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Accidental death benefit, which is also known as double indemnity, is a policy provision which doubles or triples the benefit in the case of death by accidental means.

Beneficiary is the person named in a policy as the recipient of the insurance money in the event of the insured's death.

Cash surrender value is the amount available in cash upon the policy owner's termination of a permanent life insurance policy before it matures or becomes payable by death.

Claim is the demand by an individual to recover losses covered under an insurance policy.

Contingent beneficiary is the person designated to receive life insurance policy proceeds if the primary beneficiary dies before the person whose life is insured.

Convertible term insurance is a type of policy that allows the policy owner to change a term insurance policy to a permanent policy without providing evidence of insurability. The premium rate for the permanent policy is normally based on the age of the insured at the time of the conversion.

Death benefit is the sum of money paid to a beneficiary when a person insured under a policy dies, and is income tax-free in virtually all cases.

Dividends are a way for the insurance company to share part of its favorable results with policyholders. They result when actual life insurance costs turn out to be less than what the company assumed in setting its premiums. Although dividends are not guaranteed, dividends give you the opportunity to receive an enhanced death benefit and cash value growth.

Permanent life insurance is designed to provide lifelong protection with generally level premiums. There are three main types: whole, universal and variable. All permanent policies may accumulate cash value.

Policy is the contract or agreement made between the insurer and the insured.

Premium is the payment to the insurance company for insurance coverage.

Term life insurance provides coverage for a specific period of time, usually from one to thirty years. Term policies provide a death benefit only if the insured dies during the term.

Universal life insurance is a permanent policy that gives the owner the right to vary premium payments and the death benefit within certain prescribed limits. The rate of return on the accumulation account fluctuates according to investment performance but will generally not fall below a guaranteed minimum rate of return.

Variable life insurance is a permanent policy under which the cash value of the policy may fluctuate according to the performance of the underlying investment options. The policyholder can allocate their premiums among a variety of investment options offering different degrees of risk and reward: stocks, bonds, combinations of both, or fixed accounts that guarantee interest and principal. The cash value of a variable life policy is not guaranteed and the policyholder bears that risk. Most variable life policies guarantee that the death benefit will not fall below a specified minimum.

Whole life insurance or ordinary life is the most common type of permanent insurance. The premiums generally remain constant over the life of the policy and must be paid periodically in the amount indicated in the policy.

For additional terms, check out the Glossary.



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