Here are a few common terms you’ll want to be familiar with when you shop for permanent or term life insurance coverage:
Beneficiary: A person other than a participant who may become eligible to receive, or is receiving, benefits under an insurance policy.
Cash surrender value: The amount payable to an insured who surrenders cash value life insurance, which terminates all insurance benefits.
Convertible term life insurance: A plan that permits you to exchange the term life insurance policy for a permanent one at some point.
Free look period: Under the laws of some states, a period (typically at least 10 days) during which time you may cancel the policy without penalty.
Insurable interest: A requirement that if you want to buy a life insurance policy on someone else's life, you must have an interest in that person remaining alive or expect emotional or financial loss from that person's death.
No-load policy: A type of policy that some insurers sell directly to consumers without having to pay commissions to agents and brokers.
Permanent (cash value) life insurance: A type of life insurance that combines a death benefit with a cash value component that builds over time; offers lifetime protection.
Risk factors: Factors that the insurance company takes into consideration when calculating your premium for permanent or term life insurance; these include your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying.
Term life insurance: A type of life insurance that provides coverage for a specified period of time—generally one, 10, 20, or 30 years, or until the insured reaches 65 or 70 years of age.
Find out more about Term Life Insurance.
Universal life insurance: A type of permanent life insurance in which the cash value varies with the purchaser’s payments and the insurer’s investment returns.
Find out more about Universal Life Insurance.
Variable life insurance: A type of permanent life insurance in which the cash value fluctuates depending on the investments purchased by the purchaser for his or her portfolio.
Find out more about Variable Universal Life Insurance.
Whole life insurance: A type of permanent life insurance. Whole, universal, and variable life insurance each has their own provisions, but all cover you for the remainder of your life.
Find out more about Whole Life Insurance.
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