Insurance Glossary
Definitions for the most common insurance terms.

Beneficiary

The individual or organization to whom insurance proceeds are made payable.

Coverage

Single Life: one coverage for one life.
Joint Last-to-Die: one coverage for two lives with the benefit payable when the last person dies. Joint First-to-Die: one coverage for two lives with the benefit payable when the first person dies, usually with the second person as the beneficiary of those funds.
Multi-Life: one policy for two or more Single Life coverage with the ability to have one policy with one fee for simple management. 

Critical Illness (CI) Insurance

This insurance provides a benefit paid in a lump sum once the insured is diagnosed with one of a specified group of critical illnesses (such as cancer, stroke, or heart attack). Proceeds can be used as desired - pay off a mortgage or other debts; allow a spouse or family member to take a leave of absence from work; fund advanced treatments or therapies. Helps to preserve capital by avoiding the premature withdrawal of savings to pay for costs associated with surviving an illness that are not covered by government health care. 

Disability Insurance

Pays a monthly benefit that replaces a portion of earned income when the insured is unable to work due to an illness or accident. Most employers provide group coverage, but a personal policy can complement that coverage and address any gaps.

Long-term Care Insurance

Provides the service and support necessary to maintain day-to-day care should a chronic illness or cognitive impairment keep the policyholder from being able to take care of themselves.

Term Life Insurance

A policy that protects the insured for a specified period of time, that usually expires at age 85. It is the option with the lowest cost. Different lengths of terms are available. It is often renewable for a like period, usually at a higher cost, and is ideal for temporary liabilities such as mortgages and business obligations. 

Term to 100 Life Insurance

A policy that offers permanent coverage until death or age 100. Premiums are guaranteed and remain level for the life of the contract. Premium payments end at age 100 but coverage remains in effect until death. This type of policy does not have any cash value or tax-deferred growth opportunities, but does offer lifetime coverage.

Underwriting

The process by which an insurance company evaluates the risk of providing coverage to a particular individual.

Universal Life Insurance (UL)

A policy that provides permanent life insurance coverage with an investment component. Allows assets to grow on a tax-deferred basis and provides the ability to pay down your coverage within a few short years, enhancing your estate. The original death benefit and the investment account value are paid out tax-free to your beneficiaries when you die.

Whole Life Insurance

Although less flexible than a typical UL policy and investment decisions are made by the insurance company, a whole life insurance policy accumulates a cash value and offers a guaranteed death benefit. Participating Whole Life (PAR) insurance is eligible to receive dividends, which can be applied in a variety of ways to increase coverage or accumulate wealth.

 

 

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