Life Insurance Dictionary: 55 Qs by Quility
Life insurance can seem complicated. We get it. But at Quility, our goal is to make it simple and easy. Whether you’re shopping around for your best-fit plan or diving straight into our ten-minute online application, here are 55 life insurance terms you need to know.
Quility’s insurance advisors are licensed insurance agents. This means that all of our advisors have passed their respective state’s insurance exam and are currently maintaining their licenses as mandated by their state’s education requirements. In addition, we formed our nationwide network of insurance advisors by combining our partner companies, Symmetry Financial Group and Asurea Insurance Services. Our advisors undergo extensive in-house training, receive ongoing mentoring and uphold Quility’s core values. In short, our trusted advisors are certified and have years of experience sharing their expertise with clients.
An insurance carrier is the company that provides your insurance coverage. This is interchangeable with insurer, insurance company or insurance provider. While you can buy a policy through an insurance broker (like Quility), you will pay premiums to your carrier, submit claims to your carrier and reach out to your carrier if you have any issues with your active policy.
The cash surrender value is how much money you would receive if you no longer needed your permanent life insurance policy. With some types of life insurance, you can surrender your policy and receive a sum of funds equivalent to the surrender cash value.
With cash value life insurance, a portion of your policy’s premium payment is put towards an account where funds grow tax-deferred for the duration of your policy. This cash value can be used to fund your children’s education, pay off debts and build retirement savings.
A beneficiary would submit a life insurance claim to the insurance company in order to receive the death benefit of the insured’s life insurance policy. Typically, the beneficiary would do this soon after the insured passes away and would need to include an official death certificate.
When designating your beneficiary, you should also think about choosing a contingent beneficiary – the person(s) who will receive the death benefit should your primary beneficiary pass away. For example, you might choose your spouse to be your primary beneficiary and therefore receive 100% of the death benefit. But you can also select your son and daughter as your contingent beneficiaries, who will each receive 50% of the death benefit if your spouse dies.
When selecting how much life insurance coverage is right for you, consider any outstanding loans or debts, as well as the amount of income needed if you pass away unexpectedly. Being “covered” means that your life insurance policy is active, and that your beneficiary(ies) will receive a death benefit if you pass away.
A death benefit is the amount of money your insurance company will pay to your chosen beneficiary(ies) if you pass away while your policy is in force.
When filling out an insurance application, you may be asked if you have any existing policies (I.e. active life insurance or annuity contracts). Existing policies only apply to the proposed insured.
For life insurance policies, the face value is the death benefit – the amount of money your insurance company will pay your beneficiary. It is tax-free.
A fully underwritten life insurance policy requires a medical exam and typically a blood and urine sample in order to establish your rate. Not all policies are fully underwritten – with Quility, you can apply online for term life insurance in less than 10 minutes with no need for a medical exam.
A guaranteed issue life insurance policy does not require a medical exam for you to qualify for coverage. Your application will not be rejected based on your medical history or other factors that would typically warrant a rejection. Guaranteed issue policies are designed for people with serious health conditions.
An immediate annuity begins paying income immediately. If you purchase an immediate annuity with a lump sum and schedule future payments, you will usually start receiving income less than a year after you start making your premium payments.
While similar to other kinds of life insurance, indexed universal life insurance policies (IULs) include both a death benefit and a cash value savings component. Your cash value account can be tied to a market index, so you have the potential upside that comes from investing in the stock market without the financial risk. Many people purchase IULs to save for retirement.
Quility is an insurance broker – an intermediary between clients and insurers. We partner with over 80 major insurance companies so that we can shop on your behalf to ensure you get the best coverage at the best price.
An insurance company (carrier) is the company that provides your insurance coverage. Even if you purchase a policy through an insurance broker, your company will underwrite your policy and issue the death benefit to your loved ones. Quility partners with 80+ insurance companies.
This is a strategy that allows you to “ladder” policies (you would purchase several term life insurance policies with different term lengths) to cover different stages of life – leading to more affordable rates and ensuring you are paying for the right amount of coverage throughout your life.
At Quility, all of our advisors are licensed insurance agents. In order to become a licensed agent, you must pass a state insurance exam and maintain an active license.
Life insurance is a contract with an insurer. You make monthly or annual payments to keep your policy active. If you pass away while your policy is in force, your insurance company will provide your beneficiary(ies) with a death benefit. While there are many benefits to securing a life insurance policy, one of the greatest is the peace of mind you’ll gain in knowing that your loved ones are taken care of should tragedy strike.
When applying for life insurance, it’s important to keep your medical conditions in mind. While you can still qualify for coverage with a medical condition, rates are partially based on your health at the time of your application. Some common preexisting medical conditions that insurance companies inquire about in their underwriting processes include cancer, diabetes, high blood pressure, heart disease, and high cholesterol.
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A life insurance policy is the contract between the insured and their insurance company. Policies spell out important terms and conditions, including the insured’s premium payments and the death benefit the insurance company will pay to the beneficiary(ies).
A policyholder is the owner of a life insurance policy. While often interchangeable with the “insured” – the individual covered by the life insurance policy – you can also be a policyholder of a policy that names another individual as the insured.
Premiums are monthly or annual payments made by the insured to keep their policy intact.
The primary beneficiary of a policy is the person who receives the policy’s death benefit when the insured passes away.
When filling out an insurance application, the proposed insured refers to the person who will be covered under that life insurance policy.
Quility is an insurance broker. We partner with over 80 insurance companies and offer a network of thousands of insurance advisors as well as both an online application for term life insurance and expert consultations. Our products range from term and permanent life insurance policies to debt and retirement solutions. Get to know our story!
When naming your beneficiary(ies), you can allocate how much of the death benefit each person would receive. Whether you are naming one person to be your primary beneficiary or multiple people (such as your children), the share allocation must always add up to 100%.
Simplified issue insurance is a type of life insurance policy that you can purchase without undergoing a medical exam. Typically, this involves answering a series of medical questions within an insurance application. Most people choose this type of insurance because they want coverage fast, they do not need a complex type of policy, or they prefer to not go through the process of submitting a medical exam.
Cash value life insurance and deferred annuities grow tax-deferred funds – meaning you will postpone paying taxes until you withdraw your invested money.
Your term is how long your life insurance policy will be in force. When determining your term, you may consider how long you will have dependents or if your loved ones would face a financial burden should you pass away.
Underwriting is a process that insurance companies use to determine the risk of insuring the individual who has applied for coverage. When applying for life insurance coverage, you will be asked to answer some questions about your health, medical history and family history – which are all part of the underwriting process.
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Please Note: The definitions are for educational purposes only – they are not meant to be used in lieu of professional, legal or financial advice. For more information, reach out to one of our licensed insurance agents.
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The samples shown above are real numbers from past Debt Free Life clients. They are examples of the types of quotes you can expect but are presented for example only.
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