Life Insurance Glossary of Terms and Definitions
When you compare term life insurance rate quotes online, you will discover a new set of terms that you may not understand. There is a lot of jargon to cut through to buy term life insurance that fits your needs and budget. Efinancial is here to help. We have put together this handy life insurance glossary to help you understand all of the terminology that you will encounter.
If you have any questions, you can contact us at 1-866-765-4296 or you can visit our Life Insurance E-Learning Center for more information on a variety of topics.
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Annual Premium - The Annual Premium is one of the four modes of premium you can select to pay your policy. Many of the insurance companies will give you a discount for paying your policy annually.
Annuity - Payment of a fixed sum of money to a specified person at regular intervals.
ART (Annually Renewable Term) - This is a term policy where the premium increases a little bit every year and the coverage stays the same.
Beneficiary - This is the entity that life insurance proceeds are passed to when an insured dies. This can be a person, trust, or estate.
Bequest - An old legal term for a will provision leaving personal property to a specified person or organization. Also known as a "gift."
Contingent Beneficiary - This is the entity that a life insurance benefit would pay to if the primary beneficiary deceased before the insured.
Contestability Period - In most cases the life insurance company has two years to find any material misrepresentations in a contract.
Conditional Receipt - This allows you to bind your life insurance coverage by submitting your first two months premiums with your life insurance application and medical exam.
Cash Surrender Value - The amount of money you can receive if you surrender your life insurance policy or annuity. If there is a policy loan, the cash surrender value is the difference between the cash value printed in the policy and the loan value to pay the premiums.
Death Taxes - Taxes levied on the property of a person who died. Federal death taxes are called "Estate Taxes." State death taxes (if any) go by various names, including "inheritance tax."
Evidence of Insurability - This is proof that you are an acceptable risk. You have to meet the standards of the insurer regarding age, health, occupation and such other standards as the insurer feels necessary to be eligible for coverage.
Final Beneficiaries - People or institutions designated to receive life estate trust property outright upon the death of the life beneficiary.
Generation Skipping Trust - Estate Tax savings trust where the principal left in trust is for grandchildren, with one's children only to receive the income from the trust.
Gift Taxes - Taxes levied by governments on gifts made during a person's lifetime.
Heirs - Persons who are entitled by law to inherit one's estate if you don't leave a will or other device to pass property at your death.
Irrevocable Trust - A type of trust that once established cannot be changed.
Joint Tenancy - Two or more people own property as joint tenants, and one of the owners dies, the other owners will automatically become owners of the deceased owner's share.
Living Trusts - A trust set up while a person is alive and which remains under the control of that person until death.
Net Taxable Estate - The value of all your property at death less all encumbrances and your other liabilities.
Ongoing Trust - A trust that is designed to be irrevocable and be operational for an extended amount of time.
Premium - The payments you make on a life insurance contract. Premiums can be paid monthly, quarterly, semi-annually, or annually.
Permanent Life Insurance - A life insurance contract that is designed to go to age 100. These policies build cash value.
Right of Survivorship - The right of a surviving joint tenant to take ownership of a deceased joint tenant's share of the property.
Suicide Clause - Says that if you commit suicide after being insured for less than two years, your beneficiaries will receive only a refund of the premiums that were paid.
Surrender - You surrender a life insurance policy when you either let it lapse or tell the company that you want to drop it. If a policy has a cash surrender value, you can receive such value in cash minus any penalties if you return the policy to the company with a written request.
Term Life Insurance - Insurance coverage that has no cash value and is designed for a specified period of time such as 5,10,15,20,25, or 30 years.
Will - A legal document where a person states various binding intentions about what he or she wants done with his or her property after death.