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Term Definition in Life Insurance Tuesday, 29 April 2014

Definition of Terms

Beneficiary :- The person or entity receiving the death benefit at the death of this insured.

Cash Value :- The amount of total premiums paid for a policy minus the costs for insurance in whole, universal and variable universal-life policies. The cash value grows tax-free in an insurance policy.

Death Benefit:- The total cash payment made to the beneficiary upon the death of the insured.

Insured :-  The person on whose life the insurance has been purchased. If the insured dies, a death benefit will be paid to the named beneficiary.

Owner :- The person or entity who owns the insurance policy. The owner may or may not be the insured. The owner can designate the beneficiary, and is responsible for paying premiums. 

Premium :-  The amount billed to the owner of an insurance policy by the insurance company. In term and whole-life, the full premium must be paid to keep the insurance. In universal and variable universal-life, the amount billed may or may not be a mandatory payment to keep the insurance.  

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