Life Insurance Terms

Beneficiary

The people named in the policy that receives the life insurance benefits when insured dies.

Cash (Surrender) value

The amount that is available in cash for loans and that may be available for withdrawals. Accessing this value can reduce the death payout and increase the likelihood of lapse.

Convertible term insurance

Term insurance can be exchanged at the request of the policy owner and without eligibility of insurability, for a permanent insurance policy.

Dividend

A dividend is a return from the insurer’s policy based on the original investment. Dividends are never guaranteed.

Face amount

The amount that will be paid out when the death of the policy holder occurs. This amount should be stated at the beginning of the policy. It doesn’t include payouts for accidental death or dividends.

Paid-up insurance

Insurance you have already pre-paid for, yet is still protecting you so you no longer are paying monthly premiums on it.

Participating policy

A policy that is eligible for dividends to be paid to the policy holder.

Permanent (life insurance)

A form of life insurance that builds up a value in cash. The coverage usually lasts a lifetime, it is common in whole life insurance.

Premiums

Monthly payments you make to the insurance company in order to keep the policy in effect.