Glossary of Insurance Terms

Assignment: An agreement under which one party—the assignor—transfers some or all of his ownership rights in a particular property, such as a life insurance policy or an annuity contract, to another party—the assignee.

Beneficiary: The person(s) named by the policyowner to receive the life insurance proceeds upon the death of the insured.

Cash Value/Cash Surrender Value: The amount that is available in cash for loans and/or withdrawals during the life of the insured. Withdrawals may be subject to surrender charges and could have a permanent effect on the cash value. Loans reduce the cash value and death benefit by the amount of the loan outstanding plus interest. If the policy is surrendered, the cash surrender value is paid to the policyowner.

Death Benefit: The amount paid to the beneficiary(ies) at the time of the death of the insured.

Face Amount: The death benefit stated on the policy. It does not include additional amounts acquired through the accidental death or other special provisions.

Insurability: An applicant’s acceptability to the insurance company.

Insured: The person on whose life the policy is issued.

Loan (Policy Loan): A loan made by a life insurance company to a policyowner based on the cash value of a policy. Generally, loans reduce the policy's death benefit and cash value by the amount of the outstanding loan plus interest.

Paid-up Insurance: Insurance that will remain in force with no additional premiums needed.

Policyowner: The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured.

Premiums: Payments to the insurance company to buy and keep a policy in-force.

Term Life Insurance: Life insurance that usually does not build up cash value and only provides coverage for a specified period of time. You must re-apply after specified term. The cost of your plan will increase at the time you re-apply.

Whole Life Insurance: A type of permanent life insurance which can provide lifetime protection with a level premium, guaranteed death benefit, and guaranteed cash value. Premiums are paid for as long as the policy is in force.