life insurance

Life Insurance 101: A Glossary of Terms

November 22, 2023

Most people know they need life insurance, but some put off shopping for a policy because they feel overwhelmed by insurance jargon. Learning what insurance terminology means can make you feel more confident about contacting an agent for your life insurance needs.

Top 25 Life Insurance Terms

Here are simple definitions of 25 of the most important terms associated with life insurance.

 1. Agent

A professional who represents an insurance company and sells their policies to clients.

2. Beneficiary

The person who receives money from a policy when the insured person dies.  

3. Contingent Beneficiary

The person who receives money from a life insurance policy if the beneficiary is no longer alive when the insured person dies.

4. Carrier

The insurance company providing coverage.

5. Cash Value

A portion of certain types of policies that acts as a cash accumulation vehicle.

6. Conversion

Changing one type of policy into another.

7. Evidence of Insurability

Factors related to a person’s age and health history.

8. Face Amount

The amount of money that beneficiaries receive upon the death of the insured.

9. Insurable Interest

A person has an insurable interest in another person when the death of that person would cause a financial, emotional, or another type of loss.

10. Insured

The person the life insurance policy covers.

11. Issue Date

The date when an insurance company issues a policy to someone.

12. Lapse

A period of nonpayment that may result in a company terminating coverage.

13. Length of Coverage

The period during which a policy insures a person’s life.

14. Medical Examination

Tests that some companies require people to undergo before they issue a policy.

15. Mortality Table

Tabulated demographic statistics that help predict how likely a person is to die within a certain time.

16. Nonqualified Annuity

A non-qualified annuity is funded with money that's already been taxed. There are no contribution limits, and income payments from the principal are free of income tax. Only the funds derived from income growth in the annuity are taxed.

17. Premium

The cost of an insurance policy.

18. Premium Mode

The time interval at which you pay your insurance bill, for example, monthly, quarterly, semi-annually, or annually.

19. Proposed Insured

A person applying for coverage under a life insurance policy.

20. Rate Class

The category in which an insurance company categorizes a person to determine a premium.

21. Renewal

The option to continue your insurance policy after a specified coverage period ends.

22. Reinstatement

The process of reactivating your insurance policy after a lapse in payment.

23. Rider

An add-on to an insurance policy that alters the coverage, additional persons insured, or situations. 

24. Underwriting

Reviewing an application for life insurance and determining whether someone meets the criteria for a policy. 

25. Underwriter

A person who works for an insurance company and decides whether to sell a policy.

Life Insurance Words That Matter

Once you understand what the above words mean, purchasing life insurance becomes easier. Another way to simplify the process is to work with an insurance agent who can answer your questions about these terms. Contact 1891 Financial Life to learn more.

 About 1891 Financial Life

At 1891 Financial Life, we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. In 2023, 1891 Financial Life was listed by Forbes as one of "The World's Best Life Insurance Companies."

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.