Glossary - Life Cover
1. Beneficiary: The person(s) or entity (like a trust) that the policyholder designates to receive the life insurance payout (death benefit) upon their death.
2. Death Benefit: The money that the insurance company pays to the beneficiary(ies) upon the death of the insured person.
3. Policyholder/Insured: The person whose life is covered by the insurance policy. If they die during the term of the policy, the death benefit is paid out to the beneficiary.
4. Premium: The amount that the policyholder pays regularly (monthly, quarterly, semi-annually, or annually) to keep the insurance policy in force.
5. Term: The period during which the life insurance policy is effective. If the policyholder dies during this period, the death benefit is paid out to the beneficiary.
6. Whole Life Insurance: A type of life insurance that provides coverage for the entire lifetime of the policyholder and includes a cash value component.
7. Cash Value: A savings component of a whole life insurance policy that grows over time and can be borrowed against or used to pay premiums.
8. Underwriting: The process used by insurance companies to evaluate the risk of insuring a potential policyholder and to calculate premium amounts.
9. Policy Rider: An addition or amendment to an insurance policy that provides benefits not included in the standard policy, often for an additional premium.
10. Level Term Insurance: A type of term life insurance where the death benefit remains the same throughout the term of the policy.
11. Decreasing Term Insurance: A type of term life insurance where the death benefit decreases over the term of the policy, often used to cover a debt that reduces over time, like a mortgage.
12. Trust: A legal arrangement in which assets, including a life insurance policy, are held by a third party (the trustee) for the benefit of the designated beneficiary.
13. Inheritance Tax: A tax that may be levied on the estate of a deceased person before assets are distributed to heirs.
14. Estate: The total assets, including property, money, and personal belongings, of a person who has died.
15. Convertible Term Insurance: A term life policy that includes the option to convert the policy to a whole life or permanent insurance policy without additional underwriting.
16. Joint Life Insurance: A single policy that insures two lives, usually those of spouses. The policy may pay out upon the first death (first-to-die) or upon the second death (second-to-die).
Please note that some of these terms may be understood or used differently depending on your location and the insurance company. Always read the terms and conditions of a policy, and if in doubt, ask the insurer for clarification.
As with all insurance policies, conditions and exclusions will apply