Life insurance glossary

Plain-language definitions, without the fine-print feeling. This is educational information only, not personalized advice.

Beneficiary: The person or people you name to receive the death benefit when the insured passes away. You can usually name more than one and update them over time.
Cash value: A savings-like component that some permanent policies (such as whole life) build up over time, typically growing tax-deferred. You may be able to borrow against it, which can reduce the death benefit if not repaid.
Contestability period: A window, usually the first two years of a policy, during which the insurer can review and potentially deny a claim if the application contained material misstatements. Answering honestly protects a future claim.
Death benefit: The amount the insurer pays to the beneficiary when the insured passes away, provided the policy is active. It generally passes to beneficiaries income-tax-free.
Face amount: The stated coverage amount of a policy. It is the base death benefit, before any adjustments such as loans against cash value.
Final expense insurance: A small whole life policy intended to cover end-of-life costs like a funeral or burial. Also called burial insurance. Often available without a medical exam.
Graded death benefit: A limitation on some no-exam policies during the first few years. If the insured dies from natural causes during this period, the policy commonly returns premiums paid plus interest rather than the full benefit.
Guaranteed issue: A policy with no health questions and no medical exam; acceptance is guaranteed within the eligible age range. It usually costs more and includes a waiting period.
Level premium: A premium designed to stay the same for the life of the policy (or the level period), rather than rising as you age.
No-medical-exam policy: A policy that skips the medical exam. Some still ask health questions (simplified issue); others ask none (guaranteed issue).
Premium: The amount you pay the insurer, monthly or annually, to keep the policy active.
Rider: An optional add-on that changes or extends a policy’s coverage, sometimes for an extra cost. Availability varies by insurer.
Simplified issue: A policy that asks a short set of health questions but requires no medical exam. Often cheaper than guaranteed issue for those who can answer the questions favorably.
Term life insurance: Coverage for a set number of years (such as 10, 20, or 30). If the term ends while you’re living, the coverage expires. Usually the most affordable way to buy a large benefit for a set period.
Underwriting: The process an insurer uses to assess risk and decide whether to offer a policy and at what price. It may involve health questions, records, or an exam. For some policies, it involves very little at all.
Universal life insurance: A type of permanent insurance with flexible premiums and a cash value component. It can be more complex than whole life; terms and guarantees vary by policy.
Waiting period: An initial span (often two to three years) during which a no-exam policy may not pay the full benefit for death from natural causes. See also graded death benefit.
Whole life insurance: Permanent coverage designed to last your whole life, with level premiums and a modest cash value that builds over time. It usually costs more than term for the same death benefit.

This information is educational and general in nature. It is not personalized financial, insurance, tax, or legal advice. Coverage and rates are not guaranteed.