00 PM Central Time. A
business day is any day that the company and the New
York Stock Exchange are open for business.
A life insurance policy that provides flexible
premiums and death benefits, as well as the
opportunity to build cash value in separate
investment options. The cash surrender value is not
guaranteed, but will fluctuate with the market value
of the separate account investment portfolio. The
policy owner bears the risk of poor fund
performance.
An optional life insurance policy rider that waives
the monthly cost of insurance charges on a universal
life or variable life policy for the length of a
qualified disability as outlined in the policy.
An optional life insurance policy rider that waives
a specified premium on a traditional product for the
length of a qualified disability as outlined in the
policy.
A plan of insurance that covers the insured for
life, with level premiums payable for his or her
entire lifetime.