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Life Insurance Dictionary

Quantity Discount. A premium discount given for the purchase of a policy with a larger face amount.
Rated. Coverages issued at a higher rate than standard because of impairment of the insured. Usually used as an adjective in such expressions as "rated risk," "rated policy," and "rated up."
Renewable Term. Term Insurance that may be renewed for another term without evidence of insurability.
Return of Premium. This is a term life insurnance rider (ROP) that allows the policyholder to receive a refund off all the premiums paid during the contract durations at the end of the policy term. They receive a death benefit if they die, and all the money paid in premiums back if they live.
Revocable Beneficiary. The beneficiary in a Life Insurance policy in which the owner reserves the right to revoke or change the beneficiary.
Secondary Beneficiary. The second person named to receive benefits upon the death of an insured if the first-named beneficiary is not alive or does not collect all the benefits before his or her own death. See also Contingent Beneficiary.

Settlement Options. The various methods for the payment of the proceeds or values of a Life Insurance policy that may be selected in lieu of a lump sum.
Single Premium Policy. A Life Insurance policy paid for in one single premium in advance rather than in annual premiums over a period of time.
Sole Proprietorship Insurance. Life and Health Insurance that handles the business continuity problems peculiar to a sole proprietorship. Such insurance, for instance, could be used to enable the heirs of the sole proprietor to bring the value of the business back to the level where it was prior to the death of the owner.
Split Dollar Coverage. An arrangement under which an employer pays that part of the premium that equals the annual increase in the cash value of a policy, while the employee pays the rest. Under assignment upon the death of the employee, the employer recovers the total of its payments from the proceeds of the policy, with the remainder going to the employee's beneficiary.
Split Dollar Plan. A method of purchasing life insurance whereby the employer and employee jointly purchase the policy, pay premiums and share in the policy's benefits.

Split Life Insurance. A combination of Installment Annuity and Term Insurance under which the amount of annuity consideration (premium) paid determines the amount of one-year renewable Term Insurance an annuitant can purchase and place on the life of anyone designated. (LI)
Standard Provisions. (1) Provisions prescribed by state law that must appear in all policies issued in that jurisdiction. (2) Provisions adopted by the NAIC to apply to group Life Insurance as minimum protection. They are required by law in most states. (3) Formerly, a set of prescribed provisions regulating the operating conditions of a Health Insurance policy required by law in most jurisdictions between about 1912 and 1950. They are now superseded by uniform provisions for Individual Accident and Health Insurance policies which contain an NAIC model bill. These have been enacted in virtually all jurisdictions.
Standard Risk. A risk that is on a par with those on which the rate has been based in the areas of health, physical condition, and morals. An average risk, not subject to rate loadings or restrictions because of poor health.
Term Insurance. The type of Life Insurance policy that provides protection only for a specified period of time. A common policy period would be one year, five years, 10 years, or until the insured reaches age 65 or 70. It does not build up any of the non forfeiture values associated with Whole Life policies. Contrast with Whole Life Insurance.
Termination. The cessation of premium paying for a Whole Life or Endowment policy before the agreed upon time. This ends the coverage, and the insured receives one of the nonforfeiture values. The cessation of a policy that does not or has not yet developed a cash value is termed a "lapse."
True Group Insurance. Group insurance issued under a master contract with certificates of insurance that are not policy contracts issued to persons included in the group. This would be in contrast to Franchise or Wholesale "Group" Insurance, under which a covered person is issued an individual policy contract.
Uniform Provisions. A set of provisions required by state law in Life Insurance policies. The actual wording of the provisions can vary, but the intent must be the same as the wording of the uniform provisions.
United States Government Life Insurance (USGLI). A form of Life Insurance issued to members of the armed forces during World War I until about the end of World War II.
Universal Life. A combination flexible premium, adjustable life insurance policy. The premium payer may select the amount of premium he or she can pay and the policy benefits are those which the premium will purchase. Or, the premium payer may change the amount of insurance and pay premium accordingly. Many believe this is the only true solution to the "buy term invest the difference" problem.
Variable Life Insurance. A form whose face value varies depending upon the value of the dollar or securities or other equity products at the time payment is due.
Variable Universal Life. A combination of the features of Variable Life Insurance and Universal Life Insurance under the same contract. Benefits are variable based on the value of equity investments, and premiums and benefits are adjustable at the option of the policyholder.
Waiver of Premium. A provision of a Life Insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled.
War Clause. A provision excluding liability of an insurer if a loss is caused by war.
Whole Life Insurance. Insurance which may be kept in force for a person's whole life and which pays a benefit upon his death, whenever that may be. All Whole Life policies build up nonforfeiture values, but they are paid for in 3 different ways. Under a Straight or Ordinary Life policy, premiums are paid for as long as the insured lives. A single premium policy is paid for at one time in one premium. Between these two types there are many limited-payment plans, under which the insured pays premiums for a certain period or until reaching a certain age. Contrast with Term Insurance.
Yearly (or Annual) Renewable Term (YRT). (1) Term Life Insurance that may be renewed annually without evidence of insurability until some stated age. (2) A form of Life, and sometimes Health, Reinsurance in which the reinsurer assumes only the mortality risk, which is usually calculated as the face amount of reinsurance minus the terminal reserve.