Definitions Beneficiary The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured. Cash (Surrender) Value The amount that is available in cash for loans and that may be available for withdrawals. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse. Please note that the cash value only pertains to permanent life insurance and not term life insurance. Cash Value Life Insurance Cash Value Life Insurance is a type of insurance where premiums charged are higher at the beginning than they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy’s cash value by taking a policy loan. If you don’t pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums . You also can use the cash value to increase your income in retirement or to help pay for needs such as a child’s tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types; whole life, universal life and variable life are all types of cash value insurance. Convertible Term Insurance Term insurance which can be exchanged (converted), at the option of the policy owner and without evidence of insurability, for a permanent insurance policy. Face Amount The amount stated on the policy that will be paid in case of death. It does not include additional amounts payable under accidental death or other special provisions or acquired through the application of policy dividends, and can be reduced by loans or withdrawals. Insurability Acceptability to the company of an applicant for insurance. Insured or Insured Life The person on whose life the policy is issued. Level Premium (Life Insurance) Life insurance for which the premium remains the same from year to year. The premium is 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. The building of a reserve is a natural result of level premiums. The payments in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years. Permanent (Life Insurance) Any form of life insurance except term life insurance; generally insurance that builds up a cash value, such as whole life. 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 partnership or a corporation. Premiums Payments to the insurance company to buy a policy and to keep it in force. Universal Life Insurance Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of your coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay (less expense charges) go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest your account earns is less than the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premium payments, or lower your death benefits. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value. Whole Life Insurance Whole Life Insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would pay initially for the same amount of term insurance. But they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy until your later years. Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period. Renewable Term Insurance Term insurance which can be renewed at the end of the term, at the option of the policy owner and without evidence of insurability, for a limited number of successive terms. The rates generally increase at each renewal as the age of the insured increases. Term Insurance Term Insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term life insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value. You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase. You may be able to trade many term insurance policies for a cash value policy during a conversion period -- even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term life insurance. Variable Life Insurance Variable Life Insurance is a kind of insurance where the death benefits and cash values depend on the investment performance of one or more separate accounts, which may be invested in mutual funds or other investments allowed under the policy. Be sure to get the prospectus from the company when buying this kind of policy and STUDY IT CAREFULLY. You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower or may disappear if the investments you chose didn’t do as well as you expected. You may pay an extra premium for a guaranteed death benefit.  Health insurance terms Here are some common terms and definitions. Co-pay: A fixed dollar amount you pay at the time services are rendered. Typical co-pays are for office visits, prescriptions, or hospitalizations. Co-insurance: A specified percentage of the cost of treatment the insured is required to pay for all covered medical expenses remaining after the deductible has been met. Deductible: The portion of your health care that you pay before insurance starts covering it. Typically, the higher the deductible, the lower the premiums. Pre-existing condition: An illness, disease or condition an individual has at the time of enrollment in a health care plan. Pregnancy is not a pre-existing condition. Premiums: The monthly or quarterly payments paid for health insurance. Catastrophic coverage: This plan pays hospital and medical expenses above a certain (usually high) deductible. The maximum lifetime limit may be high enough to cover the cost of a catastrophic illness. Long-term care policies: These cover medical care, nursing care and certain in-home care if you ever become unable to care for yourself due to an extended illness or disability. Disability income insurance: This plan will provide you with an income if you become unable to work due to an injury or illness. Benefits are usually 60% of your income at the time of disability.