Sunday, February 05, 2012

Life Insurance Glossary

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Cancellable:
An insurance contract that may be ended by the insured or the insurer at any time.

Cancellation:
The termination of an insurance contract by the insured or the insurer in accordance with the policy provisions.

Cash Surrender Value:
The sum of money due to the insured when the insured surrenders a life insurance policy with cash value. This value is calculated by taking the total cash value minus any surrender charges and/or outstanding loans (and accrued interest).

Cash Value:
The sum of money available to the owner when the policy is surrendered. The cash value can also be used as collateral if the owner takes out a loan against the policy. Policies that offer cash value include, but are not limited to, whole life, variable life, universal life and joint life insurance.

Catastrophe Hazard:
The potential danger of a loss due to a disaster in which large numbers of insureds are subject. A tornado would be catastrophic in nature because many people would be threatened if it occured.

Child Rider:
A rider to a life insurance policy in which term life insurance on the insured's child is added. The child must be minor and at least 15 days old. Most child riders cover any number of children for one flat rate.

Claim:
A request for payment of the contractual benefits by the insurer that is made by the insured or the beneficiary.

Clause:
A section of an insurance policy that covers various topics such as exclusions, conditions for coverage, or responsibilities of the insured.

Collateral Assignment:
Securing a loan by using the insurance policy or its value.

Collusion:
An agreement between persons to commit insurance fraud.

Concealment:
Refers to a fact that is intentionally not disclosed to the insurance company that could affect either the premium or the settlement of a loss. Concealment of material fact may be cause to void the contract.

Conditional Receipt:
A temporary contract that requires the insurance company to provide conditional coverage during the underwriting process when premium is submitted with the application and the applicant has been examined.

Contestable Period:
A period of time during which the insurer can cancel or contest the policy. For life insurance, the contestable period is normally two years.

Contingent Beneficiary:
A secondary beneficiary designated by the insured to receive the benefits of the policy if the named primary beneficiary is deceased when the proceeds become payable.

Contract:
An agreement by which the insurer agrees to provide certain benefits and/or services to the insured in exchange for consideration (premium payments).

Conversion:
Converting a group health or life policy to an individual policy, under specific conditions, when the insured is no longer a member of the group providing coverage.

Convertible (Convertibility Option or Conversion Privilege:
The right of an individual to change the form of the original policy without evidence of insurability. For a example, a term life policy may be convertible to permanent insurance without a new medical examination.

Coverage Amount:
The face amount of the policy. This is the amount of benefit the insurer would pay in the event of the insured's death.

Credit Report:
A confidential document that provides the financial record and reputation of an applicant who is being underwritten for insurance.

For more reference, click on any of the letters below to find life insurance terms that begin with that letter.
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