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Understanding Your Life Insurance Policy
Understanding Your Policy
To understand your life insurance policy—what it really says and what it promises to deliver—can be made a lot simpler by familiarizing yourself with the following key insurance terms made available by LIFE, the Life and Health Insurance Foundation for Education, www.
life-line.org.
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15 Life Insurance Terms You Should Know
Accidental death benefit—Also known as double indemnity, a provision in a policy that doubles or triples the benefit in the case of death by accidental means.
Beneficiary—The person named in a policy as the recipient of the insurance money in the event of the insured’s death.
Cash surrender value—The amount available in cash upon the policy owner’s termination of a permanent life insurance policy before it matures or becomes payable by death.
Claim—The demand by an individual to recover losses covered under an insurance policy.
Contingent beneficiary—The person designated to receive life insurance policy proceeds if the primary beneficiary should die before the person whose life is insured.
Convertible term insurance—A type of policy that allows the policy owner to change a term insurance policy to a permanent policy without providing evidence of insurability. The premium rate for the permanent policy is normally based on the age of the insured at the time of the conversion.
Death benefit—The sum of money paid to a beneficiary when a person insured under a policy dies.
Dividend—A refund of excess premium paid to the owner of an individual participating life insurance policy.