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Brief Life Insurance GlossaryAgent - a person or company that is licensed to sell insurance by or on behalf of an insurance company. Benefit - Money or help that an insurance company gives to you. Binder - A temporary or preliminary agreement which supplies coverage until an insurance policy can be written or delivered. Broker - A person who is licensed to look for insurance on your behalf and whose services are paid for by you. Cancellation - The decision to end insurance coverage during the policy period. Flat cancellation is the termination of a policy as of its effective date, which doesn’t involve any premium charge. Claim – Request to an insurance company which states that under the terms of a policy, a loss maybe covered. Claimant – Someone who makes an official request for money from an insurance company. The first or third party. Comprehensive insurance - Insurance that pays for every kind of damage or loss, even if you are responsible for it. Cost of Insurance (C.O.I.) – The amount of money that is paid by insurance company as a death benefit. C.O.I. is a fixed cost, calculated per thousand dollars of insurance. It is mostly determined by the insured's age and health. Coverage - The amount and type of protection that an insurance agreement gives you. Decline - The company’s refusal to provide a person with insurance coverage. Double Indemnity - A section in a life insurance agreement that says the insurance company will pay double the amount of money if the person who bought the insurance dies in an accident rather than because of illness or old age. Exclusion - Certain causes and terms, listed in the policy, which are deliberately not included into the coverage. Face Amount - The amount of money to be paid to the beneficiary when the insured dies. It does not comprise other sums that may be paid from insurance bought with dividends or any policy riders. Grace Period – A period of time during which the insurance company allows you to pay an overdue premium without penalty. The policy remains in force throughout this period, which is usually 31 days. Guaranteed Insurability - An option that allows an insured person to purchase additional fixed amounts of life insurance at fixed times in the future without evidence of insurability. Indemnity - A payment made to someone who has suffered injury or loss. Insurer – Person or company that sells insurance. Life Insurance - A type of insurance that pays money to your family when you die. Policy - A contract between an insurance company and a person or organization Policy Limit – The greatest amount of money the insurer will pay, either overall or under a particular coverage. Policyholder/Insured - The person who has an insurance policy. Premium - An amount of money that you pay regularly for an insurance policy. Quote - The price that the insurance company charges you. The insurance company estimates the cost of insurance on the basis of information you provide them. Rider/Endorsement - Amendment to the terms of policy which means some alteration to the amount of coverage. Surrender value - The amount of money that you receive from a life insurance policy if you decide you want to stop the policy. Third-party insurance - protects you if you accidentally injure someone or accidentally damage their property. Underwriting - The process of selecting applicants for insurance and classifying them based on their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks. Waiting Period - A period of time which must pass before some or all coverages come into force. |
Types of Life Insurance
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