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The below are a list of basic life insurance terms you may find helpful. These terms may not be specific to SBLI unless noted otherwise.

 

Absolute Assignment The process of transferring all policy rights from the assignor to the assignee.

Accrued Interest The amount of interest that is accumulated in an interest-based investment option as of a special date.

Annuitant A person who applies for and purchases an accumulation or payout annuity contract. For a payout of an annuity product, it is the person whose lifetime is used as the measuring period to determine how long benefits are payable and also is the person receiving the payments.

Annuity A contract that provides for periodic payments starting after a stated period or on a contingent date and continuing for a fixed period, or for the remaining life of the annuitant.

Automatic Payment Plan (APP) The SBLI feature, when elected, that allows payment of SBLI premiums through electronic funds transfer (EFT). The premium amount is automatically debited from a checking or savings account and the transaction appears on the monthly checking account statement. See also: Electronic Funds Transfer.

Automatic Premium Loan (APL) An optional policy provision that allows the insurer to pay an overdue premium on a whole life insurance policy by making a loan against the policy's cash value.

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Beneficiary The person who is to receive the money when the insured person dies.

Billing Frequency The frequency of payments made in a given policy year, for example, monthly, annually, quarterly, or semi-annually.

Billing Method The way in which premiums are paid.

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Cash Dividend Option A dividend option where the dividend declared by the insurance company at anniversary is paid to the policyholder in cash or check.

Cash Value or Cash Surrender Value The amount payable in cash to the owner of a policy who voluntarily cancels the policy before it is payable by death or maturity. If cashed in, there may be tax implications for the policyholder. Not all policies have a cash value, for example, term insurance.

Children's Rider A rider that may be added to a basic life insurance policy to provide term insurance coverage on an insured's current or future children - born, step-children, or legally adopted.

Client An umbrella term used to define the insurance company's customers. For our purpose, clients include only policy owners, payors, beneficiaries, insureds, assignees, and annuitants.

Compound Interest Interest accrued and credited on an investment option at periodic intervals. The amount is added to the principle and previous interest earned or charged. Essentially, interest is earned or charged on top of interest.

Contestable Period If the insured dies within a two year period from the date of issue or any lapse, the insurer may contest the validity of the policy due to material misrepresentation. A reinstated policy is also subject to the two-year contestability period.

Contingent Beneficiary The contingent beneficiary receives the proceeds if the primary beneficiary dies prior to the insured's death.

Conversion Option The right to exchange one type of insurance, based on current age, for another type of insurance without evidence of insurability. The most typical conversion is from term to permanent insurance.

Convertibility A provision that allows one type of policy to be exchanged for another without the policyholder providing medical proof of insurability.

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Death Benefit The money paid to the beneficiary when the insured person dies.

Deposit A premium payment made to an accumulation annuity. Unlike a premium for a traditional life insurance policy, a deposit is applied against a specific investment account(s) on the contract.

Disability Benefit (Rider) A benefit providing a waiver of premium if the person insured becomes disabled. Subject to underwriting review.

Dividend A refund of part of the premium paid to the policyholder. It is available on participating life insurance only. It varies year to year according to the expense experience of the insurer. Also known as: Policy Dividend.

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Electronic Funds Transfer (EFT) An automatic method of transferring funds electronically from one bank account to another without producing a check. See also: Automatic Payment Plan.

Evidence of Insurability Any statement or other form of verification of a persons physical condition, occupation, lifestyle or other factors that may influence underwriting acceptance of the terms for insurance.

Exclusion That which is expressly eliminated from the coverage of an insurance contract or policy. The exclusion clause may be a general statement of terms covering all policy owners and/or insureds. Examples of general exclusions are suicide or suicide attempt, acts of war, or foreign travel. A specific exclusion may also be added to a contract as issue. Examples of specific exclusions are skydiving, scuba diving, automobile racing, and flying.

Expiry Date The date on which a policy reaches the end of its term while the insured is still living.

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Face Value The amount stated on the face of the policy which will be paid on the death of the person insured or in some cases when the policy matures. Does not include dividends or any reduction if there is an outstanding loan. Also known as: Face Amount or Sum Insured.

Fixed Rate A rate of interest that stays the same for a specified period of time.

Free Look Period An insurer's contractual obligation providing a number of days in which a new policy owner is allowed to refuse and return a newly issued policy. SBLI provides a 30 day free look period. The number of days begins upon the policy owner's receipt of the policy. All premiums paid are returned under the rescission right. All annuity products provide a 10 day free look period.

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Grace Period A period of 30 days after the due date, during which a premium may be paid without penalty and keep the policy from lapsing.

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Insured A person whose life is covered by a policy of insurance. Upon this person's death, a benefit will be paid to a named beneficiary, unless assigned.

Irrevocable Beneficiary A type of beneficiary whose right to receive the policy proceeds can not be changed by the policy owner at any time prior to the insured's death without the beneficiary's consent.

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Lapsed Policy Termination of a policy upon the policyholder's failure to pay the premium within the time required.

Level Premium Insurance Life insurance where premiums remain level for the life of the policy.

Level Term Insurance Term life insurance in which the premiums and the amount of insurance protection remain the same over the selected term of the policy.

Limited Payment Insurance A plan of life insurance under which the premiums are payable for a specific number of years (for example, 10, 15, 20, or 30 years or to age 65) after which the policy remains in effect for the insured's life without any additional premiums.

Loan Value A portion of the policy's cash value which an insurer will lend to the policy owner at a rate of interest defined by the contract provisions.

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Maturity A policy has reached maturity when it is at the end of its term while the insured is still living, has value and that value is then paid to the insured.

Maturity Date The date when the policy matures.

Mortality Rates Statistics used in relating life insurance to the number of deaths at various ages over a period of years.

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Non-Forfeiture Option When lapse processing is imminent on a policy with cash value there are a number of options that are available for the placement of the cash value, for example, paid up insurance for a reduced amount, extended term insurance, and cash surrender value payout.

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Owner See: Policyowner.

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Paid-Up Additions Additional whole life insurance bought by using policy dividends.

Paid-Up Insurance
Lifetime insurance on which all the required premiums have been paid.

Paramedic Exam When you apply for life insurance with SBLI, you'll be required to have a paramedic examination. The results from this exam help our underwriters determine your health status.

Permanent Disability A disability that will last a lifetime, or as far into the future as can be foreseen.

Permanent Life Insurance See: Whole Life Insurance.

Policy The printed document issued to the policyholder by the life insurance company which states the terms of the life insurance contract between them.

Policy Anniversary The anniversary of the date on which a policy became effective.

Policy Fee The policy fee is a pre-determined amount charged on most traditional insurance products to cover standard fixed costs that are incurred no matter what the policy variables are, e.g. the face amount, age. The fee is in addition to the business costs used in pricing the product and is added when calculating a policy premium. For non-traditional insurance products this type of fee is usually referred to as administrative charge.

Policy Loan A loan made by a life insurance company to a policyholder using the cash value of a policy as security. Outstanding loans are deducted from the face value amount upon death.

Policyholder The person who owns a life insurance policy.

Policyowner The person or party who owns a policy. They may exercise the rights and privileges in the policy contract. Such person may or may not be the insured under the contract.

Pre-authorized Checking (PAC) See: Electronic Funds Transfer (EFT).

Premium The payment(s) a policyholder is required to make in order to keep a life insurance policy in force. Premiums may be made quarterly, semi-annually, or annually by check or automatic bank withdrawal. In some cases, a monthly option is available.

Primary Beneficiary The primary beneficiary, if still living, is the first beneficiary to receive the proceeds of the policy upon the death of the insured. There may be more than one person designated as a primary beneficiary and unless otherwise specified, the shares will be equal.

Proof of Insurability Proving medically that you are qualified to purchase life insurance.

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Rated An applicant may be offered a premium that is higher than standard risk if he or she has a medical or occupational condition that puts them at a greater risk. This is known as a rated policy.

Recission The act of rescinding; the cancellation of a contract and the return of the parties to the positions they would have had if the contract had not been made.

Reinstatement The process of restoring a lapsed policy. Evidence of insurability and payment of any overdue premiums are generally required.

Renewable Insurance This provision allows the policyholder to renew at the end of each term without having to provide medical proof of insurability.

Revocable Beneficiary A type of beneficiary whose right to receive the policy proceeds can be changed by the policy owner at any time prior to the insured's death without the beneficiary's consent.

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Settlement Option The various ways which a policy owner or beneficiary may choose to have policy benefits paid out. Options available vary by contract.

Suicide Clause A provision specifying that in the event the insured commits suicide within two years from the date the policy was issued, the insurance company's liability is limited to payment of a single sum equal to the premium(s) paid less any dividends paid and any indebtedness to the Company.

Surrender A voluntary termination of a policy where the cash surrender value is paid to the policy owner, and the insurer is no longer obligated to pay a death benefit.

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Tax-Deferred Earnings that accumulate free from taxation until withdrawn. Common types of tax-deferred products include individual retirement accounts (IRAs) and tax-deferred annuities.

Term Insurance Generally considered the least expensive form of insurance. It is only renewable for specific periods and premiums may increase at renewal.

Time Clause An electable option that, if the insured dies and a designated beneficiary dies within a specific number of days following the insured's date of death, the beneficiary will be deemed to have not survived the insured. This is to avoid having proceeds payable to the beneficiary.

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Underwriter A person who is trained in evaluating risks of proposed insureds and assigning appropriate rate classifications for an insurance company.

Underwriting A process by which a life insurance company examines medical data and determines whether or not it will accept an application for life insurance, and if so, on what basis.

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Waiver of Premium (W.P.) A policy benefit that waives the premium if an insured becomes disabled, and will continue to be waived throughout the insured's disability.

Whole Life Insurance Refers to life insurance payable on the death of the person whose life is insured, whenever that occurs. Premiums are payable on a regular basis until death, and coverage is provided for life. This type of life insurance provides both protection and cash value.

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