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Glossary Of Terms For Whole Life Insurance

By Compuquotes Team on March 26th, 2008

Listed below is a glossary of terms for whole life insurance. These terms are commonly associated with whole life insurance and are here to help you better understand what your insurance agent or broker is talking about.

Whole life insurance: also known as ordinary life insurance is life insurance that is guaranteed to eventually pay out a minimum and covers your 'whole life'.

Agent: The person or organization that is allowed to sell life insurance on behalf of an insurance company.

Beneficiary: The person who is entitled to receive the payout of the face value of the insurance policy when you pass away.

Binder: A temporary agreement providing insurance coverage to you until a policy can be written up.

Broker: A licensed organization or person that you pay to look for insurance to cover you.

Cancellation: The loss of your insurance coverage during a policy.

Claim: A notice sent to the insurance company that under the terms of a policy, a loss may be requiring coverage.

Claimant: Either the insured (you) or the insurer (insurance company) who asserts a right of recovery.

Decline: An insurance company refusing to give you insurance coverage.

Endorsement or Rider: An amendment to the insurance policy to delete or add insurance coverage to the policy itself.

Exclusion: Notations listed in the policy, that are not covered, such as certain conditions or causes.

Face amount: The actual monetary amount that will be paid to the beneficiary when the insured person passes away.

Guaranteed insurability: An option for a policy holder to purchase addition life insurance, t times in the future as labeled in the policy, without having to provide evidence of insurability.

Insured: The person or policy holder that is protected by the policy.

Insurer: The insurance company.

Limit: The absolute maximum that a whole life insurance policy will pay.

Policy: A written contract of insurance between the insured and the insurer.

Premium: The amount of money that the insured will pay the insurance company in order to keep insurance coverage.

Quote: An estimated cost of the insurance based on information you give to the insurance company. Quotes for whole life insurance (and any other type of insurance) are provided free of charge.

Rider: See 'Endorsement'.

Surrender
: The insured (you) cancel the life insurance policy before it matures.

Underwriting: A diverse process of selecting people for insurance and then classifying them according to their degrees of insurability to establish the premiums that will be paid by the insured for insurance upon acceptance. During the underwriting process, people can be rejected for insurance for unacceptable risks.

Waiting period: A period of time labeled in the policy that must pass before the insurance coverage begins.

These are just some of the common terms associated with whole life insurance. There are many more, including the types of whole life insurance that are available.

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