Insurance Policy Glossary

Terms you should familiarize yourself with before seeking term life insurance coverage:

Convertible:

Convertible term life insurance is a policy that may be changed to another type of insurance pursuant to a contract provision allowing for the change and without the insured having to provide evidence of insurability. For example, many of these policies have a provision allowing conversion to permanent life insurance policies.

Coverage:

Coverage is a means to provide financial protection for designated beneficiaries in the event of an insured's death.

Exclusions:

Exclusions are the specific activities that are not covered under a policy. Common inclusions include suicide, death in an airplane crash, and dangerous activities (sky diving, auto racing, and rock climbing).

Face amount:

An amount specified in a policy that will be paid to designated beneficiaries upon the death of the insured.

Liability:

Liability is any legal responsibility, duty, or obligation for a specified amount or action that is either due now or at some time in the future.

Limits:

Limits are restrictive conditions, such as age, length of time covered, and benefit amount, in an insurance contract that affects a participant's coverage. The contract may limit the extent or conditions under which benefits are paid.

Premiums:

Premiums are the amount charged by a life insurance provider for coverage of a certain level of benefits for a specified time. A premium also is the periodic payment on an insurance policy.

Renewable:

Renewable term life insurance is a policy that can be renewed for another term without the insured having to provide evidence of insurability.

Risk:

Risk is the probability that a death that is covered by a term life insurance policy will occur.