Life Insurance Glossary
Simple definitions for complex terms. We explain everything in plain English, so you don't need a dictionary to understand life insurance.
Why this glossary is different: Life insurance has enough jargon to confuse anyone. We've written every definition at a 3rd grade reading level, using simple words and real examples. No fancy terms, no confusing explanations—just clear, helpful information.
Accelerated Death Benefit
A feature that lets you get some of your death benefit early if you get a serious illness. This helps pay for medical bills while you're still alive.
Beneficiary
The person or people you choose to get money from your life insurance when you die. You can pick anyone you want.
Cash Value
Money that builds up inside some types of life insurance policies. You can borrow against it or take it out, but it might reduce your death benefit.
Contestability Period
The first two years after you buy a policy. During this time, the insurance company can investigate and possibly cancel your policy if you lied on your application.
Convertible Term
A term life insurance policy that you can change into a permanent policy later without having to prove you're still healthy.
Death Benefit
The amount of money your life insurance company will pay to your beneficiary when you die. This is the main reason people buy life insurance.
Exclusion
Something your life insurance policy won't cover. For example, some policies won't pay if you die from suicide in the first two years.
Face Amount
The amount of money your life insurance policy will pay out when you die. This is the same as the death benefit.
Grace Period
Extra time you get to pay your premium after it's due. Usually 30 days. Your policy stays active during this time.
Guaranteed Issue
Life insurance that you can get without answering health questions or taking a medical exam. Everyone who applies gets approved, but it's usually more expensive.
Lapse
When your life insurance policy ends because you stopped paying your premiums. You lose your coverage and usually can't get your money back.
Level Premium
A premium that stays the same amount for the entire time you have the policy. It never goes up or down.
Medical Exam
A health check-up that some insurance companies require. A doctor or nurse checks your health to help the company decide your premium.
No-Exam Policy
Life insurance you can get without a medical exam. It's usually more expensive and has lower coverage amounts.
Premium
The money you pay every month or every year to keep your life insurance policy active. It's like a monthly bill.
Rider
An extra feature you can add to your life insurance policy for an additional cost. Like adding extra coverage for accidents or the ability to get money if you get very sick.
Term Life Insurance
Life insurance that only lasts for a certain number of years, like 10, 20, or 30 years. If you die during that time, your beneficiary gets money. If you don't die during that time, the policy ends and you don't get money back.
Underwriting
The process where the insurance company looks at your health, age, and other information to decide if they'll give you insurance and how much it will cost.
Universal Life Insurance
A type of permanent life insurance that gives you more flexibility. You can sometimes change how much you pay and how much coverage you have.
Whole Life Insurance
Life insurance that lasts your whole life, as long as you keep paying your premiums. It also builds up cash value that you can borrow against or use later.