Insurance Dictionary
Life Insurance & Annuities Dictionary
61 plain-English terms covering life insurance, beneficiaries, cash value, riders, annuities and policy features.
Life Insurance And Annuities
Plain-English definitions for this part of insurance. Read the simple meaning first, then the exact insurance meaning.
Accelerated death benefit
Simple meaning: A rider or policy feature that may let an eligible insured receive part of the death benefit while still alive after a qualifying event.
Insurance meaning: A life-policy provision that can advance part of the death benefit upon specified qualifying conditions such as terminal illness, chronic illness, or other triggers defined by the contract. It reduces benefits remaining for beneficiaries.
Also called: Living benefit
Accidental death benefit rider
Simple meaning: Extra life-insurance benefit that may pay if death results from a covered accident.
Insurance meaning: A rider providing an additional death benefit when death meets the contract's definition of covered accidental death and occurs within required time limits.
Annuitant
Simple meaning: The person whose life may be used to determine annuity payments.
Insurance meaning: The person on whose life expectancy annuity benefits may be based. The annuitant may differ from the contract owner.
Annuitization
Simple meaning: Changing an annuity value into a series of income payments.
Insurance meaning: The contractual process of converting all or part of an annuity's value into periodic payments under a selected payout option, often irrevocably for the annuitized amount.
Annuity
Simple meaning: A contract designed to grow money or pay income, often for retirement.
Insurance meaning: A contract with an insurer that can accumulate value and/or provide a stream of payments for a period or for life, subject to contract terms and tax rules.
Annuity rider
Simple meaning: An optional feature added to an annuity for an extra cost or under special terms.
Insurance meaning: A contract feature modifying an annuity, such as income, withdrawal, death-benefit, or long-term-care-related guarantees, subject to charges and conditions.
Beneficiary
Simple meaning: The person or organization chosen to receive life-insurance money.
Insurance meaning: A person, trust, estate, charity, or other entity designated to receive policy proceeds or benefits when the insured dies or another benefit event occurs.
Buy-sell funding
Simple meaning: Using insurance money to help owners buy a deceased or disabled owner's business interest under an agreement.
Insurance meaning: A planning arrangement in which life or disability insurance helps fund obligations under a buy-sell agreement. Legal and tax advice may be needed for structure.
Cash surrender value
Simple meaning: The amount the policyowner may receive if a cash-value policy is ended, after charges and adjustments.
Insurance meaning: The amount available upon surrender of a permanent life policy after applying surrender charges, loans, interest, and other contract adjustments.
Also called: Surrender value
Cash value
Simple meaning: Money value that can build inside some permanent life insurance policies.
Insurance meaning: A policy value that accumulates under certain permanent life insurance contracts and may be available through withdrawals, loans, surrender, or other policy provisions.
Child term rider
Simple meaning: Life-insurance coverage added for eligible children under an adult policy.
Insurance meaning: A rider providing a stated amount of term life insurance on eligible children, subject to ages, conversion rights, and policy conditions.
Contestability period
Simple meaning: An early policy period when the insurer may have special rights to investigate application statements after a death claim.
Insurance meaning: A period, commonly set by state law and policy language, during which an insurer may contest a life policy for material misrepresentation or other permitted grounds. Exact rules vary.
Contingent beneficiary
Simple meaning: The backup beneficiary.
Insurance meaning: A beneficiary designated to receive proceeds if the primary beneficiary cannot or does not receive them, subject to policy terms and applicable law.
Also called: Secondary beneficiary
Conversion privilege (group life)
Simple meaning: A right that may let someone change group life coverage to an individual policy without new medical proof.
Insurance meaning: A contractual or statutory right to convert qualifying group life coverage to an individual policy within a stated time after coverage ends.
Convertible term insurance
Simple meaning: Term life that can be changed to eligible permanent life insurance without a new medical exam, if contract rules are met.
Insurance meaning: Term insurance containing a conversion privilege to specified permanent coverage without new evidence of insurability during the allowed conversion period.
Death benefit
Simple meaning: Money the policy can pay when the insured person dies.
Insurance meaning: The amount payable to the beneficiary when the insured dies while the policy is in force, subject to the contract, outstanding loans, exclusions, and settlement options.
Decreasing term life insurance
Simple meaning: Term life where the death benefit gets smaller over time.
Insurance meaning: Term insurance with a scheduled declining death benefit, sometimes designed to match a decreasing obligation.
Deferred annuity
Simple meaning: An annuity where income payments are planned for later.
Insurance meaning: An annuity with an accumulation period before annuitization or scheduled income begins.
Evidence of insurability
Simple meaning: Information showing whether a person meets health or other rules for coverage.
Insurance meaning: Health, medical, occupational, financial, or other underwriting information required to qualify for coverage or an increase in benefits.
Also called: EOI
Face amount
Simple meaning: The stated amount of life insurance used to calculate the death benefit, before policy adjustments.
Insurance meaning: The amount of insurance shown in the policy, sometimes called the face value. The actual death benefit may differ because of policy options, loans, riders, or other provisions.
Also called: Face value
Final expense insurance
Simple meaning: Life insurance marketed to help with funeral and other end-of-life costs.
Insurance meaning: A marketing category usually referring to smaller-face-amount permanent life insurance intended for final expenses. Actual use of proceeds is generally determined by the beneficiary unless restricted.
Also called: Burial insurance
Fixed annuity
Simple meaning: An annuity where the insurer credits interest under rates and guarantees described in the contract.
Insurance meaning: An annuity with principal and interest-crediting guarantees backed by the insurer, subject to contract terms, surrender charges, and insurer claims-paying ability.
Fixed indexed annuity
Simple meaning: A fixed annuity where interest credits can be linked to an outside market index, without directly investing the contract value in the index.
Insurance meaning: A fixed annuity that credits interest using a formula tied in part to an external index, subject to caps, spreads, participation rates, floors, and contract terms.
Also called: Indexed annuity
Free-look period
Simple meaning: A short time after receiving a policy when the owner can review it and usually return it for a refund under the rules.
Insurance meaning: A legally required or contractual review period allowing the policyowner to return a newly issued life or annuity contract for cancellation and refund, subject to state law and product rules.
Fully underwritten life insurance
Simple meaning: Life insurance that uses a more detailed health and risk review.
Insurance meaning: Coverage issued after a comprehensive underwriting process that may include medical history, exam, lab results, prescription data, financial information, and other permitted evidence.
Guaranteed-issue life insurance
Simple meaning: Life insurance that does not require health questions for eligible applicants, but usually has limits and can cost more.
Insurance meaning: Life coverage issued to eligible applicants without medical underwriting, commonly with lower face amounts, age restrictions, and a graded or limited early death benefit for nonaccidental death.
Immediate annuity
Simple meaning: An annuity designed to start income payments soon after purchase.
Insurance meaning: An annuity under which periodic payments begin within the contract’s specified short period after the premium is paid.
Incontestability clause
Simple meaning: A life-policy rule that limits when an insurer can challenge coverage after the policy has been in force for a stated time.
Insurance meaning: A life insurance provision, generally governed by state law, limiting the insurer’s ability to contest policy validity after a specified period, with exceptions that vary by jurisdiction and contract.
Indexed universal life insurance (IUL)
Simple meaning: Universal life insurance where interest credits can be linked to an outside market index under a formula.
Insurance meaning: A form of universal life insurance that credits policy value using an index-linked formula subject to caps, floors, participation rates, charges, and other contract terms. The policy is not directly invested in the index.
Also called: IUL
Irrevocable beneficiary
Simple meaning: A beneficiary whose rights usually cannot be changed without that beneficiary’s consent.
Insurance meaning: A beneficiary designation that restricts the policyowner’s ability to change the beneficiary or certain policy rights without consent, subject to law and contract terms.
Life insurance
Simple meaning: Insurance that can pay money to a beneficiary when the insured person dies.
Insurance meaning: A contract under which an insurer agrees to pay a death benefit when the insured dies while coverage is in force, subject to policy terms, exclusions, and conditions.
Life insurance dividend
Simple meaning: Money a participating life insurer may return to eligible policyowners when experience is favorable.
Insurance meaning: A nonguaranteed distribution to owners of participating policies based on the insurer’s experience and board action. It is not the same as a stock dividend.
Market value adjustment (MVA)
Simple meaning: An adjustment that can raise or lower what you receive from certain annuity withdrawals or surrenders based on interest-rate changes or contract rules.
Insurance meaning: A contractual adjustment applied to specified withdrawals or surrender values, often based on changes in interest rates or an index defined in the annuity.
Also called: MVA
Nonparticipating policy
Simple meaning: A policy that does not pay policyowner dividends.
Insurance meaning: A policy that is not eligible for participating-policy dividends, though it may have other guaranteed or nonguaranteed values.
Paramedical exam
Simple meaning: A health exam used for some life-insurance applications.
Insurance meaning: An underwriting exam that may collect measurements, health history, blood, urine, or other information for a life or health insurance application.
Participating policy
Simple meaning: A policy that may be eligible to receive insurer dividends.
Insurance meaning: A life insurance policy that participates in divisible surplus through nonguaranteed policyowner dividends when declared by the insurer.
Permanent life insurance
Simple meaning: Life insurance designed to stay in force for life if required premiums or policy values are sufficient.
Insurance meaning: A category of life insurance intended to provide lifelong coverage and commonly including a cash-value component, subject to the contract and funding requirements.
Policy loan
Simple meaning: Money borrowed using a life policy’s cash value as security.
Insurance meaning: A loan from the insurer secured by eligible cash value. Unpaid loans and interest can reduce policy values and death benefits and may contribute to lapse.
Policyowner (life insurance)
Simple meaning: The person or entity that owns the life insurance policy.
Insurance meaning: The owner controls contractual rights such as beneficiary changes, loans, assignments, or surrender, subject to the policy. The owner may be different from the insured.
Portability (life insurance)
Simple meaning: A right that may let a person keep certain group life coverage after leaving the group by moving it to an individual arrangement.
Insurance meaning: A contract feature allowing eligible insureds to continue some group life coverage after a qualifying event, often at different rates and under specified conditions.
Primary beneficiary
Simple meaning: The first person or organization in line to receive the death benefit.
Insurance meaning: The beneficiary with first priority to receive policy proceeds if eligible at the insured’s death.
Renewable term insurance
Simple meaning: Term life that can be continued for another period under the contract, often with a higher premium as age increases.
Insurance meaning: Term life with a contractual renewal right for stated periods without new evidence of insurability, subject to age limits and renewal rates.
Return-of-premium term insurance
Simple meaning: Term life that may return specified premiums if the insured survives the term and contract conditions are met.
Insurance meaning: A term life product or rider that returns eligible premiums at the end of a stated period if requirements are satisfied. It generally costs more than comparable ordinary term coverage.
Simplified-issue life insurance
Simple meaning: Life insurance with fewer health questions and usually no traditional medical exam.
Insurance meaning: Life insurance using streamlined underwriting, often based on health questions and data sources rather than a full paramedical exam. Approval is not guaranteed.
Suicide exclusion
Simple meaning: A life-policy rule that can limit the death benefit if the insured dies by suicide during an early stated period.
Insurance meaning: A provision permitted under applicable law that may limit payment for suicide during a specified initial policy period. Terms and time limits vary by state and contract.
Surrender charge
Simple meaning: A fee or reduction that may apply if a policy or annuity is ended or money is taken out early.
Insurance meaning: A contract charge imposed on certain withdrawals or surrender during a stated period. The schedule is product-specific.
Surrender period (annuity)
Simple meaning: The years when taking money out may trigger a surrender charge.
Insurance meaning: The contract period during which withdrawals above permitted amounts may be subject to a surrender charge.
Survivorship life insurance
Simple meaning: One life-insurance policy covering two people that usually pays after the second insured dies.
Insurance meaning: A permanent life policy insuring two people and generally paying the death benefit after the second death, subject to contract terms.
Also called: Second-to-die life insurance
Term life insurance
Simple meaning: Life insurance for a set length of time.
Insurance meaning: Life insurance designed to provide a death benefit during a specified term if the policy remains in force. Most term policies do not build cash value.
Universal life insurance
Simple meaning: Permanent life insurance with flexible features and a cash-value account.
Insurance meaning: A form of permanent life insurance with adjustable premiums or death benefit features and policy values credited under the contract. Coverage can lapse if values and premium payments are not enough to cover policy charges.
Variable annuity
Simple meaning: An annuity with investment choices whose values can go up or down.
Insurance meaning: A securities-based annuity in which contract values may vary with separate-account investment performance, subject to fees, guarantees, and product terms.
Variable life insurance
Simple meaning: Permanent life insurance where some policy value is invested in separate investment accounts and can go up or down.
Insurance meaning: A securities-based permanent life insurance product with separate-account investment options. Values and benefits may vary with investment performance, subject to guarantees and contract terms.
Variable universal life insurance (VUL)
Simple meaning: Universal life insurance with investment choices that can rise or fall in value.
Insurance meaning: A permanent life policy combining universal-life flexibility with separate-account investment options. It involves insurance and securities risks and is subject to product and securities regulation.
Also called: VUL
Waiver of premium rider
Simple meaning: A rider that may waive certain premiums if the insured meets the policy’s disability rules.
Insurance meaning: A rider that can waive required premiums after a qualifying disability and waiting period, subject to definitions, age limits, and policy terms.
Whole life insurance
Simple meaning: Permanent life insurance with guaranteed features described in the policy and a cash value that can grow.
Insurance meaning: A form of permanent life insurance generally providing fixed or guaranteed premiums, a guaranteed death benefit, and guaranteed cash values when policy requirements are met. Participating policies may also pay nonguaranteed dividends.
Group life insurance
Simple meaning: Life insurance offered to people because they belong to a group, often through work.
Insurance meaning: Life coverage issued under a group master contract, commonly through an employer or association, with certificates describing individual coverage. If you are deciding whether workplace coverage is enough, see Is Life Insurance Through Work Enough?
Guaranteed insurability rider
Simple meaning: A rider that may let the insured buy more coverage at certain times without new medical proof.
Insurance meaning: A rider allowing specified additional life insurance purchases at stated dates or events without new evidence of insurability, subject to limits and conditions.
Guaranteed lifetime withdrawal benefit (GLWB)
Simple meaning: An annuity rider that may allow withdrawals for life under its rules, even if the contract value later reaches zero.
Insurance meaning: A rider providing a contractual lifetime withdrawal amount when conditions are met. The benefit base is generally not the same as cash value and may not be available as a lump sum.
Also called: GLWB
Insured person (life)
Simple meaning: The person whose life is covered by the policy.
Insurance meaning: The individual whose death is the insured event under a life insurance contract.
Key person life insurance
Simple meaning: Life insurance a business owns on an important person whose death could hurt the business.
Insurance meaning: Life insurance purchased by a business on a key employee or owner to help offset financial loss from that person’s death, with appropriate insurable interest and consent.
Also called: Key employee insurance
Level term life insurance
Simple meaning: Term life where the death benefit usually stays the same during the level period.
Insurance meaning: Term insurance with a level death benefit for a stated period. Premiums may also be level for that period, depending on the product.
Life insurance illustration
Simple meaning: A document showing how a life insurance policy may perform under stated assumptions.
Insurance meaning: A presentation of policy values, premiums, death benefits, guarantees, and, where applicable, nonguaranteed elements under specified assumptions. An illustration is not a guarantee that every projected value will occur. The policy contract controls.
Back to the Insurance Dictionary
About Ensurance
Ensurance is a U.S. insurance-shopping company that helps people shop for better insurance prices and coverage options through one protected request.
Ready to shop for life insurance? Start one protected request with Ensurance.
Get a Life Insurance Quote from Ensurance
More help. More choices. Less spam.