Insured
The person whose life is covered by the policy; the death benefit pays when the insured dies.
Policyholder / Owner
The person who owns the policy and can change beneficiaries or borrow cash value; may be the insured or someone else.
Beneficiary
The person or entity who receives the death benefit when the insured dies.
Premium
The amount paid to keep the policy in force — monthly, quarterly, or annually.
Death Benefit
The lump sum paid to beneficiaries upon the death of the insured.
Cash Value
A tax-deferred savings component in permanent policies that grows over time and can be borrowed against.
Term Life
Coverage for a fixed period (10/20/30 yrs) paying a death benefit if the insured dies during the term; builds no cash value.
Whole Life
Permanent coverage for the insured's whole life with guaranteed level premiums and guaranteed cash-value growth.
Universal Life
Permanent coverage with flexible premiums and cash value tied to an interest rate; more adjustable than whole life.
Indexed Universal Life (IUL)
Universal life whose cash value is credited based on a market index, subject to a floor and a cap.
Rider
An optional add-on that modifies coverage — e.g. waiver of premium or accelerated death benefit.
Policy Loan
A loan taken against a permanent policy's cash value, using the cash value as collateral.
Underwriting
The insurer's process of assessing risk and setting the premium, often including a medical exam and health questions.
Contestability Period
The first two years during which the insurer can investigate and deny a claim for material misrepresentation.
AD&D
Accidental Death & Dismemberment — pays an extra benefit only for death or loss from a covered accident.
Convertible Term
Term life that can be converted to permanent coverage without a medical exam.
ILIT
Irrevocable Life Insurance Trust — owns the policy and keeps the death benefit outside the taxable estate.
Key Person
Life insurance on a vital employee, owned by and payable to the business to fund continuity after their loss.
Buy-Sell
An agreement funded by life insurance that lets surviving owners buy a deceased owner's share at a set price.
Paramedical Exam
A short health exam (height, weight, BP, blood, urine) used in underwriting.