These life insurance terms have been especially annotated for the needs of commercial and private pilots.
| ACCELERATED DEATH BENEFIT |
That portion of the death benefit which becomes available to the policyowner
in advance of the death of the insured. The insured, with reasonable medical
certainty, must be diagnosed with a terminal illness and is expected to
die within 12 months. |
| AGE CHANGE |
The date, for purposes of determining life insurance premiums, on which
the potential insured is deemed to be one year older. Depending on the insurance
company the age of the insured may be calculated on the "age nearest"
or "age at last birthday" method. |
| AVIATION EXCLUSION |
The right of an insurance company to deny payment of the death benefit
proceeds to the named beneficiary(ies) if death of the insured is the result
of an accident while engaged in aviation activities. Normally, death benefits
are payable if death occurred due to aviation activities if the insured's
involvement was limited to those of a fare paying passenger of a commercial
airlines. |
| BENEFICIARY |
The person or persons named in the policy to receive the death benefit
upon the death of the insured. The beneficiary may also be a business, educational
or charitable entity. |
| BROKER, INSURANCE |
A life insurance agent/salesperson who is without restraints imposed by
a life insurance company to do business only with said company. Brokers
represent multiple insurance companies and may research the insurance market
and submit applications for insurance with the best interest of the policyowner
in mind. see independent agent |
| CAPTIVE AGENT |
An insurance agent who is a representative of a single life insurance
company who is obligated to submit applications for insurance only to that
company. A captive agent may sometimes submit applications to the sister
company of their primary carrier. |
| CASH SURRENDER VALUE |
The amount of money, before adjustments for factors such as policy loans
or late premium payments, that the policyowner will receive if the policyowner
cancels the coverage and surrenders the policy to the insurance company. |
| CONTINGENT BENEFICIARY |
The beneficiary entitled to the proceeds of an insurance policy if the
primary beneficiary predeceases the insured.
see beneficiary, primary beneficiary |
| CONVERTIBLE TERM INSURANCE |
Term life insurance that allows the policyowner to exchange (convert)
the term life insurance policy for a permanent life insurance policy without
providing evidence of insurability of the insured. The premium for the exchanged
(converted) permanent policy is normally based on the age of the insured
at the time of the exchange (conversion). Not all permanent policies issued
by the insurance company may be eligible for exchange (conversion). |
| DEATH BENEFIT |
Amount payable upon the death of the insured under a life insurance policy. |
| DIVIDEND |
The return of part of the premium paid on a participating insurance policy.
Dividends are based upon the insurer's investment, mortality and expense
experience. Dividends are not guaranteed. |
| FACE AMOUNT |
The amount stated on the schedule of policy benefits page of the policy
that will be paid in the event of death of the insured. |
| GRACE PERIOD |
The length of time, usually 31 days, after the due date of an unpaid premium
in which the full death benefit is payable, minus any premium due, upon
the death of the insured. All riders of said policy also remain in force
during the grace period. |
| INDEPENDENT AGENT |
see broker, insurance |
| INSURED |
The person whose life is insured by the policy. This person may or may
not be the owner of the policy. |
| INSURABILITY |
Generally refers to the health of the insured. |
| LEVEL PREMIUM LIFE INSURANCE |
Premiums that are scheduled to remain the same, level, each year for a
specified number of years. The premiums are normally more than the actual
cost of protection during the earlier years of the policy and less than
the actual cost in the later years. Premium may be guaranteed or non-guaranteed
depending on the policy. Normal level premium periods are 10, 15, 20 and
30 years although other periods may be available. Premiums are scheduled
to increase after the initial specified number of years. |
| LIFE INSURANCE |
A contract that provides protection against economic loss caused by the death of
the person named as insured in the policy. |
| MEDICAL INFORMATION BUREAU (MIB) |
The central facility that maintains for its member insurance companies
the health history of applicants for life, health and disability insurance.
The purpose of the MIB is to protect the member companies against loss due
to fraud of the applicants. |
| PARTICIPATING INSURANCE |
An insurance policy that is eligible for the payment of dividends to the
policyowner.
see dividend |
| PERMANENT LIFE INSURANCE |
Any form of life insurance except term life. |
| POLICYOWNER |
The person who owns a life insurance policy. This is usually the insured
but, it may be a relative or a business entity. All rights conveyed by the
policy are vested in the policyowner. These include but, are not limited
to, the right to change beneficiary(ies), the right to cancel the policy,
the right to any cash value of the policy. |
| POLICY |
A contract that contains the pertinent facts about the policyowner, the
insured, the insurer and the insurance coverage and limitations. |
| PREMIUM |
Payment made to an insurance company so that an insurance policy will
remain inforce for a period of time. The premium payor may or may not be
the policyowner. |
| PRIMARY BENEFICIARY |
The party or parties who have the primary right to the proceeds of a life
insurance policy upon death of the insured. |
| REINSURANCE |
A transaction between two or more insurance companies in which one company
purchases insurance from the other to cover part, or all, of the risk that
the first company does not wish to retain. Reinsurance allows an insurance
company to reduce its exposure to loss. |
| RISK CLASS |
A group of insureds who present a substantially similar risk to the insured
company. |
| TERM INSURANCE |
Life insurance which pays a benefit only upon the death of the insured
during a specified period. Term insurance does not build up a cash value. |
| WAIVER OF PREMIUM |
A rider that may be added to any fix premium insurance policy which will
remove the obligation to pay future insurance premiums while the insured
is totally and completely disabled. The policy remains inforce during the
period that premiums are waived. Usually a waiting period of six months
is required before premiums will be waived. |
| WHOLE LIFE INSURANCE |
A type of permanent life insurance which can provide lifetime coverage
at a level premium. Premiums must generally be paid for as long as the policy
is in force. |
