Accidental death & dismemberment insurance
Also known as AD&D, this type of coverage pays a benefit upon the loss of life or limb(s) in an accident.
Agent
The person, broker or organization that is accredited and allowed to sell life insurance on behalf of an insurance company.
Annual renewable term life
Term life insurance that is renewable each year for a fixed period of time. The annual premium increases each year, based on the risk of the benefit being paid.
Annuity
This investment tool converts an initial deposit into a long-term schedule of paid disbursements with interest. Some policyholders prefer to structure benefit payouts to minor children as annuities to guarantee a stable cash stream over decades.
Beneficiary
This is the person who will receive the contracted sum upon the insured persons death, or contracted agreement such as AD&D.
Binder
A temporary or "Binding" agreement which gives the insured the insurance coverage needed until a life insurance policy can be issued.
Broker
A licensed organization or person that acts as an intermediary between the customer and insurance company. Brokers typically search for coverage that is appropriate for their clients, and work on commission.
Cancellation
The loss of your insurance coverage during a policy. This may happen for many reasons if the contract is not followed accordingly. Please speak with your Broker in order to fully understand all policy agreements.
Cash surrender value
The cash amount due to a policy owner who is surrendering a life insurance policy. This is no applicable to all types of Policies.
Cash value
The savings portion of a permanent(or whole) life insurance policy, which is paid through premium payments and interest. Different Policies have a different cash value, which is available as a loan or for withdrawal before it becomes payable by death or maturity. Any unpaid loans taken against cash value are deducted from the death benefit, and withdrawals are subject to surrender charges.
Claim
A request for payment, which is related to an event that is covered under the terms of an in-force insurance policy. Be sure to understand all claims policies, and speak to your broker if you have any questions.
Claimant
This is the person who asserts right of recovery.
Contestability clause
Language in a life insurance policy that allows the insurer to review a deceased policyholder's medical records for evidence that may invalidate a claim. Be sure to see if your policy has the more common version of "Incontestability Clause", which gives a fixed time (usually 2 years) in which a beneficiary may review medical records. Be sure to speak with your broker if you have any further questions.
Convertible term insurance
A benefit of a term life insurance policy, which gives the policy owner the ability to convert the Term policy to a Permanent policy.
Death benefit
This is the contracted amount of money the beneficiary will receive upon the death of the insured. Some policies call this a "survivor's benefit." This benefit is paid in either a lump sum, or over time depending on how the policy was constructed.
Dividend
A benefit of having a Participating Life Policy, this is a return of part of the premium on participating insurance policies which gives the difference between the premium changed and the combination of the cost of insurance, fees, and investments back to the insured.
Endorsement
A stipulation added to an insurance policy that changes the policy's coverage or terms. Remember that if added the premiums could change.
Estate tax
Provincial and/or Federal tax paid by beneficiaries on inherited money and assets above an exclusion limit. Good Estate planning will keep these costs low, and some situations are even exempt (such as Spouses).
Exclusion
A stipulation stated in the policy that eliminates coverage for certain situations, risks, people, property classes, or locations. Be sure to ask your Broker about any exclusion there may be in the contract.
Fiduciary
This is either a person of entity which has been authorized to make financial decisions or hold assets on behalf of the insured person. Legally bound, Fiduciaries are not allowed to make decisions to profit themselves.
Grace period
This is the time period in which the insured has in order to pay the premium on the policy, without being charged a penalty fee.
Group life insurance
Businesses and large organizations often opt for this coverage in order to find cheaper pricing for high risk insurers. This will cover a large number of individuals under one policy.
Guaranteed insurability
This is an option for policy holders to add to their policy. This addition will guarantee acceptance on additional insurance coverage without having to provide additional information or updated medical reports.
Guaranteed-issue life
Life insurance offered to the general public with no medical exam required.
Insured
The individual who has the Life Insurance coverage - also called the Policy Owner.
Insurer
The insurance company.
Irrevocable trust
An option which the grantor gives assets, which helps in the taxation of the estate. Only the beneficiary may alter the structure or the contents of the trust, making this arrangement attractive for charitable donations during estate planning.
Issue age
The policy holder’s age at the time of inception of the insurance policy.
Key person life/key man life
Life insurance purchased by a company based on the life of a significantly important employee.
Lapse
The termination of an insurance policy, most often due to non-payment of the premium. If a policy has lapsed, the insured is no longer covered.
Level term life insurance
A premium style of term coverage where the premiums will not increase over specified years. The longer the Level Term, the higher the premium.
Life Settlement
This occurs when the insured sells the policy to a third party. The insured receives a one-time payment and the third party assumes all responsibility for the policy including premiums.
Limit
The highest amount of insurance that a whole life insurance policy pays.
Medical exam
A physical exam which is necessary for the insuring company to determine eligibility and premiums.
MIB Group
A membership corporation comprised of approximately 470 insurance companies from the United States and Canada. MIB Group provides its members with fraud protection and other services.
Mutual company
A company owned by its clients.
No-exam life insurance
Life insurance policies that do not require a medical exam.
Paid-up insurance option
Life insurance option that allows policyholders to use the net cash value of their policy to make future premium payments.
Participating policy
A life insurance policy that pays dividends to policyholders. This option can only be offered through permanent policies, not on term or temporary policies.
Permanent life insurance
A policy in which the insured is covered for life, or until 100 years old. These policies usually have more added benefits for certain situations. Please speak to your Broker in order to find out more information.
Persistency
The percentage of an insurance company's written policies that have not lapsed. A useful tool to determine the financial stability of a company.
Policy
A written agreement that states the terms of the insurance contract between the insured and the insuring company.
Policyowner
This is the individual who is usually the insured. However in certain circumstances this can be a third party such as a Corporation.
Premium
This is the cost the insured pays in order to stay covered by the policy. This cost is based on many stipulations such as age, medical reports, and occupational hazards to name a few.
Premium Vacation
An option with some Permanent Life policies where the Premiums may be paid with the dividends of the policy. This is not an option for Term agreements and applicants should consult their broker to see if the policy they have applies to the Premium Vacation option.
Quote
An estimated cost of insurance based on information you provide, which is free of charge through EasyInsure.
Renewable term life
The ability for an insured person with a previous Term contract to renew without having to provide medical information again. The premiums usually increase due to age.
Simplified issue life
Similar to a No-Exam Policy or No-Medical Life Policy. These policies do not require a medical exam, and are usually a higher paid premium.
Standard risk
A class of applicant which fits all criteria of the insurance policy with regards to occupation, physical fitness etc.
Substandard risk
A class of applicant which falls below, or is sub-standard, in all criteria of the insurance policy with regards to occupation, physical fitness etc. These premiums tend to be higher.
Suicide clause
A stipulation which states the timeline in which the insured will void the contract due to suicide. The timelines vary and if the insured commits suicide after the timeline, then the company will need to pay the beneficiaries in full.
Surrender
To cancel the policy in order to gain the cash value. This is not an option with Term Life policies.
Surrender fee
The amount charged a policyholder for the early withdrawal of funds from a life insurance policy or annuity.
Surrender value
The amount an insuring company pays the policyholder if the insured voluntarily terminates (or surrenders) a life insurance policy. This amount applies to the savings portion of whole life insurance policies.
Survivorship life insurance
This option usually covers married couples. A stipulation in which the policy is not paid out to the beneficiaries until all who are insured under the policy die.
Table rating
A rating system used to determine premium costs for applicants that do not fit into "Preferred" status or "Standard" status, rather the "Sub-Standard" applicants. Typically every step up the table will be in increments of 25%. For example, and obese applicant who smokes may be paying a Table 2 Rating of 50% extra on the premium in comparison to a "Preferred" applicant.
Waiting period
A period of time outlined in the policy that must pass before insurance coverage begins.
Waiver of premium
A rider or fiduciary in an insurance policy that waives premium payments if a policyholder becomes seriously ill or disabled, typically for a specified period of time.
Whole Life Insurance
A type of permanent life insurance that can provide lifetime protection with a level premium, guaranteed death benefit, and guaranteed cash value. Premiums must be paid for as long as the policy is in force. Most whole life insurance policies are eligible to receive dividends. Dividends can be used to reduce or eliminate out-of-pocket premium payments with options such as Premium Vacations. Applicants should check with their broker to see if they qualify for these dividends.