Glossary
At TruStage, we believe insurance should be simple, straightforward and easy to understand. That’s why we created this insurance glossary with the terms you need to know, in plain English. We want to help you make smarter, more informed decisions about protecting yourself, your family and your finances.
A
Absolute Assignment
Signing over ownership of an entire insurance policy to another party. There are a variety of reasons why a policyholder may do this. They might think of it as a gift to a favorite charity. Or they may use the policy as collateral for a loan. The term absolute means that once the rights are assigned you can't change your mind.Accelerated Death Benefits
Part of a life insurance policy that lets you access your death benefits while you’re still alive, usually to cover the cost of care if you were to have a terminal illness. What are life insurance policy riders?Accidental Death and Dismemberment Insurance
Also known as AD&D, this type of insurance pays out if the insured dies, becomes blind or is dismembered (loses a limb) in a covered accident.Accidental Death Insurance
An insurance policy that pays out only if the insured dies in a covered accident. Some of the leading causes of accidental death include poisoning, auto accidents and falls. Learn more about AD&D insurance.Accrued Interest
Interest that has been earned but not yet paid out. Some annuities, for instance, have a feature where a portion of the payment goes to investments. Over time, these investments will build up accrued interest.
Accumulated Value
Whole life insurance usually includes a death benefit as well as an accumulated value. This is the cash value that has built up over time plus any dividend value (including interest). As you pay your premiums over the years and earn more of a return, the accumulated value of your policy may grow.
Actual Cash Value
The amount something is worth in its current condition. It’s a way to determine the value of an item when it got damaged or destroyed by considering its original cost minus depreciation from wear and tear.
Administrative Expense
An insurance company's operating costs. It covers things like salaries, underwriting, advertising, printing costs, agency expenses and premium taxes. These expenses get lumped into what you pay and are used to calculate dividends and premium rates.
Advance Directive
A statement that details the healthcare preferences and decisions, who makes those decisions and how they are to be executed should that person become unable to communicate their desires to a healthcare professional autonomously.Agent
A professional licensed by the state who has the authority to sell insurance. An agent can be independent and represent multiple companies, or a direct writer who sells policies for only one company. Contact a TruStage agent today.Amount of Insurance
The amount of money paid by an insurance policy. It’s also known as the coverage amount, death benefit or face amount. For example, if your homeowner's policy has a limit of $300,000, then the amount of insurance you have for this policy would be $300,000. You are responsible for losses over this limit..Annual Renewable Term
A type of life insurance that covers you for a term of one year, then renews every year at an increasingly higher premium. A person might buy yearly renewable term life because he or she wants to cover only very short-term debts, or is between jobs and anticipates buying group life insurance through a future employer.Annuitant
The person (or persons) who receives the payments of an annuity. Usually, the annuitant is the owner of the annuity, though some annuities have options to keep paying different beneficiaries after the original policyholder dies.Annuity
A financial contract with an insurance company designed to be a source of retirement income. When you invest in an annuity through a lump sum or by making periodic payments over several years, your insurer in return agrees to make regular payments to you that can last your entire life. Learn more about TruStage Annuity products.Annuity Certain
An investment that provides a series of payments for a set period of time (say, five, 10 or 30 years). If you die before the end of the period, your beneficiary will receive the remainder of the payments for the guaranteed period.
Anti Theft Device
Any mechanism or system installed in a vehicle such as alarms, steering wheel locks, or GPS tracking systems to help prevent theft or unauthorized access. Often, there’s a discount on insurance premiums for vehicles equipped with approved devices.
American Memorial Life Insurance Company (AMLIC)
The insurer/underwriter of Funeral Preplanning and Final Expense Insurance products.Application
No, it’s not that cool new program on your smartphone. In the insurance world, it’s a form requiring certain information when applying for insurance. It helps the insurance company decide whether to accept the risk and may affect premium rates. Learn more about what to consider when buying life insurance.Assignee
A person or organization receiving certain rights to a life insurance policy. For example, the insured can transfer the benefits of a policy to a bank as collateral for a loan. In this case, the bank is the assignee.Assignment
Transferring benefits of a life insurance policy to another person or financial institution as collateral for a loan. If the insured dies, the lender is paid first and the balance (if any) is paid to the policy’s beneficiary.
Automatic Premium Loan (APL) Provision
Let’s say you miss a payment on your whole life policy. Rather than cancelling your policy, the insurance company withdraws money from the policy’s cash value and uses it as a loan to pay the owed premium. Your insurance stays in force thanks to the Automatic Premium Loan Provision.
Auto Insurance
Insurance designed to cover damage to your vehicle from things like accidents, theft, and other unforeseen events while protecting you financially if you're liable for someone else's injuries or damages. Get an instant quote today.
B
Beneficiary
The person or persons who will receive the death benefit of your life insurance policy or annuity. Beneficiaries can be anyone … spouse or partner, child, a church or charity. Not sure if you're a life insurance beneficiary? Here's how to find out.
Benefit Period
The length of time that services are covered under your plan. It has a start and an end date. Most people are familiar with the benefit period for medical insurance, but term life insurance, disability, long-term care, homeowner's, and auto insurance policies will also carry a benefit period.
Bodily Injury Coverage
A component of auto insurance designed to help you financially if you're held responsible for injuries to others in a car accident. It covers things like medical bills, rehabilitation, and even legal costs if you're sued for injuries caused to others while operating your vehicle.
Bundling
The act of purchasing multiple insurance policies (like car and home insurance) from a single provider that could help you save money. In addition to potential savings, bundling can also offer convenience by helping you manage all your policies in one place, saving time and effort.
C
Car Liability Insurance
A type of auto insurance that covers costs if you're found responsible for injuries or property damage to others in an accident. It helps pay for the other driver's expenses if you’re at fault in a car accident. This video can help explain it more.
Cash Surrender Value
If you cancel your whole life policy and take the cash value, the amount you may be able to walk away with is an amount known as the cash surrender value. This amount equals the cash value minus a surrender charge, any outstanding loans and interest on those loans.
Cash Value
Typically when you have whole life insurance, a portion of your premiums go into an investment account, or the cash value. This money grows with interest over time. You can do many things with the cash value, including taking out a loan, using it for any needs that arise or funding the policy. The longer you’ve had the policy, the higher the cash value will be. Please remember that loans do accrue interest and any outstanding loan balance reduces the death benefit at the time of claim. Learn more about cashing out a life insurance policy.
Collateral Assignment
Transferring ownership of an asset from the borrower to the lender until the loan gets fully paid. The transferred asset can be the borrower's life insurance. If the borrower is unable to pay, the lender can cash in the life insurance policy and recover what is owed.
Collision Insurance
If you’re at fault, this type of auto insurance coverage helps pay for repairs or vehicle replacement if it's damaged in an accident with another vehicle (or even an object such as a fence or a tree). It’s typically required if you lease or finance your car and can also be used when another driver is at fault but doesn't have enough liability insurance to cover your costs.
Comprehensive Insurance
This type of auto insurance helps pay for damage that occurs due to non-collision events outside of your control such as theft, vandalism, natural disasters, and accidents involving animals. Many people add it to an existing policy because it’s often considered an affordable option.
Condo Insurance
Also known as HO-6, this type of insurance covers the interior structure of condo units including personal belongings, liability protection, and additional living expenses when the unit becomes uninhabitable due to covered events such as fire or theft. It can also pay for temporary housing in certain circumstances, and it may be more affordable than you think.
Contingent Beneficiary
Think of a contingent beneficiary as your backup — the person who will receive proceeds of a life insurance policy in the event your primary beneficiary is no longer around. Learn more about contingent beneficiaries.Contingent Owner
The person who will become owner of a life insurance policy if the original owner dies before the policy ends.Conversion Right
The right to change (convert) a term life policy to a permanent one at the end of the term without having to take a medical exam. It’s beneficial because the policyholder can enjoy the benefits of permanent life insurance at an older age without evidence of insurability. Learn more about term conversion.Cost Basis
For a permanent life insurance policy, this is the sum of all your insurance payments. If your cash value is higher than the amount you paid in premiums, the remaining money represents your gains. For example, if you paid $20,000 in insurance premiums and have a cash value balance of $25,000, you have a cost basis of $20,000 and the other $5,000 is from your gains.Cost of Insurance
The amount you pay for a life insurance policy, also known as the premium. The monthly rate may vary depending on age, health, gender and other underwriting considerations such as lifestyle and occupation. Poor health and extreme hobbies are likely to increase the cost of insurance. Get a free life insurance quote.Coverage End Date
Just like it sounds, this is the day insurance coverage ends.Coverage Period
The period of time (with a start and end date) an insurance policy covers the policyholder. Learn more about how life insurance works.
Coverage Start Date
Your coverage start date – also called the “effective date” – is the day your coverage officially kicks in. Remember, your policy won’t pay any benefits until that exact date.
Covered Perils
Any event or situation that causes property damage or loss. Fire, theft, vandalism, windstorms, and certain types of water damage are good examples that insurance can cover.
D
Death Benefit
The amount of money paid to the beneficiary of a life insurance policy when the insured dies. Learn more about life insurance death benefits.
Deceased Identity Theft
The crime of stealing the identity of a deceased individual. Also known as ‘ghosting,’ brings risk to their overall estate, including financial assets, credit cards, tax returns, etc.
Declarations Page
A document with important details of an insurance policy like your policy number, coverage limits, deductibles, premium amounts, dates of the policy, and more. Think of it as a quick reference to help you understand everything you need to know about your insurance coverage.
Deductible
The amount of money a policyholder must pay out of pocket before their coverage kicks in to cover a claim. For example, if you have a $500 deductible on your car insurance and you're involved in an accident causing $2,500 in damages, you would pay the first $500, and then your insurance would cover the remaining $2,000.
Deferred Annuity
A type of annuity that delays, or defers, income payments until a later date of your choosing. There are two main phases: the savings phase, which is when you invest money into the account, and the income phase, which is when the plan begins paying you. Generally, the money earned on a deferred annuity is taxed only when you withdraw it. Learn more about TruStage Annuity products.
Depreciation
The decrease in value of something over time due to age, becoming obsolete, or normal wear and tear. It’s helps figure out the value of property or belongings at the time of a claim to determine its replacement cost.
Disclosure Statement
An official statement that outlines the terms, conditions, risks and rules of a financial transaction, such as an insurance policy, loan or investment.
Direct Response
Insurance sold directly to you by an insurance company, usually by mail or online. Learn more about TruStage.
Dividend
A partial refund of premiums paid on permanent life insurance. Similar to the dividends paid by a company to its shareholders, the amount paid to policyholders depends on the insurance company’s profits.
Dividend Option
Not all life insurance policies pay out dividends. But for those that do, the policyholder is given different options on how to use them. The dividend can earn interest, reduce the premium, purchase additional paid-up insurance, or be taken in cash.
Due Date
The date on which your monthly payment is due. You’ll want to keep track of this to make sure your policy doesn’t lapse! What is the grace period on a life insurance policy?
E
Endorsement
A change to your insurance policy that adjusts your coverage. Also known as a “rider” or “floater,” endorsements are designed to tailor insurance policies to better meet your needs by helping you decide how much insurance you really need.
Estate Planning
End-of-life planning that is done in advance. An estate plan may include a will, identified beneficiary, and a power of attorney.
Evidence of Insurability (EOI)
Part of the application process for a life or health insurance policy where an applicant provides health information, such as medical history. The EOI can determine whether you’re approved for coverage and how much your premiums will be. Learn more about applying for life insurance.
Exclusion
An event or situation not covered by an insurance policy to avoid risks that may be too high or unpredictable. Exclusions help clarify the scope of coverage and define the limits of protection so you know exactly what you’re protected against.
Executor
An individual named by the insurer who manages the estate of the deceased and executes the terms identified in a will.
Expense
Your insurance policy’s share of the company’s operating costs. This includes things like medical exams, underwriting, printing costs, advertising, agency expenses, premium taxes and salaries. These costs figure in to your dividends and premium rates.
Extended Term
A nonforfeiture option in a whole life policy that uses cash value to purchase term insurance equal to the existing amount of life insurance. This allows you to continue receiving coverage for a limited time without paying premiums. What is term life insurance?
F
Face Amount
The amount of money a life insurance policy will pay upon the insured’s death. The name comes from the fact that this amount is typically shown on the "face" or top sheet of the policy. Learn more about life insurance death benefits.Family Benefit
Insurance that provides coverage for an insured's spouse and children.Final Expense Insurance
Final Expense Insurance is a funeral insurance policy meant to provide funds for the insured’s final expenses after death. Final Expense Insurance is life insurance sold through licensed insurance producers that do not usually have specific relationships with funeral homes. The policy funds are directed to the identified beneficiary and may be used to cover funeral expenses, debt, or other outstanding needs.
Financial Needs Analysis
“How much insurance do I need?” A Financial Needs Analysis can help answer that question. It looks at your current financial situation, your needs and wants, and how you plan to achieve your goals. This can help ensure that your family is provided for and that your finances are in order.Fixed Amount Option
Most life insurance policies pay death benefits in one lump sum. The Fixed Amount Option is one alternative that pays your beneficiary a series of fixed amount payments until the proceeds run out.Fixed Period Annuity
An annuity that pays you income for a specified period of time, such as 10 years. This could be a good option if you have a specified period of time that you will not be earning income. For example, if you were retired, an annuity could provide income after regular income has stopped but before retirement or other benefits begin. Learn more about TruStage Annuity products.Fixed Period Option
The option in a life insurance policy that makes death benefit payments for a set length of time. The number of payments is fixed, while the benefit amount is determined by the proceeds in the policy. For example, a benefit of $800 per month is paid for a period of 36 months.Free Look Provision
A certain amount of time (usually 30 days) to examine an insurance policy and return it to the company for a full refund if not satisfied.
Full Life Insurance
A phrase sometimes used to refer to permanent life insurance or whole life insurance. Learn more about TruStage Whole Life Insurance.
Funeral Preplanning Insurance
Sometimes referred to as funeral insurance, funeral preplanning insurance is an insurance policy purchased and assigned to a funeral home to cover the costs associated with preplanning a funeral.
G
Goods & Services Contract/Agreement
An agreement between the funeral home and customer that details the items and services selected for burial and/or funeral. A Goods & Services agreement may include (but is not limited to) the casket, cost of the funeral, flowers, transportation, preparation of the body, etc.
Grace Period
The period of time a policy stays in force even after a premium payment is due and goes unpaid. It’s usually a month so don’t wait too long to make things right. Learn more about life insurance life insurance grace periods.
Group Life Insurance
Life insurance that covers an entire group of people (as opposed to individual coverage). Employers usually offer group life insurance to their workers as part of a larger benefit package. Typically, the coverage ends when you leave the company. Is your employer’s provided life insurance enough?
Guaranteed Auto Protection (GAP)
An insurance option designed to help pay off your auto loan or lease if your vehicle is totaled or stolen and the insurance payout isn’t enough to cover the outstanding balance. Simply put, you won’t have to pay a remaining balance that’s above what your standard insurance covers.
Guaranteed Insurability Option (aka Guaranteed Purchase Option)
A rider that ensures you will be able to buy more insurance in the future as your need for coverage increases. Generally, you will be allowed to purchase additional life insurance at specified ages without having to provide evidence of insurability. What are life insurance riders?
Guaranteed Renewable
The right to continue your insurance each year as long as premiums are paid. Even if you develop a serious health condition and have a lot of claims, you have the assurance that your insurance will stay put.
H
Home Insurance
Sometimes referred to as “homeowners insurance,” this type of policy helps pays for losses and damage to your property if something unexpected happens like a fire or burglary. Most lenders require proof of home insurance and you can learn more about it here.
Home Warranty
A service contract covering the repair or replacement of major home systems and appliances that fail due to normal wear and tear. Keep in mind, it’s not the same as home insurance, so you may want to learn more about the differences.
I
Immediate Annuity
An annuity purchased with a single payment that pays a guaranteed income starting right away. It’s common for immediate annuities to last 10 or 20 years. They can even continue for the rest of your life if you choose to make it last that long. Learn more about TruStage Annuity products.Incontestable Clause
Sometimes, errors are made when applying for life insurance. That’s where an Incontestable Clause can protect you, the insured. It prevents the insurance company from cancelling coverage due to a misstatement on your application after a certain amount of time has passed, usually two or three years. Learn how to avoid the reasons why insurance claims are not paid.Insurable Interest
With regards to life insurance, someone having an insurable interest in you means that they would experience financial loss and hardship if you die. This is required when purchasing life insurance on another person.Insurance Policy
The physical, legal document that an insurance company issues to the policyholder which outlines the terms of the insurance. Learn how to read a life insurance policy.Insured
The person who is covered by an insurance policy. You’re bound to come across this word when reading through your policy and it’s important because it’s probably you!Insurer
The company that underwrites the insurance policy and pays out claims. It’s important to choose an insurer who is reliable and financially stable.Interest Option
In some cases, the primary beneficiary of a life insurance policy may not need the full death benefit all at once. Instead, they may choose to receive only interest payments while the insurance company holds the money (called the Interest Option). This way, they can access the full death benefit later on or pass it on to a secondary beneficiary, in effect, creating a policy on themselves.Intestate
A situation in which someone dies without a legal will. The distribution of the deceased's assets then becomes the responsibility of a probate court.Irrevocable Beneficiary
A life insurance policy beneficiary who cannot be removed from a policy unless they agree to be, and who also has the power to prevent the policy holder from canceling the policy without their approval. For example, if a spouse is an irrevocable beneficiary, that person cannot be removed as a beneficiary even if the couple divorces.
J
Juvenile Insurance Policy
Life insurance purchased by an adult that insures children, typically under the age of 15. This is often permanent life insurance that has a savings component and guarantees the child coverage as an adult.
K
No Current Definitions
L
Lapse
Termination of coverage due to nonpayment of premiums within a specified time period. A lapsed policy no longer pays benefits or provides coverage.
Lapse Rate
The rate at which insurance policies are cancelled because of unpaid premiums. Not surprisingly, the more expensive a policy is, the higher the lapse rate.
Last Conversion Date
The last day a policy can be converted from term life insurance to whole life insurance to avoid losing money paid on premiums.
Leased Vehicle
A car used for a specified period of time where the person leasing the car makes regular payments (typically to a car dealership) for the right to use the vehicle. Some people prefer leasing a car instead of buying it, but each has its advantages you can read about here.
Life Expectancy
The number of years someone is expected to live, based on statistical research. Insurers factor in life expectancy when determining the premium for certain policies, particularly life insurance.
Life Income with Period Certain Annuity
A type of annuity that guarantees income for a certain number of years. This allows you to specify when the benefit will start and how long it will last to meet your retirement and estate planning needs, as well as your lifespan expectations. Common time frames for a period certain annuity are 10, 15, or 20 years.
Life Insurance
Life insurance is a contract with an insurance company that helps financially protect your loved ones if you pass away. You pay your premiums, and, if you pass away while coverage is in place, the company pays a lump sum (called a death benefit) to your beneficiaries. This money can help them with things like funeral costs, rent or mortgage, day-to-day living expenses, education costs and more. Get a free life insurance quote from TruStage.
Lifetime Coverage
An insurance policy that lasts for your entire life, as long as premiums are paid. Whole life insurance is a type of permanent life insurance designed to provide lifetime coverage.
Living Benefits
Part of a life insurance policy that lets you access funds while you’re still living, usually to cover the cost of care if you were to have a terminal or catastrophic illness.
Living Will
A legal document that specifies the type of medical care an individual does or does not want in the event they are no longer able to communicate their wishes.
M
Mechanical Repair Coverage
Insurance that covers the costs of unexpected vehicle repairs and replacements of parts that fail due to normal wear and tear. It’s typically offered as an optional add-on to auto insurance policies that only cover accidents. Learn what makes it different than Liability Insurance.
Medical Information Bureau (MIB)
A computer database that stores medical and some non-medical information for fraud detection purposes. This information is used by insurance companies to assess an applicant’s risk and eligibility for life and health insurance.
Medical Report
A report on the health of a life insurance applicant that is filled out by a doctor following a physical examination. Learn more about physical exams and life insurance.
Misstatement of Age
If an applicant for life insurance misstates their age, the insurer, during a length of time known as the "contestability period," may choose to cancel the policy, increase the premiums or adjust the policy amount. Why are some life insurance claims not paid out?
Mortality Rate
The frequency of death at each attained age. Life insurance companies use mortality rates to determine life insurance rates that make sense for both the consumer and the company.
Mortgage
A type of loan provided by a bank or financial institution to help someone purchase a home. The person borrowing the money agrees to make regular payments over a set period of time, and we offer a calculator to help you figure out how much you can afford.
Mortgage Life Insurance
As the name implies, mortgage life insurance is a policy that pays off the balance of your mortgage should you die. The payout goes to the mortgage lender, not your family.
N
Non-Forfeiture
One of the choices available if the policyholder stops paying on a life insurance policy with cash value. Options include taking the cash value in cash or using it to purchase extended term insurance or reduced paid-up insurance.Non-Forfeiture Clause
A clause in an insurance policy with cash value that entitles the insured to all or a portion of the benefits, or a partial refund on premiums paid, if the insured person misses premium payments and the policy lapses.Non-Forfeiture Provisions
Privileges allowed under the terms of a life insurance contract after cash value has been created. Options include: 1) surrender for full cash value; 2) paid-up insurance for however much the cash value will purchase; and 3) term insurance for the full face amount.Non-Participating Life Insurance Policy
A life insurance policy that does not share in the insurance company’s surplus earnings and does not pay dividends. If you want to own a participating policy with dividends, you will likely need to buy whole life insurance.
Non-Smoker Rates
It’s no secret that non-smokers are expected to live longer than smokers. For this reason, they are often rewarded with lower life insurance rates. Anyone who hasn’t smoked for at least a year before applying for a life insurance policy may benefit from this discount. How does smoking affect life insurance rates?
O
Owner
The person who purchased an insurance policy. He or she is usually the same as the insured but in certain cases, the owner could be someone who has been authorized to be the owner, such as a spouse, a child, or a parent.
P
Paid-Up Additions
Using dividends earned by a whole life insurance policy to purchase additional coverage and grow additional cash value.
Paid-Up Insurance
A whole life policy that is paid in full, remains in force, and you no longer have to pay any premiums. It’s a great option for someone who has recently received an inheritance or has come into money.
Participating Insurance
A life insurance policy that pays dividends to the policyholder. Dividends are generated from the profits of the insurance company and are typically paid out on an annual basis over the life of the policy. If you want to own a participating policy, you will likely need to buy whole life insurance.
Payout Option (annuities)
When you invest in an annuity, you choose the term of the payments you’ll receive. Three of the most common payout options are lifetime payments (which continue for as long as you live), period certain (say, five years or 30 years) and joint-life payments (which continue for as long as either you or your spouse lives).
Payout Phase (annuities)
The period during which the money accumulated in an annuity is paid out as regular income payments. You can choose to receive these payments for a specific period of time (such as five or 30 years) or for the rest of your life.
Period Certain (annuities)
An annuity that provides guaranteed income for a set period of time (say, five years or 30 years). If you die before the end of the period your beneficiary will receive the remainder of the payments for the period. Learn more about TruStage Annuity products.
Permanent Life Insurance
A life insurance policy that lasts your entire lifetime, as long as premiums are paid. One of the most common types of permanent life insurance is one you’ve likely heard of: whole life insurance. It can build cash value over time, as well as provide a death benefit to your beneficiaries.
Personal Injury Protection (PIP)
A type of auto insurance that helps pay for medical expenses, lost wages, cleaning services, and other related costs (even funerals) for you and your passengers if you're injured in a car accident. It’s often required by some states in addition to liability insurance.
Policy
A written contract between you and the insurance company stating the terms of insurance. Learn how to read a life insurance policy,
Policy Dividend
Many whole life insurance policies provide dividends representing a portion of the insurance company’s profits that are paid to policyholders; policyholders are not typically guaranteed dividends. The dividend amount often depends on the amount of money paid into the policy. Dividends are typically not guaranteed and are subject to the financial performance of the insurance company.
Policy Loan
Let’s say you own a whole life insurance policy and need emergency cash. One option is to get a policy loan, which accesses the cash value of your life insurance. You’re not actually withdrawing the cash value, it’s simply being used as collateral on the loan. Keep in mind that loans accrue interest and if the money isn't paid back, the money is withdrawn from the policy’s death benefit. Learn more about how to cash out a life insurance policy.
Policy Proceeds
The amount of money actually paid on a life insurance policy at death, or when the policyowner receives payment at surrender or maturity.
Policyowner
Also known as the policyholder, this is the person who owns an insurance policy. It’s usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.
Power of Attorney
A document that allows you to appoint someone to manage your affairs if you become unable to do so. This may include performing financial transactions with your resources, making decisions regarding your medical treatment, or both. You can name anyone you want to be power of attorney, but it should be someone you trust completely.
Preferred Rates
The healthiest people with the safest lifestyles are the least risky to the insurance company, so they are placed in the categories that qualify them for the lowest rates, called preferred rates. Considerations include health, gender, smoking habits, occupation and hobbies. Learn more about what factors affect life insurance premiums.
Premium
The amount of money you pay for an insurance policy. Depending on the policy, premiums can be paid monthly, quarterly, semi-annually or annually. Factors such as your age, health, gender and coverage amount all determine your premium amount.
Primary Beneficiary
The first person in line to receive the insurance policy death benefit. This is often a spouse, sibling or child. With most policies, you can change your beneficiary at any time.
Prospectus
A legal document that describes a security, such as a stock, bond or mutual fund, to potential investors. A prospectus contains facts about the company (or fund), its finances, management, and other information that can help investors make an informed decision.
Q
Qualified Annuity
An annuity purchased with pre-tax dollars. The money that you put into the plan is tax deductible when you contribute it, but all of the money you later receive from the annuity payouts will be taxable, since you haven't yet paid tax on it. Learn more about TruStage Annuity products.
R
Rating
The basis for an additional charge to the standard premium because the person insured is classified as a greater than normal risk. This usually results from impaired health or a hazardous occupation. Learn more about the factors that affect life insurance premiums.
Reduced Paid-Up
If you own a whole life policy, the reduced paid-up option would allow you to give up your existing coverage and instead receive a reduced death benefit that needs no additional payment of premiums. That reduced amount is based on the cash value at the time you stop the policy.
Reinstatement
Restoring a policy that had previously lapsed due to unpaid premiums. This is usually allowed during the 31 days following the expiration of an insurance policy's grace period. Reinstatement requires payment of all overdue premiums plus interest, and may require evidence of insurability.
Renters Insurance
A policy designed to protect people living in a rented apartment, condo, or home. It helps pay for personal property after unexpected circumstances such as a theft or fire and can even protect against liability if someone gets hurt where you’re renting. Learn more by researching prices.
Repatriation
The process of returning remains of a loved one to the legal residence of the deceased, then typically to their preferred funeral home.
Replacement
The act of terminating a policy with an insurance company and replacing it with a new policy. Policyholders sometimes replace their policy with a new one to get more or less coverage, to lower the premium payment, or to switch to a policy better suited to their needs. Replacement transactions are highly regulated to help protect consumers.
Replacement Cost Insurance
Coverage that reimburses the full cost of damaged or destroyed property with a new item that’s similar in type and quality. It’s designed to make sure your possessions are replaced at today's market prices instead of their depreciated value.
Revocable Beneficiary
A type of beneficiary designation that can be changed without the beneficiary's consent.
Rider
An optional add-on to an insurance policy that provides additional benefits for an increased cost. Examples of life insurance riders include accelerated death benefits and critical illness riders. Learn more about life insurance riders.
S
Settlement Options
A settlement is the way your life insurance policy proceeds are paid out. Options include a lump-sum cash payment, life income, or periodic payments for a certain amount of time. As a policyholder, you can usually choose the settlement method you prefer though your beneficiary may also get to choose.
Suicide Clause
A provision in a life insurance policy that denies payment if the insured person takes his or her own life within a set period after the policy is issued, typically two years. Is suicide covered by life insurance?
Supplementary Contract
An agreement between a life insurance company and a policyholder or beneficiary in which the policy’s proceeds are paid over a period of time instead of as a lump sum. For example, a beneficiary may decide that he wants to be paid $1,000 a month by the life insurance company. The insurance company could then set up a supplementary contract with the beneficiary reflecting this payout method.
Surrender Charge
The fee deducted from a life insurance policy or annuity payout when a policyholder cancels (or “surrenders”) the policy. Surrender charges typically decline over time, though some policies impose surrender fees for as long as 15 to 20 years after you buy a policy.
T
Term
The specific time period for which the insured person is covered under a term life policy. The insured person can be covered for a set number of years (usually 10, 20 or 30 years) or until the person reaches a certain age, such as 80. The policy pays benefits only if the insured dies during the term.Term Conversion
The right to convert a term life insurance policy to a permanent, whole life policy. Usually the insured can convert to a permanent policy at the same amount of coverage without providing evidence of insurability. This means you can have lifelong protection regardless of your health as long as you convert before the deadline listed on your policy.Term Life Insurance
A life insurance policy that provides death benefit protection for a certain length of time, usually 10, 20 or 30 years. The policy pays a benefit to your beneficiaries should you pass away during the term. Once the term expires, you can either renew it for another term, convert the policy to permanent coverage, or allow the policy to end. Learn more about TruStage Term Life Insurance.TruStage Life of Canada
For 50 years, TruStage Life of Canada has provided funeral preplanning solutions, final expense solutions and products created to reduce the obligations of an executor.Trustee
An individual, named by the insured who manages trusts established during one’s life and at death.
U
Uninsured
Someone who lacks any form of insurance coverage. As a result, they won’t be able to offer financial compensation for damages, injuries, or losses unless they pay for it out of their own pocket.
Underinsured Motorist Insurance
A type of auto insurance that protects you if you're in an accident caused by a someone who doesn’t have any or doesn’t have enough coverage to pay for the damages or injuries they caused. Essentially, it helps pay the actual cost of your injuries and property damage when the person at fault can’t.
Underwriter
The person in an insurance company who reviews the application for insurance and decides if the applicant is acceptable and at what premium rate. For life insurance, the underwriter will look at a number of data points, including your lifestyle, occupation, medical record, financial history, and driving record. Learn more about what impacts the cost of life insurance.
Underwriting
The process by which an insurance company reviews your application and other information and decides whether to insure you and if so, how much you’ll pay for coverage. For life insurance, the underwriter looks at data like your age, health and medical history as well as lifestyle information like your hobbies and driving record.
Union Security Insurance Company (USIC)
The insurer/underwriter for a closed block of business that is internally referenced as a legacy product.Universal Life Insurance
A type of life insurance that can protect you for your entire life, while offering the flexibility to change your premium or benefit amount as life takes twists and turns. Universal life insurance also allows you to build cash value over time that you can use for unexpected expenses that come up.
V
Variable Annuity
A tax-deferred retirement vehicle that allows you to choose from a range of investments, including stocks, bonds and money market accounts. A variable annuity can be affected by the performance of the investments you choose. Compare that to a fixed annuity, which provides a guaranteed interest rate, regardless of what may happen in the market. Learn more about TruStage Annuity products.Variable Life Insurance
A type of permanent life insurance that has a cash value investment component, similar to what whole life insurance offers. The main difference is that a variable policy's cash value is invested in accounts that are similar to mutual funds rather than a savings account. The cash value may rise or fall depending on the performance of the investments you choose.
W
Waiver of Premium
A rider or supplemental benefit that helps prevent your life insurance from lapsing if you become incapable of making payments. If you become too sick or injured to work, this rider goes into effect and covers your policy premiums. Qualifying scenarios would include things like severe injury, permanent illness or some other catastrophic life change that results in you becoming disabled. What are life insurance riders?Whole Life Insurance
A type of life insurance that provides a set amount of coverage for your entire life. You pay the same premium amount for the life of the policy, so you always know what to expect. In addition to providing a death benefit, whole life policies build cash value over time – money you can use if the need arises.Will
A document describing what you want to happen to your assets when you die. You can also name your heirs, a guardian for your minor children and an executor for your will – the person to collect and distribute your assets. Remember, a will is only enforceable if it complies with the probate laws of your state.Withdrawal Charge
The amount deducted from the accumulation or account value of a policy if a withdrawal occurs within a specific number of years following policy issue.
X
No Current Definitions
Y
No Current Definitions
Z
No Current Definitions
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10, 15, 20, 30-Year Insurance Policy
A life insurance policy that covers you for 10, 15, 20 or 30 years, known as the term. If the insured passes away during this time, the insurance company will pay his or her beneficiaries. Once the term ends, so does the policy. Learn more about term life insurance.
1035 Exchange
Think of it as a way of trading in your life insurance policy or annuity for a new one without any tax penalties. The exchange must meet the requirements of Section 1035 of the Internal Revenue Code for the transaction to be tax-free. Learn more about life insurance and taxes.