- Premium
- The amount of money the policyowner pays the insurance company to keep a life insurance policy in force, typically paid monthly, quarterly, or annually.
- Beneficiary
- The person, entity, or estate designated to receive the death benefit proceeds when the insured dies.
- Death Benefit
- The lump sum of money the insurer pays to the beneficiary upon the death of the insured, generally free of federal income tax.
- Underwriting
- The process by which an insurer evaluates an applicant's risk—based on health, age, lifestyle, and other factors—to decide whether to issue a policy and at what premium rate.
- Cash Value
- The savings component that accumulates in a permanent life insurance policy, which the policyowner can borrow against or withdraw, and which grows tax-deferred.
- Term Life Insurance
- Life insurance that provides coverage for a specified period (the term) and pays a death benefit only if the insured dies during that period; it has no cash value.
- Whole Life Insurance
- A type of permanent life insurance that provides lifelong coverage with level premiums and builds cash value over time.
- Rider
- An optional add-on or amendment to a life insurance policy that provides additional benefits or modifies coverage, such as a waiver of premium or accelerated death benefit.
- Insurable Interest
- A legal requirement that the policyowner must stand to suffer a genuine financial or emotional loss from the insured's death, and it must exist at the time the policy is issued.
- Grace Period
- A set number of days after a premium due date during which the policyowner can pay an overdue premium without the policy lapsing.
- Surrender
- The voluntary termination of a permanent life insurance policy by the policyowner in exchange for its accumulated cash surrender value.
- Pre-Licensing Education
- The state-mandated coursework a candidate must complete before sitting for the life insurance licensing exam, which many states require.