Glossary

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A C D E F G I J L M N P R S T U W

A

Advisor
An insurance company representative (agent or broker) licensed by a state who assists consumers in aligning their financial needs with solutions through financial products and provides ongoing service for the customer and the insurance company.
Application
A statement of information made by a person applying for life insurance. It enables Catholic Financial Life to assess an individual’s insurability. Statements made in the application are used to properly determine an applicant's underwriting classification and premium rate.

C

Cash Surrender Value
The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by death or maturity. This amount is reduced by any outstanding loans or other debts in the policy at the time of surrender. Also see non-forfeiture.
Children’s Term Rider
An elective rider to an approved policy that provides insurance coverage on the lives of all eligible children, until the policy anniversary date following their 23rd birthday. This rider allows conversion of up to five times the rider amount at ages 18 and 23.
Cost of Insurance
For universal life insurance policies, a monthly charge per $1,000 of coverage based on the amount at risk, the insured’s age and underwriting class.
Contingent Beneficiary
A person(s) or organization who is second in line to receive the insurance proceeds if the primary beneficiary is deceased at the time the proceeds are to be paid.
Critical Illness Insurance
Critical illness insurance is a living benefit that pays a lump sum, for each covered condition, to the insured upon diagnosis during the length of the policy. Condition categories include: heart attack, cancer or stroke. The insured can use the lump sum however they would like.

D

Death Benefit
The amount of money payable upon the death of the insured, usually the face or specified amount stated in the policy. The total death benefit payable may include paid-up additional insurance, any dividends on deposit, any unearned pre-paid premium; minus any outstanding loan balance.
Deferred Annuity
A product that provides tax-deferred accumulation of money for retirement or other long-term needs. Income may be derived through settlement options offering various lifetime or guaranteed period arrangements, usually at the discretion of the policyowner.
Disability Income Insurance
Insurance that provides income payments in the event of an illness or accident resulting in a disability that prevents you from working at your employment.
Dividend
An amount that represents a return of premium due to various factors, including favorable mortality experience, investment results and expense control. The amount, if any, Catholic Financial Life (CFL) will allocate for the payment of dividends on a qualifying contract is determined at the sole discretion of CFL’s Board of Directors. Dividends are not guaranteed and may be zero. Depending upon the terms of the policy and the owner’s election, dividends may be used to purchase paid-up additional insurance, reduce premiums, accumulate on deposit at interest, reduce a loan or be taken in cash. The amount of any annual dividend is payable on the policy anniversary.

E

Evidence of Insurability
A statement or proof of health and other resources that enables the insurer to assess and classify an applicant’s life insurance risk.

F

Face Amount
For any life insurance policy, the face amount is the death benefit. This is the stated dollar amount that the policy's beneficiaries receive upon the death of the insured. In most cases, the face amount is transferred to the beneficiaries tax free.
Fraternal
A 501(c)(8) not-for-profit organization formed to provide social, insurance and other benefits to its members who often share a similar ethnic, religious or vocational background.
Free Look Provision
A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.

G

Guaranteed Insurability Option
An elective rider to the policy that guarantees the primary insured the right to purchase additional insurance at specific times without evidence of insurability.

I

Immediate (Income) Annuity
A policy that can provide guaranteed income for life of the annuitant/owner or for a guaranteed period specified by the annuitant/owner.
Insurable Interest
Insurable interest is defined as the reasonable concern of a person to obtain insurance for any person or property against unforeseen events such as death, losses, etc. An insurable interest is required when purchasing life insurance on another person.

J

Juvenile Purchase Option
This is a no cost rider that is automatically added to policies where the issue age is between 0-15. It guarantees the primary insured the right to increase coverage by up to $50,000 without evidence of insurability upon the policy anniversary date following the insured’s age 23.

L

Lapse in Coverage
A life insurance policy will lapse when premium payments are missed and the cash surrender value is exhausted on a life insurance policy. If this happens, the life insurance policy will no longer pay a death benefit or provide any insurance coverage for the insured person.
Life Expectancy
The probability of an individual living to a certain age according to a particular mortality table.
Life Insurance
A contract between an insurer and an insured individual/or owner in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured.
Loan
Loans include cash loans sent directly to the policyowner and automatic premium loans used to pay premiums. A loan from the insurer to the policyowner is secured by policy values. If the insured dies while a loan is outstanding, the amount of the loan balance and any accrued interest are deducted from the total death benefit. Loans are also deducted from the total cash value when a policy is surrendered.
Long-Term Care Insurance
Insurance that covers the costs of nursing homes, assisted living, home healthcare and other long-term care services.

M

Medicare Supplement Insurance
Insurance that helps pay some of the healthcare costs that original Medicare doesn’t cover.
Misstatement of Age
The falsification of the applicant's birth date on the application for insurance. When discovered, the coverage will be adjusted to reflect the correct age and annual premium.
Monthly Deductions
The monthly charges that are subtracted from the account value, consisting of the monthly premium expense charges (if applicable), monthly cost of insurance and monthly costs of any additional benefits and riders.
Mortality
The incidence of death at each attained age; frequency of death.

N

Non-Participating
A life insurance policy in which the insurance company does not distribute to policyowners any part of its surplus in the form of a dividend.

P

Paid-Up Additional Insurance
Additional insurance, purchased with dividends, which has a death benefit and a cash value, but does not require payment of additional premiums.
Participating Policy
A life insurance policy under which the insurance company agrees to distribute to policyowners the part of its surplus that its Board of Directors determines is not needed at the end of the business year. The distribution serves to reduce the policyowners cost basis.
Partial Withdrawal
The owner may withdraw limited amounts of cash from the account value, subject to applicable surrender charges and withdrawal guidelines as defined in the policy.
Permanent Insurance
Insurance that provides life-long coverage as long as premiums are paid, and the ability to accumulate cash value on a tax-deferred basis.
Policy
The legal document stating the terms of the insurance contract that is issued to the policyowner by the insurance company.
Policy Proceeds
The amount actually paid from a life insurance policy as a death benefit or when the policyowner receives surrender or maturity benefits in cash.
Policyowner
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a business partner or a corporation.
Premium
The amount of money charged for the insurance policy. Premiums may be payable monthly electronic funds transfer (EFT), quarterly, semi-annually, or annually, as elected by the policyowner.
Primary Beneficiary
A person(s) or organization who is first in line to receive the insurance proceeds upon the death of the insured.

R

Rating
An additional premium charge, above the standard premium, resulting from an impaired health or occupational risk.
Reduced Paid-Up Insurance
A form of insurance available as a non-forfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount, without further premiums.
Reinstatement
Restoring a lapsed policy to its original premium paying status, upon payment by the policyowner, with interest, of all unpaid premiums and policy loans, and presentation of satisfactory evidence of insurability by the insured.
Rider
A rider is a provision of an insurance policy that adds to or amends the coverage or terms.
Risk Classification
The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, gender, state of health) and then applies the resulting rules to individual applications.

S

Settlement Options
Methods chosen by a policyowner or beneficiary, to have policy benefits paid, if other than lump sum. These options typically include the following:  Interest Option – Death benefit left on deposit at interest with the insurance company with earnings paid to the beneficiary annually.  Fixed Amount Option – Death benefit paid in a series of fixed amount installments until the proceeds and interest earned terminate.  Fixed Period Option – Death benefit left on deposit with the insurance company with the death benefit plus interest paid out in equal payments for the period of time selected.  Life Income Option – Death benefit plus interest paid through a life only annuity where guaranteed income continues for as long as the beneficiary lives or combined with a guaranteed period option.
Single Premium Rider
A whole life rider that has a guaranteed cash value and a guaranteed death benefit. The rider’s premium is paid by one single payment at the time of issue of the rider.
Standard Risk
The classification of a person applying for a life insurance policy who fits the physical, occupational and other standards on which the normal premium rates are based.
Substandard Risk
The classification of a person applying for a life insurance policy who does not meet the requirements set for the standard risk. An additional premium is charged on substandard risks to provide for the probability that such a person will have a shorter life span than a standard risk.
Supplementary Contract
An agreement between a life insurance company and a policyowner or beneficiary in which the company retains at least part of the cash sum payable under an insurance policy and makes payment in accordance with the settlement option chosen.
Surrender Charge
A fee that is applied at the time a contract is surrendered or partial withdrawals are made by the owner. Surrender charges are typically expressed as a percentage that systematically decreases over a limited time after the issue of a new policy or may be expressed as a dollar amount fee for a specific number of years. Once the surrender charge period has lapsed, it rarely, if ever returns.

T

Term Insurance
Term life insurance provides coverage at a level cost for a specified period (typically 10, 20 or 30 years.)
Term Insurance Rider
This elective rider provides for an amount of insurance attached to a permanent life insurance policy which pays an additional term insurance benefit if the insured dies during a specified time, as defined in the rider.

U

Underwriter
The person(s) who reviews the application for insurance, evaluates the risk accordingly to strict insurability guidelines and assesses an appropriate premium classification.
Underwriting
The process by which a life insurance company determines whether it can accept an application for life insurance, and if so, on what basis so that the proper premium is charged.
Universal Life Insurance
A permanent life insurance policy characterized by flexible premiums and an adjustable face amount. Death benefits, cash values and premiums can all be adjusted to reflect the goals of the insured/owner.

W

Waiver of Monthly Deductions Rider
This elective rider may be added to a universal life policy to provide for the payment of insurance costs and other expenses (planned premiums waived) during a period in which the primary insured has a qualifying total disability.
Waiver of Premium Rider
This elective rider provides for the waiving of required premiums should the primary insured become totally disabled (as defined in the policy) as a result of an accident or illness.
Whole Life Insurance
Whole life insurance provides coverage for the life of the insured. In addition to providing a death benefit, whole life also contains a savings component where cash value may accumulate. Dividends may or may not apply as specified in the policy.
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