Common Questions and Terminology in Life Insurance 

Accelerated death benefit

A portion of a life insurance death benefit that can be paid to the insured person while living. The purpose is to help with costs associated with severe chronic or terminal illnesses.

Beneficiary

The person(s) or trust named to receive payment of an insurance death benefit.

Claim

Notification to the insurance company to receive payment of an insurance benefit. Typically, a form is provided requiring details needed to process the claim.

Death benefit

Money paid when an insured person dies.

Exclusion

Conditions or terms not covered by insurance. For example, suicide is an exclusion to life insurance.

Term life insurance

Life insurance that lasts for a set time period or term. At the end of the term, the insurance either ends or converts to a new term.

Group term life insurance

A type of term insurance offered through a group such as an employer or association. Employer insurance typically offers a fixed benefit set as a portion of the employee salary and often ends when employment ends. Associations offer amounts the individual can choose and can be kept across jobs.

Level term life insurance

Insurance in which payments are designed to remain the same, or level, across the term.

Premium

The cost of insurance for attained coverage that is due in periodical payments monthly or annually. Monthly payment are subject to a $2/month fee.

Underwriting

The process used to decide if and at what rate class an applicant will be offered insurance and the cost. This can include health and financial assessments.

Rate class

The categories of health and other factors of an applicant that impact insurance offered and the cost.