Term Life Insurance Q&A
- Why should I choose BeyondQuotes?
- Which companies do we represent?
- Is BeyondQuotes licensed where I live?
- Is my information confidential?
- Do you only offer rate quotes?
- How do we choose which companies to represent?
- How much Term Life Insurance do I need?
- What are "level" policies?
- What should be the term length?
- Is it worth insuring my spouse on my policy?
- Can you explain the difference between Term and Whole Life plans?
- I suffer form a pre-existing condition. Can I still be insured?
Applying for a Policy
- How do I apply for Term Life Insurance?
- How do I find the best value plan for my needs?
- What is the waiting period between applying and coverage?
Glossary for Insurance
Life insurance companies use some jargons that go above our heads. It is important to understand some basic insurance terms because it will help you take the right decision when you are buying insurance coverage for your family. Here’s the list of most commonly used terms in insurance:
Accidental Death Insurance - Insurance that is paid out if the insured dies in an accident.
Agent - An official from an insurance company who deals in insurance.
Annually Renewable Term - A kind of term life insurance that offers protection on a yearly basis. After a year, the policyholder can get the policy renewed without submitting a proof of insurability. It is also known as yearly renewable term (YRT).
Assignment - The transfer of the possession rights of an insurance policy from one individual to another.
Attained Age - Your present age is the attained age. This is among the major factors that helps the insurance companies decide the premium that you need to shell out for a life policy.
Backdating - A process wherein the original date of a life policy is changed and made before the date of application. Usually, people do this to obtain lower premiums. According to the State laws, the upper limit for backdating a policy is six months.
Beneficiary - The nominee or the person entitled for the death claim after the death of the insured.
Binder - A provisional insurance policy issued till the permanent policy is written. The applicant is given a binder till the time all the formalities for the insurance policy are finished.
Cash Benefits - Money or funds given to the insured when an insurance claim is paid out. The term ‘cash benefits’ is mostly related to Hospital Income programs. Instead of paying the cash benefits to the hospital authorities or the doctor, the insurance company pays the amount directly to the insured.
Cash Value - The total amount in cash build up as savings in whole life policy.
Claim – Payment to be made by an insurance company to the beneficiary of the insurance policy.
Conditional Receipt - A receipt provided to the owner of the policy when he shells out premium at the time of submitting his application. This receipt is a proof that the insurance company has approved the application.
Contestable Clause - A proviso mentioned in the insurance policy according to which an insurer can contest or cancel the insurance policy during a time period. Once this period is over, the policy cannot be challenged.
Contingent Beneficiary - Person or persons designated to receive the death claim lest the original beneficiary is no longer alive. These individuals are also known as secondary or tertiary beneficiary.
Coverage - Insurance companies use the word coverage for insurance. It can denote the amount of insurance bought in Dollars, or the kind of loss covered by the insurance company.
Conversion Privilege - Before a policy ends, the insurance company lets the policy holder select a new policy. This way the insurance protection continues. The premiums for the new policy might be based on the attained age or the original age at which the original policy was issued.
Convertible Term - An insurance policy that can be converted into another type without submitting any proof of insurability. Majority of the term life policies can be changed to permanent policies.
Cross-Purchase Plan - An agreement which states that after the demise of the business proprietor, the surviving owners can buy out his interest with the help of the money received from the insurance company.
Death Benefit - Funds given out to the beneficiary by the insurance company when the insured dies.
Decreasing Term Insurance - A type of term life insurance wherein the death benefit keeps on decreasing with time, but the premium amount remains the same.
Double Indemnity - Disbursement of twice the amount of the original benefit. This can happen due to loss in some particular conditions or specified situations.
Evidence of Insurability - Proof of an applicant’s health condition, profession, etc. needed at the time of insurance. It affects approval or rejection of an application.
Exclusions - Risks mentioned in an insurance policy for which benefits will not be disbursed by the insurance company.
Face Amount - The amount of insurance given by the insurance company as per the terms of an insurance agreement. In a life insurance policy, it is the death benefit.
Final Expenses - Money spent upon the demise of a person like funeral or burial costs, existing debts, taxes, and court expenses related to probating the person’s will. These expenses can also include outstanding bills and loans that need to be paid off.
First To Die Insurance - An insurance policy wherein the death benefit is released after the demise of one of the insured. After this, the insured doesn’t get a benefit again. If he wants to avail a benefit he will have to purchase another policy of the same amount.
Fixed Benefit - A death benefit that is not subject to change.
Funeral Expenses - Money spent on things like casket, vault, headstone, grave plot and funeral manager, required for a funeral and burial.
Grace Period - Time period allotted after the due date for an insurance premium. During this period, the policy remains effective and the policy owner doesn’t have to bear any penalty.
Graded Premium Policy - A kind of whole life policy where premiums are low initially and then increase in the first three to five years. It’s intended for those people who wish to have more insurance than they can afford to buy at present.
Guaranteed Term - A type of renewable term insurance which remains in line till the time premiums are paid on a regular basis.
Guaranteed Insurability (Guaranteed Issue) - An agreement, where extra insurance can be bought at different time intervals, without submitting any proof of insurability.
Incontestable Clause - A provision in a policy stating that the policy has been effective for a certain period of time (two or three years) and the insurer will not be able to challenge the statement
included in the application. If an applicant fibs about his health when the life insurance policy is being issued, he will not be able to contest payment if death took place after the time limit mentioned in the incontestable clause.
In Force - Insurance policy on which premium amount is being shelled out or has been fully paid.
Insurability - A person’s present health condition, vulnerability to injury, life expectancy and other risk factors should be known to the insurance company.
Insurance - A service offered by the insurance company or insurer wherein the insured is compensated for the loss according to the terms mentioned in the agreement. To avail this service, a person has to pay regular premiums to the insurance company.
Insurance Policy - A Printed form that acts as an agreement between the insurance company (insurer) and the insured.
Insured - The person who is being given insurance protection is the insured. After the death of this person, the insurance company would pay death benefit or proceeds to the beneficiary.
Insurer - Insurance Company that offers insurance to people, usually by means of an agreement.
Irrevocable Beneficiary - A beneficiary who cannot be changed without his permission.
Increasing Term Insurance - A type of term life insurance wherein the death benefit keeps on increasing with time. This usually happens by paying high premiums.
Lapse - When the policy holder fails to pay the premium within the stipulated time period or grace period, his policy is canceled.
Level Term Insurance - A form of term life insurance where the death benefit and premium amount does not changes from the date when the policy is taken out to the date when it ends.
Life Expectancy - An estimate of the number of years a person will live. This is done with the help of a mortality table.
Life Insurance - A legal contract according to which a specified amount of money is paid to the beneficiary after the death of the insured.
Limited Pay Policy - A whole life policy in which the policy owner has to shell out higher premiums for a certain period of time like 10 or 20 years. After that the owner does not have to pay any premiums for the remaining of his life.
Medical - A document given by a medical practitioner or a physician to an insurer, as a medical proof of insurability of a person.
Misrepresentation - An act of representing, circulating or issuing any estimate that is not true. A statement containing policy terms, proceeds or policy type that is false or manipulated.
Mortality Charge - Charges for getting full insurance coverage from a life insurance policy.
Mortality Rate - The number of deaths in a particular region or a group of people. It is generally quoted as deaths per thousand.
Mortality Table - A table that gives an idea about when a person is likely to die.
Non medical Insurance - A life insurance where medical exam is not needed. It is provided on the grounds of the insured’s health statement.
Occupational Hazard - Risks or dangers involved in certain kind of jobs. This will naturally call for higher premiums.
Original Age - Your age at the time of purchasing the insurance policy.
Ownership - The owner of life insurance policies has full control over his policies. The policy holder may or may not be the one who is insured against death. If he wants, he can transfer ownership through a written request.
Para-Med (Paramedical) Examination - The medical exam that an applicant has to undergo when applying for life insurance.
Para-Med (Paramedical) - A para-med or physician who examines the applicants for life insurance policies. A para-med is employed by the medical chief of the insurance company.
Permanent Life Insurance - A form of life insurance which is generally bought by people who want insurance coverage for a longer duration. It is also known as Whole life insurance.
Policy Holder - The owner of the insurance policy. Most probably he is the one who is insured; however, it is possible that it might be a family member, a partner or an organization.
Premium - A specified amount that is to be paid at regular intervals, so as to keep the insurance policy alive.
Premium Flexibility - The policy owner has the right to change the premium amount that is paid every month in case of Universal life policy.
Primary Beneficiary - The first beneficiary appointed by the insured who will receive the death benefit after his death.
Primary Policy - At one time, you may be covered by more than one insurance policy, but the first one to pay you benefit when you suffer from a loss is your primary policy.
Probate Costs - The costs involved in the processing of a will. Till the time the will is not probated, the assets of the deceased cannot be distributed among the beneficiaries.
Provisions - The conditions included in an insurance policy that elucidate the benefits and terms of an insurance agreement.
Rated - Insurance is offered to the insured at a relatively high price due to a health condition, or injury.
Re-entry Option - An option given to the insured in a renewable term life policy, according to which the owner of the policy can renew his insurance at the end of the term, without providing any proof of insurability.
Reinstatement - A lapsed policy is made effective by getting adequate proof of insurability and disbursing any unpaid premiums.
Renewable Term/Annual Renewable Term - A type of term life insurance that is renewable every year without submitting any proof of insurability.
Replacement - A new policy granted as a substitute of the present one.
Representation - Statements given by the applicants on their application form at the time of buying an insurance policy. It says that whatever information they have included in the form is true.
Revocable Beneficiary - The beneficiary who can be revoked or changed by the policy holder. Majority of the insurance policies are penned with a revocable beneficiary.
Rider - An attachment to an insurance policy which amends its terms by increasing or confining benefits or leaving out some specific conditions from being covered.
Risk - The odds of damage, injury, or any kind of loss.
Secondary Beneficiary - Another beneficiary assigned to accept the death benefit in case the first beneficiary dies before the insured.
Single Premium Policy - A whole life insurance policy for those individuals who intend to procure adequate coverage for once. They don’t have shell out extra premiums and enjoy coverage for the remaining of their lives.
Standard Risk - People who get insurance coverage without paying additional premiums and are free from all kinds of restrictions.
Substandard Risk - Person who is regarded below average or at an impaired insurance risk due to some physical condition, family history of disease, profession, perilous hobbies.
Term Insurance - Insurance coverage that lasts for a specified time period. If the insured lives through the term, the beneficiary is no longer entitled for the benefit. This type of insurance can be for one year, but most of the people prefer to buy it for five to twenty years.
Term - The time period for which a life insurance policy remains valid.
Tertiary Beneficiary - The third beneficiary in life insurance policy who is entitled for the death benefit if the primary and secondary beneficiaries are no longer alive to receive the proceeds after the insured’s death.
Third-Party Owner - The owner of the policy, but he is not the insured party. Most often the policy owner and the insured are the same person. But they can be two different individuals. For instance, if your father bought a life insurance for you, then he is the owner of the policy and you are the insured.
Underwriter - The insurance company receives the premium amounts and takes responsibility for providing coverage to the owner of the policy. Underwriter can also be the insurance agent who sells the insurance policy or an employee of the insurance company who makes a decision whether they should take on a specific risk.
Uninsurable Risk - Individuals who cannot be given insurance protection as the risk element is too much.
Universal Life - A type of life insurance where cash value is built. The policy owner has the freedom to stop paying the premiums (pay out the policy) or carry on paying them for life. The present mortality rates are taken into consideration to formulate these policies.
Variable Life - Benefits of life insurance are connected with the value of assets when they are being paid out. Premium amount might be fixed or can be altered by the owner of the policy.
Waiver of Premium - Proviso in majority of the life insurance policies wherein if the insured remains disabled for up to six months (time period can vary), he is not supposed to pay the premiums anymore.
Whole Life Insurance - Life insurance policy which is kept effective for the whole life by paying regular premiums. In these policies, cash value is built and they are guaranteed till the time premiums are paid as per schedule. The cash received from the dividends can be used to buy more insurance and in lot of other ways