The world of insurance can be confusing, and sometimes intimidating. Many of the agents I know still have to look up a term every now and again, and they deal with these things daily. Throughout my time an an insurance agent I have had to define many terms for my clients. That’s why I have put together this glossary.
GIO – Guaranteed Insurability Option – A guaranteed insurability rider lets you increase the coverage on your life insurance policy without taking another medical exam. It is also known as a guaranteed purchase option rider. The main benefit of a guaranteed insurability rider is that it gives you the option to increase your life insurance coverage in the future. You don’t have to worry about possibly developing health problems that would block you from buying more.
Convertible Insurance – Convertible insurance lets the policy owner convert a term policy that only covers the insured individual for a predetermined number of years into a policy that covers that individual indefinitely, as long as the policyholder continues to pay the insurance premium.
Free Look Period – The free look period is the required time period in which a new life insurance policy owner can terminate the policy without any penalties, such as surrender charges. American Income Life free look period is 14 days.
IG20R – AD&D Benefits through an employer that only pay out due to an accident. (R= Recommended or Requested)
IG20NP – AD&D Benefits through an employer that only pay out due to an accident – No Production (nobody issued this policy)
NTRC10MN – Ten Year Term Life Renewable Convertible Policy.
WLPFN – Whole Life Policy.
LLPU65FS – Life Paid up to 65
NWLPMS – Whole Life
WP – Waiver of Premium. This feature waives your premium for 3 months should you ever have a hardship and cannot afford your premium. This helps to keep your policy in place until you can afford to start paying again.
Freedom Of Choice Certificate – A feature unique to American Income Policyholders. This feature allows your beneficiaries time to grieve your loss by having a specialized negations team form American Income negotiate your final expenses directly with the funeral home. Your beneficiary simply goes to the funeral home, selects the things they want, and provides this certificate. No hassle, no haggle. American Income is proud to be the only Life Insurance company to offer this free service to its members.
Decreasing Term Life Insurance – With decreasing term life insurance, the amount of coverage declines over time, similar to the way a repayment mortgage decreases over time. Decreasing term life insurance is usually purchased to pay off a specific debt, like a repayment mortgage. The policy ensures that, upon death, the repayment mortgage (or other specified debt) gets settled.
Level-Premium Insurance – Level-premium insurance is a type of term life insurance. With this type of coverage, premiums are guaranteed to remain the same throughout the contract, while the amount of coverage provided increases.
Term Life Insurance – Term life insurance, also known as pure life insurance, is a type of life insurance that guarantees payment of a stated death benefit if the covered person dies during a specified term. Once the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the term life insurance policy to terminate.
Whole life insurance – Whole life insurance offers coverage for the full lifetime of the insured, and its savings can grow at a guaranteed rate. Whole life insurance lasts the lifetime of the insured (hence, the name), unless nonpayment of premiums causes the policy to lapse. Whole life insurance premiums go toward both maintaining the policy’s death benefit and allowing the policy to build cash value. The policy owner can borrow funds against that cash value or, in some instances, withdraw cash from it outright.
Indexed Universal Life (IUL) Insurance – Universal Life (UL) Insurance – Universal life (UL) insurance is permanent life insurance (lasting the lifetime of the insured) that has an investment savings element and low premiums similar to those of term life insurance. Most UL insurance policies contain a flexible-premium option.
living benefits – allow you to access part of your death benefits while still alive. You may access living benefits when a qualifying life event occurs, like a terminal illness or permanent disability.
Nonforfeiture Clause – an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to nonpayment.