Life Insurance Tools

Our goal is to create savvy life insurance consumers that are able to get the policy they want while staying within their budget. To do this we've pulled together several life insurance tools that will help save big money on your term life insurance policy.

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Life Insurance Glossary

The following are many of the commonly used life insurance terms that you need to know.

Accelerated Benefits :

Benefit Advance Riders added to many Term Insurance Policies. They advance of a portion of Term Insurance policy death proceeds prior to death. The insured must be terminally ill or confined to a nursing home. The Advanced Insurance Benefit is paid under certain specific circumstances. Eligibility requirements along with the calculation of Insurance Benefit amounts set forth in the Life Insurance policy and be discent each Life Insurance Company

Accidental Death Benefit Rider :

All Accidental Death Benefit Rider pays another Life Insurance Benefit in addition to the basic face amount of the Life Insurance Policy double only if death occurs as a result of an accident under the terms of the policy.

Annuity :

Is an insurance policy that either accumulates premium deposits for payment of a future life income ( Deferred Annuity ), or an Insurance Policy that provides immediate income guaranteed by the Life Insurance Company for a specified period of time. ( Immediate Annuity )

Applicant :

The individual or entity that applies for a Life Insurance Policy. Life Insurance Policies can be applied for as Individual Insurance Policies, a Trust Policy or a Business Policy.

Application :

The entire life insurance application forms that are completed by an applicant for Life Insurance. They include questions about health, family history, occupation, hazardous sports, motor vehicle record, income and more, which all become part of the policy.

Attained age conversion :

The right to exchange your Term Policy for a Permanent Policy offered by the same company. The Insurance premium for the new Insurance policy is based on the age of the insured at the conversion date. This Policy feature allows a Policyholder to extend Insurance coverage farther into the future without having to undergo a new underwriting exam. Conversion can be available for a specified number of years after the original term policy is purchased. It also can be limited to a maximum age. Term Life policies may or may not offer a conversion feature. Ask the life insurance company or agent for the rules.

Back dating :

Insurance Companies can allow a Life Insurance Applicant to request a Term policy is effective at date earlier than their application at a younger age date to get a lower Life insurance premium. The life insurance premium may be based on last birthday, or nearest birthday. The typical length of time that a policy can be back dated is six months in most states. A policy back dated to save age requires all premium paid during the back dated period when the policy is issued. The value of back dating a policy to save a younger age, should consider how much in back premiums would have to be paid compared to the savings in premium over the life of the policy.

Beneficiary :

The individual or entity that will receive the death benefit when the insured dies.

Cash surrender value :

Is the specified amount that a policy owner may receive if they surrender (cancel) a permanent cash value life insurance policy (Universal Life Insurance or Whole Life Insurance*. The amount payable is the cash surrender value, usually reduced by outstanding policy loans, loan interest, surrender changes or any prior withdrawals taken from the policy.

Conditional Receipt :

An applicant may want to submit the initial premium payment with the application and get limited coverage before the policy is issued. The conditional receipt, usually is found as part of the life insurance application. Sets forth the insurance company's terms and conditions, they will pay to a death benefit. Life Insurance Companies limit the maximum amount of coverage under a conditional receipt. Specific qualifications must be met. The amount may be lower than that applied for. Carefully read the conditional receipt page in the application.

Contestable period :

The life insurance company can contest a death claim for a specified period of time after the policy is in force for misrepresentations and other reasons. The contestable period is stated in the policy and is subject-to state regulations. The most common contestable period is two years or as set forth in the policy.

Death benefit :

A stated amount paid (Fare Amount) by the insurance company to the beneficiary when the person insured under the policy dies. This can include the original or basic policy death benefit, plus dividends, and supplemental benefits. The total of all these benefits will be reduced by any outstanding policy loans, loan interest, prior policy withdrawals, or benefits paid under an accelerated benefit rider. Family benefit rider :

Family benefit rider or spousal or child rider. A supplemental death benefit on a spouse and/or on dependent children is added. When considering a policy for a spouse, also consider two separate term policies from the same company, some companies offer a "spousal discount" when both apply and can save more money than a family benefit rider.

Free look :

Your state requires that an insurance company provide every new policy owner a free look period. During time, a policy owner may return the new policy to the life insurance company for cancellation for any reason or if they changed their mind. If the premium was previously paid, they receive a full refund. A free look time period is set forth in the policy.

Fraud :

Providing false information to an insurance company when applying for insurance is against that law. It is a reason for the company to contest in the 2 year period.

Lapse :

Premiums are not paid on time causing discontinued coverage. The insurance company must receive the premium payment within thirty days of the due date (Grace Period).

Level premium :

A term insurance policy providing a level premium for period ranging from five to thirty years. Policies also offer a rate guarantee for a stated number of years that may or may not extend over the entire level premium period. Be aware that some level premium term policies do not provide a full premium guarantee (A ten year guarantee on a fifteen year level term policy). If available, consider policies that are guaranteed for the entire period.

Life insurance :

A contract between an insurance company and individual in which the company promises to pay a death benefit in the event the insured covered under the policy dies.

Mode of premium payment :

A policy owner can be paid annually, semi-annually, quarterly, monthly, or by automatic monthly bank draft subject to the company.

Non-smoker rate class:

An applicant who has not used any form of tobacco for at least one year prior to applying for insurance, they may qualify for non-smoker rates. Thi s is a substantial cost savings.

Policy :

A written contract between the insurance company and the policy owner. The policy includes a statement of policy benefits and provisions, tables with guarantees of premiums and/or cash values. This is specific language explaining policy benefits and any riders or supplemental benefits. A copy of the application as completed by the insured and/or policy owner is part of the policy. The policy is the official source of definitions for policy benefits, values, limits, options, etc.

Rate class :

Insurance companies quote different rates based by the underwriters evaluating current health, personal history, family history, hazardous activities, occupation, and other factors. "Standard" is a rate class for those in average health. Better than average health applicants who meet additional insurance company criteria may get "preferred class". Preferred class premiums are lower than standard premiums. Some companies offer a "super preferred class" for people in excellent health. Super preferred classes are the most difficult to qualify for but have the lowest rates. Qualifying for a super preferred class, an applicant must not use tobacco, meet the insurance company's height and weight, blood pressure, cholesterol, personal history and family history requirements as determined by the company.

Applicants with a special circumstances medical history, a current medical condition, or a hazardous occupations or sport, can be charged an additional premium to cover a special risk. This added premium is called a rating, or special risk class. A condition or circumstance improving this to reconsider the rating after a specified period of time.

Policy owner :

Is the person or entity that owns the policy. Policy owners can be the insured, may allow at the discretion of family members, a business associates, employers, or a trust. They must have some risk of economic loss (insurable interest) if the insured dies.

Reinstatement :

After a lapse, a policy owner may apply to reinstate the lapsed policy. Reinstatement often requires an application, medical evidence or statement to confirm good health, and payment of back premiums. The insurance company has the right to decline to reinstate a lapsed policy if the former insured has developed health or other problems.

Renewable term policy :

Premiums on a term policy may be level for a limited period of time (twenty or thirty years), policy owners can continue to pay premiums to continue their policy. Many term policies can be renewed up to age 95. Premiums increase annually after the level guarantee ends. They become very expensive. Policy owners whose need for coverage will be longer than the level premium, can consider a term conversion if available. Be aware that a term conversion option may not be available beyond a certain number of years or after a maximum age.

Replacement :

A policy owner who cancels, lapses, reduces, or makes substantial changes in their existing life insurance when buying a new policy, usually is "replacing". States have specific rules regarding the replacement of existing life insurance. Replacement forms or disclosure must be given to the applicant. Many states require a comparison of policy features, benefits, costs, etc. It is unwise to cancel existing insurance until a satisfactory replacement policy has been issued, delivered, and is in force.

Rider :

An additional benefit that may be added to a policy. Popular riders are; waiver of premium for total disability, accidental death benefit, family or child rider, an accelerated benefit rider.

Sales illustration :

The insurance company is illustration of premiums, benefits and values of the proposed policy. Illustrations must comply with state regulations and contain clear disclosure of both guaranteed and non guaranteed features. Life insurance companies now require an applicant sign the illustration and include it with the application for your protection.

Survivor life :

Second To Die insurance. A policy covering two people, often a husband and wife or two business partners. The policy pays a death benefit only on the second death. Usually used as part of a professionally designed estate plan. Survivor life policies are often significantly less than the cost of two identical individual permanent policies.

Suicide provision :

An insured taking their own life within a specified period of time after buying a policy, the life insurance company will not pay a benefit. The provision is effective for the first two years after the policy effective date. Provisions may vary, check the language in the policy.

Term insurance :

Pays a benefit only if the insured dies during a specified period of time. Term is a death benefit plan. Usually offers no cash values. Those needing to get low costlife insurance for a limited time period, term insurance offers the lowest premium.

Underwriting :

The actual process in which the insurance company evaluates the applicant. The company determines if they will offer insurance and at what rate class. The life insurance company evaluates information provided in the applications medical exam, lab results, motor vehicle report, consumer interview /or inspection as well as information from attending physicians.

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