Resources
Insurance Glossary
Plain-English definitions for the terms you'll run into when shopping for coverage. No jargon, no asterisks, no fine print. If a word here still feels fuzzy, that's on us — tell us and we'll rewrite it.
A
- Accelerated Death Benefit
- A policy feature that lets you draw part of the death benefit while you're still alive if you're diagnosed with a terminal, chronic, or critical illness. The amount you use is subtracted from what your beneficiaries receive later.
B
- Beneficiary
- The person or people you name to receive the death benefit when you die. You can change this anytime while you're alive — primary beneficiaries get paid first, contingent beneficiaries get paid only if the primary is gone.
C
- Cash Value
- The savings component inside a permanent life policy that grows tax-deferred over time. You can borrow against it, withdraw from it, or use it to pay premiums.
- Convertible Term
- A term policy that lets you switch to a permanent policy without a new medical exam, usually before a set age or deadline. Useful if your health changes and you still want lifelong coverage.
D
- Death Benefit
- The tax-free lump sum your beneficiaries receive when you die. Also called the face amount — it's the core promise of any life insurance policy.
- Disability Waiver
- A rider that waives your premiums if you become totally disabled and can't work. Your policy stays in force without you paying a dime during the disability.
E
- Endowment
- A policy that pays out either when you die or when you reach a set age — whichever comes first. Less common today, but still used for college funding and structured savings goals.
F
- Face Amount
- The dollar amount of coverage stated on the front of the policy. If you buy a $500,000 policy, $500,000 is the face amount.
- Free Look Period
- A window of time after you receive your policy — usually 10 to 30 days — when you can cancel for any reason and get a full refund. Use it to actually read the policy before committing.
G
- Grace Period
- The extra time after a missed premium payment before your policy lapses, typically 30 or 31 days. Coverage stays active during the grace period.
- Group Life Insurance
- Coverage offered through an employer, union, or association as a single contract covering many people. Cheap or free, but it usually ends when you leave the job.
- Guaranteed Insurability Rider
- Lets you buy more coverage at set milestones — marriage, a new baby, a home purchase — without proving you're still healthy. Worth its weight if your family or assets are growing.
I
- Insurable Interest
- A legal requirement that you must benefit from the insured person staying alive. Spouses, children, and business partners qualify; strangers do not.
L
- Lapse
- What happens when a policy ends because premiums weren't paid and the grace period ran out. A lapsed policy no longer pays a death benefit.
- Level Term
- A term policy where the premium and the death benefit stay the same for the entire term — usually 10, 20, or 30 years. The most common and easiest type to compare.
- Living Benefits
- Riders or features that let you access part of your death benefit while you're alive — typically for terminal, chronic, or critical illness. Coverage that helps you, not just the people you leave behind.
M
- Mortality Charge
- The portion of a permanent policy's premium that covers the actual cost of insuring your life. It rises as you age and is deducted from the cash value in universal life policies.
- Mortgage Protection Insurance
- A term policy sized and timed to your mortgage so the loan gets paid off if you die. Your family keeps the house without scrambling for the monthly payment.
- Mutual Insurance Company
- An insurer owned by its policyholders rather than shareholders. Profits often come back to policyholders as dividends on participating policies.
N
- Non-Forfeiture Options
- What you can do with the cash value if you stop paying premiums on a permanent policy. Common choices: take the cash, convert to reduced paid-up insurance, or buy extended term coverage.
P
- Paid-Up Insurance
- A policy that requires no more premium payments but still has a death benefit. You either bought it that way, paid it up early, or used non-forfeiture options to get there.
- Permanent Life Insurance
- Coverage designed to last your entire life as long as premiums are paid. Includes whole life, universal life, and variable life — all of which build cash value.
- Policy Loan
- A loan taken against the cash value of a permanent policy. The insurer charges interest, and any unpaid balance reduces the death benefit if you die before paying it back.
- Premium
- The amount you pay — monthly, quarterly, or annually — to keep your policy active. Miss enough of them and the policy lapses.
R
- Reinstatement
- Bringing a lapsed policy back to life. Usually requires paying back-premiums, proof of insurability, and acting within a set window after the lapse.
- Rider
- An optional add-on that customizes a policy — like a child rider, accidental death rider, or waiver of premium. Some are free, some cost extra.
S
- SGLI
- Servicemembers' Group Life Insurance — low-cost group coverage for active-duty military, up to $500,000. Coverage ends 120 days after separation unless you convert to VGLI.
- Surrender Value
- The cash you actually walk away with if you cancel a permanent policy, after any surrender charges and outstanding loans. Often less than the full cash value in the early years.
T
- Term Life Insurance
- Coverage for a set number of years — typically 10, 20, or 30. If you die during the term, your beneficiaries get paid; if you outlive it, the policy ends with no payout.
U
- Underwriting
- The process the insurer uses to decide if they'll cover you and at what price. They look at age, health, lifestyle, family history, and sometimes labs or an exam.
- Universal Life
- Permanent insurance with flexible premiums and an adjustable death benefit. The cash value earns interest based on a rate the insurer sets, with a guaranteed minimum.
V
- VGLI
- Veterans' Group Life Insurance — the conversion option that lets separating servicemembers keep group coverage after leaving SGLI. No medical exam if you apply within 240 days of separation.
W
- Waiver of Premium
- A rider that pauses your premium obligation if you become disabled, while keeping the policy in full force. Different from a disability waiver in name only at most carriers.
- Whole Life Insurance
- Permanent insurance with a fixed premium, a guaranteed death benefit, and cash value that grows on a guaranteed schedule. Predictable, boring in the best way.
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