Glossary of life insurance terminology
InsuranceQuotes.com asked life insurance expert Tony Steuer to tell us which life insurance terminology is critical for consumers to know. Here’s what he provided.
Agent: A person licensed by the state who sells life insurance and provides customer service.
Beneficiary: The person named in the policy to receive the insurance proceeds after the insured person dies. A secondary, or contingent, beneficiary will receive the proceeds if the primary beneficiary cannot collect.
Cash surrender value: The amount of money payable if a life insurance policy is canceled by the insured person before the policy matures or the policyholder dies.
Claim: A request for payment of a loss.
Contract: A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is contained in a written document called the policy.
Death benefit: A payment made to a designated beneficiary after the death of the insured person.
Insured: A person or organization covered by an insurance policy, including the “named insured” and other parties protected under the policy.
Life insurance: Insurance that pays a specified amount once the insured person dies, either to his or her estate or to a designated beneficiary. In the case of an endowment policy, the money goes to the policyholder on a specified date.
Permanent life insurance: Type of life insurance (other than term insurance) that builds cash value and is designed for the long-term, or permanent, needs of a policyholder. This type of insurance includes universal and variable life.
Policy owner (or policyholder): The person or business that owns the policy and is responsible for premium payments.
Premium: The amount paid to an insurer for your policy.
Term insurance: Life insurance that covers a certain number of years but expires without value if the insured person lives beyond the “term.”