Glossary

General definitions of terms you are likely to meet on an application or policy. Insurers define these terms precisely in their own contracts, and those definitions — not these — govern your coverage. Always read the definitions section of the actual policy.

A–C

Accelerated death benefit. A provision or rider allowing part of the death benefit to be paid to the insured while living, typically upon a qualifying terminal or chronic illness as defined in the contract. Amounts paid early generally reduce what the beneficiary receives.

Accidental death benefit. A rider paying an additional amount if death results from an accident as defined by the policy. The definition is narrower than everyday usage.

Beneficiary. The person or entity named to receive the death benefit. A primary beneficiary is first in line; a contingent beneficiary receives the proceeds if no primary survives.

Cash value. An amount that accumulates inside a permanent policy over time, which the owner may generally borrow against or receive on surrender. In small policies it accumulates slowly.

Contestability period. A period, commonly the first two years, during which the insurer may investigate and potentially deny a claim based on material misrepresentation in the application.

D–G

Death benefit (face amount). The amount payable on the insured's death under the terms of the contract.

Exclusion. A circumstance under which the policy does not pay, or pays less. Listed in the contract.

Free look. A period after policy delivery, set by state law and commonly 10 to 30 days, during which the owner may return the policy and receive a refund of premium.

Grace period. Time allowed after a missed premium before the policy lapses.

Graded (or modified) benefit. A structure paying less than the full face amount for death from natural causes during an initial period, then the full amount afterward.

Guaranteed issue. A policy issued without health questions or an exam, within the insurer's age and amount limits, typically with a waiting period on natural-cause death and a higher cost per dollar of coverage.

I–L

Illustration. A document showing projected policy values. Guaranteed columns are contractual; non-guaranteed columns are projections that may not occur.

Insured. The person whose life the policy covers — not necessarily the same person as the owner or the payer.

Lapse. Termination of coverage for non-payment of premium after the grace period.

Level benefit. A structure in which the full death benefit is generally available from the effective date, subject to the contract's provisions.

Level premium. A premium that does not increase over the life of the policy.

M–P

Material misrepresentation. An untrue statement on the application that would have affected the insurer's decision. Can support denial of a claim during the contestability period.

Owner. The person with rights under the policy — to name beneficiaries, surrender the policy, or change coverage.

Paid-up. A status in which no further premiums are due and a stated amount of coverage remains in force.

Preneed contract. An agreement made and paid for directly with a funeral provider for specified goods and services. A different product from insurance, with its own state rules on trusting, refunds, and portability.

Premium mode. How often premiums are paid — annually, semi-annually, quarterly, or monthly. Paying more frequently often costs more in total per year.

Producer. The regulatory term for a licensed insurance agent or broker.

R–W

Rate class. The category an applicant is assigned to based on underwriting, which determines the premium.

Reinstatement. Restoring a lapsed policy, generally requiring back premiums and evidence of insurability, within a limited window.

Rider. An optional addition modifying the policy's benefits, sometimes at extra cost.

Simplified issue. Underwriting using health questions and database checks rather than a medical exam.

Surrender. Voluntarily ending a permanent policy in exchange for its surrender value, which may be less than premiums paid, ending the coverage.

Underwriting. The insurer's process of evaluating an application to decide whether to issue coverage and at what price.

Waiting period. An initial period during which death from natural causes results in something other than the full death benefit — commonly a return of premiums with interest on guaranteed issue policies.

Whole life insurance. Permanent life insurance designed to remain in force for life while premiums are paid, typically with level premiums and cash value accumulation.

Last reviewed: August 12, 2026