Tallahassee Term Life Insurance Glossary
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Beneficiary: A person named in the life insurance policy who will receive the life insurance proceeds upon the passing of the insured.
Cash or Surrender Value: The amount of money available in cash for loans and that also may be available for withdrawals. Your cash surrender value normally reduces the death benefit of the policy and may increase the chances of your policy lapsing. “Cash value only” is a term only used when describing permanent life insurance policies and not term life insurance policies.
Cash Value Life Insurance: Cash Value Life Insurance is when the premium charged is higher at the start than for the same face amount of term insurance. The portion of premium not used for the underlying insurance is invested and accumulates a "cash value" that may be used in a myriad of ways. One may borrow against the cash value by taking a loan against the policy. If the loan isn't paid back, the amount you owe against the loan will be deducted from the death benefit or from the cash value if you stop paying your premium. You have the option to use cash value in order to keep insurance protection for a limited time. You can also buy a reduced face amount without needing to pay more premium. Cash value can also be used to increase income in retirement or help pay for needs like college tuition without cancelling the policy. To build up cash value, one must pay a higher premium in the beginning years of the policy. Whole life, universal life and variable life insurance are all types of cash value insurance.
Convertible Term Insurance: Term life insurance that can be converted, at the option of the owner of the policy, without evidence of insurability, for a permanent life insurance policy.
Face Amount: The amount that will be paid by the insurance company to the beneficiary in the case of death. Face amount doesn't include additional amounts paid under accidental death or provisions or policy dividends and can be reduced by loans against the policy or cash withdrawals.
Insurability: When the insurance company accepts an applicant for insurance.
Insured Life: The actual person whose life the policy is issued on.
Level Premium: This is when the premium remains the same each year. The premium normally is more than the cost of protection during the early years of the life insurance policy and less than the actual cost of the policy in the later years.
Permanent Life Insurance: is generally insurance that builds up a cash value such as whole life or universal life.
Policy Owner: This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation. The policy owner is the person who actually owns the life insurance policy.
Premiums: These are the monthly, quarterly or annual payments paid to the insurance company to buy a policy and to keep it in force.
Renewable Term Insurance: Term insurance that can be renewed at the end of the policy term for a limited number ofterms. The rates almost always increase at each renewal with the age of the insured.
Term Insurance: Term Life Insurance covers you for a specific term of one or more years and pays the beneficiary a death benefit only if the insured dies during that term. Term life insurance offers the largest face amount of insurance protection per your premium and does not build up cash value. One can renew a term insurance policiy for one or more terms even in the event of your health changing. Every time the policy is renewed for a new term, premiums will generally be higher.
Variable Life Insurance: Variable Life Insurance is the type of life insurance where death benefits and cash values depend on the investment returns of one or more separate accounts, which may be invested in certain mutual funds or other instruments allowed under the policy. Your benefit and cash value of the policy will be lower if the investments don't perform well as you would have liked. You normally pay an additional premium for guaranteed death benefit.
Whole Life Insurance: Whole Life Insurance will cover you for your entire life as long as your premiums are current. Premiums are generally constant for your entire life. When the policy is first taken out, your premium can be much higher than it would for the same face amount of term insurance, but are smaller than the premiums one would pay if you were to keep continually renewing a term policy. Some specific whole life policies allow one to pay premiums for a shorter period like 20 years or until age 65. Premiums paid for these policies are generally higher as the premium payments are made for a shorter period of time.