401 K
Tax Qualified Savings Plan that is a type of profit sharing or stock bonus established by employers for employees. Contributions by the employees into the plan are deferred from income tax, until withdrawn.
Accidental Death
In a Life insurance policy, benefits in addition to the death benefits paid to the beneficiary, should death occur due to an accident.
Accumulation Period
Period which funds are left to accrue interest until such time as income is to start. Interest rate will be guaranteed and annuitant knows exactly how much the income will be.
Accumulation Units
An accounting measure used to determine the value of ownership during the accumulation period of a variable annuity
Adjustable Life
Policies that the face value, premiums and plan of insurance can be changed at the discretion of the policyowner without using additional policies.
Annuitant
Person to receive the income or distribution from an annuity.
Annuities
A contract where the insurer agrees, for a price, to make regular payments to either the purchaser or another individual for life, a fixed period or for a fixed amount.
Annuity Period
Period at which time the income is distributed from an annuity.
Attained Age
Age of insured at current time. Often at age when conversion of policy is completed to another type of contract.
APL
Automatic Premium Loan Option whereby premium due is deducted from cash value to retain coverage in force when insured does not pay the premium due.
Beneficiary
Person to receive benefits upon death of annuitant in an annuity or insured from a life insurance contract.
Blended Policies
Insurance policies that combine finite risk insurance, reinsurance, and traditional insurance as an alternative to self insurance.
Cash Flow
Cash that is incoming and disbursed on a regular basis, such as Net Pay and Mortgage Payments.
Cash Surrender
The cash that can be received when a permanent life insurance policy is surrendered to the insurance company that issued the policy.
Cash Values
Accumulation of cash in a Permanent Life Insurance Contract which the insured can withdraw during his/her lifetime.
CD
Negotiable Certificates of Deposit issued by banks which pay higher interest if savers agree to leave their money on deposit for longer periods of time.
CFP
Certified Financial Planner - Individual who has obtained a certificate in Financial Planning and contains expertise to provide financial planning.
Combination Policies
A life insurance contract that includes elements of whole life and term insurance.
Combined Annuity
Annuity combining the features of the fixed and variable annuities. Also called Balanced Annuity.
Contingent Beneficiary
Will receive the proceeds of a life insurance policy if the primary beneficiary doesn't survive the insured.
Convertible Term
Coverage that can be converted into permanent insurance regardless of an insured's physical condition and without a medical examination.
Death Benefits
Proceeds of a Life Policy to be paid to a designated beneficiary at the time of the insured's death.
Decreasing Term
Coverage in which the face amount of a life insurance policy declines by a stipulated amount over a period of time.
Deferred Annuities
Annuity period begins at a time in the future, i.e. at age 65, or in 20 years, etc. Usually include a death benefit with a survivor being named to receive the monthly income should the annuitant die before the entire funds are paid out.
Distribution
Lump Sum which is put into annuity may be distributed as monthly income throughout lifetime to guarantee the annuitant that he/she will receive regular monthly payments for balance of life. Often, a survivor is named to receive balance of funds if not all has been paid out should the annuitant die before all of the funds are disbursed.
Endowment
A Life Insurance policy which pays the proceeds if the insured is living at the end of the specified period of time. If he dies prior to that time, the death proceeds are paid.
Estate
Assets and Liabilities left an individual's death.
Estate Planning
A method used to project future financial needs by analyzing current financial facts and use of investment tools to attain financial goals for the future. It also includes how the individual wishes assets to be disbursed at his or her death.
Family Policy
A contract providing whole Life insurance on the father, and term insurance on the mother and all children, including newborns after reaching a stated age, usually 15 days.
Financial Planning
A method used to project future financial needs by analyzing current financial facts and use of investment tools to attain financial goals for the future.
Fixed Amount
This option is similar to Fixed Period, however, rather than a predetermined period of years for the payments to be made, it is a fixed amount that is determined from the proceeds and is paid for whatever length of time it takes to exhaust the proceeds.
Fixed Annuity
An Annuity paying a guaranteed fixed number of dollars each period for the term of the contract.
Fixed Period
This option indicates that the funds will be received for a fixed period of time, such as 10 years, 20 years, etc. The amount of the funds then is broken down to reflect an equal installment to the beneficiary or annuitant throughout this period. Once the period is over, the distribution ceases.
Fixed Time Option
Payout Option of a Mutual Fund which results in the investor's account being liquidated by a specified date in the future.
Grace Period
A period of time after the premium due date during which a policy remains in force without penalty even though the premium due has not been paid. Commonly 30 or 31 days in Life Insurance policies.
Immediate Annuities
Annuity period begins one period after the lump sum is deposited with the issuer of the contract. This may be one year, if payments are to annual.
Interest Only Option
Settlement Option whereby the company holds the proceeds of the policy and pays the beneficiary interest only on the funds at a guaranteed rates.
IRA
Individual Retirement Account - A tax favored plan which allows individuals with earned income to set aside contributions for retirement. There is no tax on the earnings until they are distributed and the contributions are deductible with certain limitations.
Level Term
Coverage in which the face amount of a life insurance policy remains uniform, neither increasing nor decreasing for as long as the policy is in force.
Life Annuity
An Annuity which ceases payments upon the death of the annuitant.
Life Annuity Certain
Annuity which provides for benefits payments to be paid for a specified time even if annuitant outlives the period chosen.
Life Income
A monthly income based on the beneficiary’s life expectancy is determined and paid to the beneficiary on a regular monthly basis for the balance of his/her life.
Life Income Certain
Settlement option whereby it overcomes the outcome should the beneficiary die prior to receiving all of the funds. It guarantees the monthly income for the balance of the beneficiary’s life with a guarantee that should he/she die before receiving all of the funds and before the period of time indicated is completed, the funds will go to the contingent beneficiary.
Life Insurance
A policy which can provide death benefits upon the death of the insured to a survivor designated by the policy holder. Life Insurance Contracts which provide only Death Benefits are called Term Policies. Life Insurance Policies which provide both Death Benefits and Living Benefits are called Permanent Policies.
Life Paid up at 65
Permanent Life Insurance policies designed to have fully paid up benefits at the insured's age of 65, without the insured paying any further premiums.
Limited Pay Life
Permanent Life Insurance Policies designed to have fully paid up benefits at a particular period or age, without the insured paying any further premiums.
Living Benefits
Proceeds from a Life Insurance Policy which the insured may obtain during his life. These may be Cash Values which the insured may withdraw from the policy during his/her lifetime.
Long Term Goals
Goals that are hoped to be attained in the future, usually more than 5 years in the future.
Lump Sum
Distribution of proceeds of a Life Insurance policy or annuity in one initial payment.
Mortality Costs
This is the cost of the insurance protection in Life Insurance.
Mortality Tables
Statistic Tables used which project death at ages, which are used by Life Insurance companies to establish premium rates.
Original Age
Age of the insured when contract was issued.
Payout Period
The period whereby annuitant receives payments from the annuity.
Permanent Insurance
A policy that remains in full force and effect for the life of the insured, with premium payments being made for the same period.
Permanent Life Insurance
contains living benefits by a portion of the premium being set aside as a savings plan for the policyowner.
Policy Loans
Loans made by a life insurance company from its general funds to a policyowner on the security of the cash value of a policy.
Primary Beneficiary
The first named beneficiary who must survive the death of the insured to collect the proceeds.
Qualified Plans
Retirement Plans or Long Term Health Care Plans, that are qualified by the IRS for tax benefits. Contributions made into the plans are income tax free, until the funds are withdrawn from the plan.
Refund Life Annuity
Annuity which guarantees that benefits will be fully paid, even if annuitant dies before receiving all payments. Balance is paid to beneficiary designated by the annuitant.
Refund Life Income
Settlement Option that guarantees that the beneficiary will receive at least all of the original amount of the proceeds. If he/she dies prior to receiving all of the proceeds, the remaining funds will go to someone which the beneficiary has designated.
Renewable Term
Coverage that is renewable at the option of the insured, who is not required to take a medical examination.
Settlement Options
A method of receiving proceeds of an insurance policy rather than a lump sum.
Single Premium Whole Life
A policy that remains in full force and effect for the life of the insured and one premium payment is made and the policy is fully paid up with no further premiums required.
Tax Deferred Annuity
Annuity program available to employees of certain nonprofit organizations and public school systems. Part of the employee's income is excluded from current taxation and used to purchase annuity.
Term Insurance
Life Insurance policies written for a particular period of time and contain no Cash Values or Living Benefits. Benefits are only those received by the designated beneficiary when the insured dies. Policy will either terminate at the end of the period or may be renewed at the insured's attained age rate.
Universal Life
Flexible Premium, Adjustable Benefit, Permanent Life Insurance Policy. The policy contains a term insurance portion and a separate account which is used to build income for future withdrawal by the insured.
Variable Annuities
Annuities which grow depending on the performance of the investment medium used.
Variable Life
Permanent Life Insurance Contract which is securities based. The separate account is funded via mutual funds.
Whole Life
Permanent Life Insurance policies on which premiums are paid for the entire life of the insured. If premiums are not continued, cash values at that time in the contract are used to purchase either reduced paid up insurance or reduced term insurance.
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