Glossary Of Insurance Terms

Carrier:
The insurance company or the one who agrees to pay the losses. The carrier may be organized as a stock or mutual company, a reciprocal exchange, as an association of underwriters or as a state fund.

Contingent Beneficiary:
A person or persons named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.

Face amount:
The Protection Amount of a life insurance policy, or amount of money that will be paid to a beneficiary upon the death of an insured—depending upon the policy.

Fraud:
Intentional concealment or misrepresentation with the objective of forcing an insurer to provide a benefit (such as paying a claim) which otherwise would not be provided.

Grace Period:
The number of days (31 in most cases) a life insurance policy will remain in force when a payment is overdue.

Hazardous Activities:
Examples include, but are not limited to scuba diving, jet, snow, and water skiing, snowboarding, hang gliding, skydiving, paragliding, bungee jumping, mountain climbing, and amateur racing.

Insured:
A person covered by an insurance policy

Lapsed Policy:
A life insurance policy terminated as a result of nonpayment of a premium before the end of the grace period.

Level Premium Life Insurance:
Insurance for which the cost is distributed evenly over the period during which premiums are paid. The premium remains the same from year to year and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up a reserve which helps meet the costs in later years.

Permanent Insurance:
The type of life insurance that develops cash value and includes whole life, endowment, universal life and variable life insurance.

Policy:
The name generally used to mean the written contract of insurance.

Premium:
The amount of money charged a policyholder for an insurance policy.

Rated Policy:
Coverage issued at a higher rate than standard because of some health condition, or impairment of the insured.

Return of Premium Rider (Money Back Rider):
Provides a guaranteed return of all premiums paid at the end of the term period minus any benefits paid. If no benefits have been paid, the insured or policy owner will receive a full refund of all premiums paid, guaranteed.

Term:
A period of time for which a policy is issued.

Term Insurance:
Life insurance protection during a limited number of years but expiring without value if the insured survives the stated period.

Underwriter:
An employee of an insurance company who is a selector of risks. The underwriter is expected to select business that will produce an average risk of loss no greater than anticipated for the class of business. In the life insurance industry, “underwriter” may also mean an agent or other field representative who is referred to as a “field underwriter.”

Underwriting:
The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company accepts the risk.