Life Insurance Terms: “A” - “C”
Accelerated Death Benefit: A policy stipulation or rider that lets you gather a part of the death benefit prior to your death. If you have an incurable illness the policy will advance you a particular portion of your death benefit to compensate medical bills or other expenditures. The quantity is subtracted from the death benefit your beneficiary is the recipient of. Some policies also authorize you to utilize the death benefit to fund long-term care (nursing home) costs. Also referred to as "living need."
Accidental Death: A condition or rider that guarantees to disburse more (typically double) if you perish in an accident. Also known as "double indemnity."
Actuary: A arithmetic authority who applies probability theory to the industry of life insurance and is accountable for calculating premiums, policy reserves, and other principles.
Administrative Fee: Charges a number of policies subtract from cash value accrual annually. Administrative fees are frequently highest in the first initial few years subsequent to purchasing the policy.
Agent: An individual licensed by the state to stand for an insurance company. An agent must be present at least 40 hours of insurance classes to acquire a license and take continuing education courses to retain the license.
Annuity: A contract bought from an insurance company, generally in order to gather money that can be used subsequent to retirement. After a particular age, the insurance company guarantees to pay you monthly (annuity) payments. The company is assuming the risk that you could live longer than anticipated, meaning the company would compensate you more than you had actually invested.
Annuitant: An individual who collects an income advantage from an annuity.
Assignment: Giving privileges under the insurance policy to another individual. You can allocate beneficiary rights or policy possession.
Automatic Premium Loan: A stipulation in a policy that permits the insurance company to utilize funds from your cash worth to pay premiums.
Attained Age: The precise age you have reached at any specified time.
Beneficiary: The individual you delegate to be rewarded a death benefit when you die. A policy might have one or more beneficiaries.
Burial Policy: A policy with a moderately small death benefit, projected to cover your funeral and burial expenditures.
Cash Value: The “savings” part of a life policy. When your premium expenses are more than the price of insurance, the surplus goes into a cash value account and gathers interest.
Certificate: The proof of coverage received by people insured by a group life insurance policy.
Churn: Insurance agents "churn" their industry when they repetitively influence their customers to change existing policies with new ones. An agent might be enticed to churn due to commissions being higher in the initial year of the policy or if the agent has started working for a new insurance company.
CLU: Charted Life Underwriter. A label that agents and other insurance experts can accomplish after taking a sequence of classes and passing examinations. An agent with CLU following his or her name is supposed to be very knowledgeable about the subject of life insurance.
Commission: The segment of your premium payments that goes to the insurance agent who sold the policy. Agents routinely are given a percentage of each premium payment made. The percentage may be at its highest in the first year you procure the policy.
Commissioner: The designation that many states give to the administrator in charge of regulating insurance companies
Contestable Period: In some states, an insurance company can dispute a life insurance policy for the duration of the initial two years following issuance. Throughout the contestable period, a life insurance company can terminate the policy (if you are still alive) or decline to pay a death benefit because it ascertains your responses on the original application were deceptive or false.
Conversion: Varying a term life policy to a different form of life insurance. This can be performed only when the policy has been expressed as convertible.
Cost of Insurance: The sum a company calculates that is required to insure your life. While your insurance premiums may never change, the cost of insurance goes up every year because you are unavoidably getting closer to death. Annually an escalating sum of your premium payment of a cash value policy is utilized to compensate for insurance - and a smaller amount goes to cash value.
Credit Life: A policy projected to pay off a debt (loan for an automobile, furnishings, appliances, etc.) if happen to die before the loan is paid off.
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