Life Insurance Glossary

Beneficiary: The person or legal entity the owner of an insurance policy names to receive the policy benefit if the event insured against occurs.

Cash Value: The amount, before adjustments for factors such as policy loans, that the owners of a permanent life insurance policy are entitled to receive if the policy does not remain in force until the insured’s death.

Convertible Term Insurance: A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance.

Death Benefit: The amount of money paid by an insurer to a beneficiary when a person insured by a life insurance policy dies.

Face Amount: The amount of the death benefit payable if the insured person dies while the policy is in force.

Level Premium Term Life Insurance: Premiums remain the same each year the contract is in force for the term selected.  At the end of the term, premium is likely to increase each year.

Paid-Up Insurance: An insurance policy that requires no further premium payments but continues to provide coverage.

Participating Policy: A type of insurance policy that allows owners to receive policy dividends.

Premiums: The price of an insurance policy.

Term Life Insurance: A form of life insurance that covers the insured person for a certain period of time, the “term”, that is specified in the policy. It pays a death benefit to a designated beneficiary only when the insured dies within that specified period, such as 1, 5, 10, 20 or 30 years. Term life policies are renewable but premiums increase with age.

Whole Life Insurance: The oldest kind of cash value life insurance that combines protection against premature death with a savings component. Premiums are fixed and guaranteed to remain level throughout the policy lifetime.