Life insurance or for that matter any type of insurance is a little complicated to understand for people who have no formal education in finance related topics. However, even though insurance (especially life insurance) is a complicated subject, the basics are easier to understand and may go a long way in ensuring that you choose the correct type of life insurance. Some basic life insurance related terms may help you in understanding the subject in a better manner and help in making the right decisions.

1. Accidental Death Benefit Rider: A life insurance policy rider for payment of an additional cash benefit linked to the face amount of the base policy when demise happens by accidental means.
2. Accidental Death Insurance: Insurance providing payment if the insured’s demise is the consequence of an accident.
3. Agent: An authorized representative of an insurance company who vends and services insurance contracts.
4. Annually Renewable Term: It is a type of renewable term insurance that offers coverage for one year and permits the policy owner to renew his or her coverage every year, with no data of insurability. It is also called yearly renewable term.
5. Assignment. The transfer of the ownership rights of a Life Insurance policy from one person to another.
6. Attained Age:Your present age. Your attained age is one of the factors life insurance companies use to establish your premiums. The older you are, the bigger chance you’ll die while you are covered – so the higher your premium.
7. Backdating: Backdating is a process for making the date of a policy in advance than the application date. Backdating is frequently used to change the age of the consumer at issue lesser than it was in truth in order to get a hold of lower premium. State regulation typically limit to six months the time to which policies can be backdated.
8. Beneficiary: The individual selected to receive the death benefit when the insured expires.
9. Binder: Binder is a provisional insurance policy that ends at the finish of a precise time period or when the unending policy is written. A binder is offered to an applicant for insurance for the duration of the time the entire policy formalities are being done.
10. Cash Benefits: Cash benefits are funds that are rewarded to the insured upon settlement of a sheltered claim. Frequently created with Hospital Income Programs, “cash benefits” are rewarded directly to the insured rather than the doctor of medicine or the hospital.
11. Cash Value: Cash value is the equity amount or “savings” accumulation in a whole life policy.
12. Claim: A claim is a notice to an insurance company that disbursement of an amount is pending under the terms of the policy.
13. Conditional Receipt: Conditional receipt is given to policy owners when they shell out a premium at time of appliance. Such receipts bind the insurance company if the peril is accepted as applied for, subject to any additional conditions declared on the receipt.
14. Contestable Clause: This clause is a stipulation in an insurance policy setting forth the conditions under which or the period of time throughout which the insurer might dispute or annul the policy. After that time has lapsed, usually two years, the policy cannot be disputed.
15. Contingent Beneficiary : An individual or persons named to receive proceeds in case the original beneficiary is not living. It is also known as secondary or tertiary beneficiary.
16. Coverage: This is a different word for insurance. Insurance companies use the term coverage to mean either the dollar amounts of insurance acquired or the sort of loss covered.
17. Conversion Privilege: This allows the policy owner, before an original insurance policy runs out, to choose to have a fresh policy issued that will preserve the insurance coverage. Conversion might be achieved at attained age or at original age.
18. Convertible Term: This is a policy that might be changed to a new mixture by contractual provision and with no evidence of insurability. Nearly all term policies are changeable into permanent insurance.
19. Cross-Purchase Plan:This is an accord that provides that upon a business owner’s death, existing proprietors will purchase the deceased’s interest, frequently with finances from life insurance.
20. Death Benefit: The sum of capital rewarded to the recipient when the insured person passes away.
21. Decreasing Term Insurance: Term life insurance on which the face value gradually reduces in planned steps from the date the policy comes into force to the date the policy terminates, while the premium remains the same. The intervals between decreases are typically monthly or yearly.
22. Double Indemnity: Double indemnity is the payment of double the necessary benefit in the event of loss resulting from specified causes or under certain circumstances.
23. Evidence of Insurability: Evidence of Insurability is any statement or confirmation of a person’s bodily condition, occupation, etc., affecting approval of the candidate for insurance.
24. Exclusions: Specific hazards named in a policy for which benefits will not be paid.
25. Expiry: Expiry means the ending of a term life insurance policy at the closing stages of its period of coverage.
26. Face Amount: This is the amount of insurance given by the terms of an insurance contract, normally set up on the first page of the policy. In a life insurance policy, it is the death benefit.
27. Final Expenses: Expenses sustained at the time of a person’s death. These include funeral costs, court expenses linked with probating his or her will, existing bills or liability and taxes. Depending on their situation, the survivors might also desire to give the outstanding balances of mortgage and loans.
28. First To Die Insurance: Insurance policy whose death benefit is rewarded to the surviving insured upon the demise of one of the insured’s. There is no longer a benefit once the benefit is paid; on the other hand, the surviving insured generally has the alternative of acquiring a policy of equal amount without providing proof of insurability.
29. Fixed Benefit: A death benefit, the dollar amount of which does not fluctuate.
30. Free Look: Provision required in the majority of states whereby policy owners have up to twenty days to examine their latest policies at no compulsion.
31. Funeral Expenses: These are expenses for a funeral and burial. These can comprise of casket, vault, grave plot, headstone and funeral director.
32. Grace Period: This is the period of time after the due date of a premium during which the policy stays in force with no fine.
33. Graded Premium Policy: A sort of whole life policy intended for individuals who want additional life coverage than they can presently come up with the money for. They pay a lesser premium rate that rises slowly over the first three to five years and then remains steady over the life of the policy.
34. Guaranteed Term: This is a form of renewable term insurance that stays in force as long as the premiums are paid punctually. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.
35. Guaranteed Insurability: This is typically provided by rider, whereby extra insurance might be acquired at various times without proof of insurability.
36. Incontestable Clause: A clause in a policy stating that a policy has been in effect for a given length of time the insurer shall not be able to challenge the statements enclosed in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to dispute payment under the policy if death happened after the time limit declared in the incontestable clause.
37. In Force: Insurance on which the premiums are being paid or have been completely paid.
38. Insurability: These are all requirements pertaining to individuals that influence their health, vulnerability to harm and life expectancy; an individual’s risk profile.
39. Insured:This is the entity who is being insured. In life insurance, it is the human being because of his or her death the insurance company would compensate a death benefit to a chosen recipient.
40. Insurer: An insurer is the entity that gives insurance coverage, usually through a contract of insurance.
41. Irrevocable Beneficiary: An irrevocable beneficiary that cannot be altered without that beneficiary’s consent.
42. Increasing Term Insurance: This is a type of Term life insurance in which the death benefit augments from time to time over the policy’s term. It is typically purchased as a cost of living rider to a whole life policy.
43. Lapse: Lapse is the termination of a policy upon the policy owner’s stoppage to shell out the premium inside the grace period.
44. Level Term Insurance: Term coverage on which the face value and premiums remain unaffected from the date the policy comes into force to the date the policy ends.
45. Life Expectancy: The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.
46. Life Insurance: Life Insurance is a contract that promises the disbursement of a confirmed amount of monetary remuneration upon the passing away of the insured.
47. Limited Pay Policy: A type of whole life insurance planned to allow the policyholder to shell out higher premiums over a precise period such as ten or twenty years and then not pay any premiums for the rest of his or her life.
48. Medical: This is a document done by a medical doctor or a different permitted examiner and offered to an insurer to deliver medical proof of insurability (or lack of it) or in relation to a claim.
49. Medical Expenses: Medical expenses are evenhanded charges for medicinal, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. Usually the insurance company describes what is reasonable.
50. Mortality Charge: This is an expense for the element of pure insurance safety in a life insurance policy.
51. Mortality Cost: The primary feature considered in life insurance premium rates. Insurers have an idea of the likelihood that any individual will expire at any particular age; this is the information revealed on a mortality table.
52. Mortality Rate: The quantity of deaths in a grouping of people typically expressed as deaths per thousand.
53. Mortality Table: This is a table showing the occurrence of death at particular ages.
54. Non medical Insurance: This is an agreement of life insurance underwritten on the basis of an insured’s statement of his health with no medical examination necessary.
55. Occupational Hazard: This is a condition in an occupation that augments the danger of accident, bad health, or death. It generally will indicate high premiums.
56. Original Age: The age you were when you buy the policy.
57. Other Insured Rider: Other insured rider is a term rider that covers a family member excluding the insured that is linked to the base policy covering the insured.
58. Ownership: All constitutional rights, reimbursement and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insured. Ownership might be allocated or transferred by written demand of existing owner.
59. Para-Med Examination: The medical examination of an applicant for Life Insurance.
60. Para-Med (Paramedical): A physician, nurse, or para-med appointed by the medical director of a life insurance company to examine applicants.
61. Permanent Life Insurance: A term applied to life insurance policy forms excluding Group and Term, by and large Cash Value Life Insurance, for instance Whole Life Insurance.
62. Policy: This is the written manuscript given to the policyholder by the company stating the terms of the insurance contract.
63. Policy Holder: Policy holder is the person who possesses a life insurance policy. This is generally the insured person, however it might also be a next of kin of the insured, a company or a corporation.
64. Preferred Risk: A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age.
65. Premium: A premium is the intermittent expense necessary to maintain an insurance policy in force.
66. Premium Flexibility: The policy holder’s right to change the sum of premium paid every month towards a universal life policy.
67. Primary Beneficiary: In life insurance, the beneficiary chosen by the insured as the first to take delivery of policy benefits.
68. Primary Policy: Primary policy pays earliest when you have a loss that’s covered by numerous policies.
69. Probate Costs: The official fees and supplementary expenses incurred in the probate procedure, which is the legal processing of your will. Assets that you leave to other people in your will cannot be disseminated till the will is probated.
70. Provisions: Statements enclosed in an insurance policy which elucidates the benefits, conditions and other features of the insurance contract.
71. Rated: Coverage’s issued at an advanced rate than standard because of various health conditions, or injury of the insured.
72. Re-entry Option: An alternative in a renewable term life policy under which the policy owner is assured, at the end of the term, to be able to renovate his or her coverage with no evidence of insurability, at a premium rate given in the policy.
73. Reinstatement: Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.
74. Renewable Term: This type of term insurance is one that can be renewed for an additional term without evidence of insurability. Level term frequently turns into renewable term with escalating premiums after the level premium phase.
75. Replacement: A new policy written to take the place of one presently in force.
76. Representation: Declaration made by applicants on their applications for insurance that they represent as being significantly accurate to the best of their knowledge and belief but that are not necessary as accurate in all detail.
77. Revocable Beneficiary: The recipient in a life insurance policy in which the holder reserves the right to rescind or modify the beneficiary. Most policies are written with a revocable beneficiary.
78. Rider: An attachment to a policy that adjusts its conditions by escalating or curbing benefits or not including specific conditions from coverage.
79. Risk: Risk can be defined as the chance of injury, damage, or loss.
80. Risk Selection: The method by which a home office underwriter uses to choose applicants that the insurance company will permit. The underwriter must state whether risks are standard, substandard or preferred and lay down the premium rates for that reason.
81. Secondary Beneficiary: An added or alternate beneficiary chosen to take delivery of payment, typically in the event the original beneficiary predeceases the insured.
82. Single Premium Policy: A whole life policy for people who want to buy a policy for a single lump sum payment, and then be covered for what’s left of their lives without paying any extra premiums.
83. Standard Risk: An individual, who, according to a company’s underwriting standards, is allowed insurance protection without further rating or special restrictions.
84. Substandard Risk: Individual who is considered an under-average or impaired insurance risk because of bodily condition, relatives or personal record of illness, profession, residence in harmful climate or hazardous lifestyle.
85. Term Insurance: Protection throughout restricted number of years; ending without value if the insured stays alive after the acknowledged period, which might be one or more years but typically is five to twenty years, since such periods often cover the requirements for provisional protection.
86. Tertiary Beneficiary: In life insurance, a recipient chosen as third in line to take delivery of the income or benefits if the main and secondary beneficiaries do not stay alive and the insured does.
87. Third-Party Owner: A policy owner who is not the eventual insured. The policy owner and the insured may be, and frequently are the same person. If for instance, you apply for and are issued an insurance policy on your life, then you are mutually the policy holder and the insured and possibly will be acknowledged as the policy owner-insured. If, however, your mother applies for and is issued a policy on your life, then she is the policy owner and you are the insured.
88. Underwriter: Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.
89. Uninsurable Risk: A person who is not suitable for insurance because of too much jeopardy.
90. Universal Life: An interest-sensitive life insurance policy that constructs cash values. The premium financier has power over how the policy is prepared. He has the elasticity to do away with the premiums or have the premiums maintained for life. Formerly, a lot of Universal Life Policies were prepared assuming an elevated interest rate then was in reality received; consequently, most of them have been inefficient. If you have a Universal Life Policy, you should have it calculated to check if it requires having the premiums adjusted to get it back on track.
91. Variable Life: Life insurance under which the remuneration relates to the worth of assets behind the contract at the time the benefit is rewarded. The assets change according to the investment skill of funds handled by the life insurance company. Premium payments might be unchanging as to timing and quantity or subject to change by the policy holder.
92. Waiver of Premium: Rider or provision incorporated in nearly all life insurance policies excusing the insured from paying premiums after he or she has been disabled for a specific period of time, typically six months.
93. Whole Life Insurance: This type of life insurance is one that stays in force for an individual’s whole life as long as the pre-determined premiums are paid in time. All Whole Life policies put together cash values. The majority Whole Life policies are assured as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could differ depending on how healthy the insurance is. If the company is sound and the policies are not experiencing an advanced mortality than expected, premiums are repaid to the policy owner in the form of dividends.