An accelerated option in an insurance contract allows the policyholder to withdraw benefits earlier than they would normally be payable.

An accelerated option is a clause in an insurance contract that allows the policyholder to receive part of the cash benefit sooner than it would normally be paid. In a life insurance contract, an accelerated option may allow the policyholder to apply the accumulated cash value to pay off the policy in one lump sum. When a policyholder receives a partial benefit from an accelerated option, it decreases the final or death benefit of the policy by that same amount. An accelerated option is a clause in an insurance contract that allows the policyholder to receive part of the cash benefit sooner than it would normally be paid. The life insurance company will deduct the payment of the accelerated benefit from the death benefit it ultimately pays to the beneficiary.

Accelerated Option

An accelerated death benefit (ADB) allows a life insurance policyholder to get cash advances against the death benefit if diagnosed with a terminal illness.

An accelerated death benefit (ADB) is a benefit that can be attached to a life insurance policy that enables the policyholder to receive cash advances against the death benefit in the case of being diagnosed with a terminal illness. An accelerated death benefit (ADB) is a benefit that can be attached to a life insurance policy that enables the policyholder to receive cash advances against the death benefit in the case of being diagnosed with a terminal illness. In order to qualify for an accelerated death benefit, a policy owner needs to provide proof that they are chronically or terminally ill.
Taking accelerated death benefits will reduce the amount of money received by beneficiaries. Choosing an insurance policy with an accelerated death benefit (ADB) allows the policyholder to pay for their daily living in an effort to make it as comfortable as possible while also allowing the holder to look after their family once they pass away. Fred contracted terminal brain cancer and decided he wanted to accelerate half the face value of his policy and collect an accelerated death benefit.

Accelerated Death Benefit (ADB)

An accelerative endowment is an option in a whole life insurance policy to withdraw the dividends that have accumulated in the account.

26 USC 7702: Life insurance contract defined

An accelerative endowment is an option in a whole life insurance policy that allows the policyholder to access the accumulated dividends in the account as a lump-sum payment rather than leaving them to be inherited by their beneficiaries. An accelerative endowment is an option in a whole life insurance policy that allows the policyholder to access the accumulated dividends in the account as a lump-sum payment rather than leaving them to be inherited by their beneficiaries. An endowment life insurance policy will grow in value over a time period selected by the policyholder, such as 18 years, and will pay out a lump sum on a specified date, known as the maturity date, at the end of that time period. An accelerative endowment allows dividend accumulations to be applied to convert a whole life insurance policy into an endowment or to shorten the endowment term. In this respect, the accelerative endowment policy differs from other whole life insurance options designed only to provide financial security to the policyholder's beneficiaries.

Accelerative Endowment

The accidental death benefit is a payment due to the beneficiary of an accidental death insurance policy.

The term accidental death benefit refers to a payment due to the beneficiary of an accidental death insurance policy, which is often a clause or rider connected to a life insurance policy. An accidental death benefit is paid to the beneficiary of an accidental death insurance policy. This means that the beneficiary receives the death benefit paid by the policy itself plus any additional accidental death benefit covered by the rider. Depending on the issuer of the policy, an accidental death benefit may extend up to a year after the initial accident occurs, provided the accident led to the insured's death.

Accidental Death Benefit

Accidental death and dismemberment (AD&D) insurance is coverage that pays benefits upon the accidental death of an insured or for the accidental loss of a limb.

Underlying Cause of Death, 1999-2019 Results

Table of Contents
What Is AD&D Insurance? Pros
Provides financial assistance resulting from an accidental death or loss of limb
Supplements loss of income beyond initial loss
Costs less than traditional life insurance
Pays only for certain events
Terminates upon the insured's termination with the sponsor issuing coverage
Gives a false sense of security if regular life insurance is not adequate
Accidental death and dismemberment (AD&D) coverage only pays a benefit if death results from a covered accident or upon the loss (or loss of use) of a limb. Understanding AD&D Insurance
Special Considerations
Pros and Cons of AD&D Insurance
The Bottom Line
Accidental death and dismemberment (AD&D) insurance is insurance—usually added as a rider to a health insurance or life insurance policy—that covers the unintentional death or dismemberment of the insured. Life insurance policies pay death benefits upon the death of the insured, despite how the death occurred (exceptions apply per policy).
AD&D policies cover the accidental death of the insured or the loss (or loss of use) of the insured's limb. Accidental death and dismemberment (AD&D) insurance is an insurance policy that pays a death benefit upon the accidental death of an insured or upon the loss of a limb due to an accident.

Accidental Death and Dismemberment (AD&D) Insurance

The accumulated value is the total amount an investment currently holds, including the capital invested and interest earned to date.

The accumulated value is the total amount an investment currently holds, including the capital invested and the interest it has earned to date. Value accumulated in a whole life insurance policy is tax-deferred so long as the policyholder keeps the insurance contract valid.
For insurance purposes, accumulated value begins to build when the policyholder of a whole (or universal) life insurance policy starts paying a monthly premium. In life insurance, the accumulated value is the total acquired value of a whole life insurance policy—also known as cash value. A policyholder can also surrender a whole life insurance policy to the insurance company and receive the cash surrender value of the policy in return. Value accumulated in a whole life insurance policy is tax-deferred so long as the policyholder keeps the insurance contract valid. Accumulated value can be an integral component of a tax-savings strategy because it maximizes the amount of money you get to keep.

Accumulated Value

An accumulation option is a policy feature of permanent life insurance that reinvests dividends back into the policy, where it can earn interest.

An accumulation option is a policy feature of permanent life insurance that reinvests dividends back into the policy, where it can earn interest. term insurance:*Some insurers that offer what sometimes called a fifth dividend option use a portion of the dividend to buy 1-year term insurance equal to the policy's then cash value, with the remainder used to buy paid-up additions or to accumulate at interest. Paid-up additional insurance increases the total death benefit as well as the cash value the policy owner can either borrow as a loan or receive upon the cash surrender of the policy. An accumulation option is a policy feature of permanent life insurance that reinvests dividends back into the policy, where it can earn interest. An accumulation option reinvests dividends back into the policy to earn interest that are taxed on an annual basis.

Accumulation Option

Actuarial Age is an individual's life expectancy based on calculations and statistical modeling.

Actuarial age is an individual's life expectancy based on calculations and statistical modeling. Actuaries use mathematical and statistical computations to predict a person's life expectancy, or his or her actuarial age, to assist insurance companies with pricing, forecasting and planning. A person's actuarial age is the age to which mathematical and statistical modeling indicate a person will live. At age 80, the SSA table estimates the average person has 8.2 years to live, so any payments collected must reflect the high probability of a payout relatively soon. Actuarial age is an individual's expected life expectancy used by insurance agencies for planning and forecasting purposes.

Actuarial Age

An actuarial life table is a table or spreadsheet that shows the probability of a person at a certain age dying before their next birthday and is used by insurance companies to price products.

An actuarial life table is a table or spreadsheet that shows the probability of a person at a certain age dying before their next birthday. The two tables are the period life table (to determine mortality rates for a specific time period of a defined population) and the cohort life table (used to represent the overall mortality rates of a certain population's entire lifetime). Insurance companies use actuarial life tables to primarily make two types of predictions: the probability of surviving any particular year of age and the remaining life expectancy for people of different ages.
Actuarial life tables also play an important role in the sciences of biology and epidemiology. In addition, the Social Security Administration in the United States uses actuarial life tables to examine the mortality rates of people who have Social Security in order to inform certain policy decisions or actions.
Actuarial life tables are also important in product life cycle management and for pension calculations. An actuarial life table is also called a mortality table, life table, or actuarial table.

Actuarial Life Table

The add to cash value option is a contractual term which allows dividends to be reinvested into the policy's cash value.

The add to cash value option is a contractual term found in cash value life insurance policies. Eventually, Michaela can benefit from this cash value through actions such as borrowing against the cash value, withdrawing the cash value, or using the cash value to pay some or all of her monthly insurance premiums. By exercising the add to cash value option, the policyholder allows for the dividends earned on their policy to be added to the policy’s cash value, rather than being paid out to the policyholder. Therefore, she decides to exercise the add to cash value option in her insurance contract, allowing the dividends earned on her cash value account to be reinvested into the policy. Holders of cash value life insurance pay premiums for their insurance coverage, a portion of which are directed into a cash value account.

Add To Cash Value Option

An additional death benefit is a clause found in certain life insurance contracts. It provides an additional lump sum for certain causes of death.

An additional death benefit is a clause found in certain life insurance contracts. An additional death benefit is an insurance contract clause that provides an increased death benefit if the death in question meets certain specified conditions. For example, a life insurance contract with a death benefit of $1 million may specify that an additional death benefit of $500,000 would be paid should the policyholder die from natural causes before the age of 40. For example, a life insurance contract with a death benefit of $1 million may specify that an additional death benefit of $500,000 would be paid should the policyholder die from natural causes before the age of 40. For instance, one of the most common life insurance riders or additions is the accidental death benefit rider, which provides additional life insurance coverage in the event that the insured's death is accidental.

Additional Death Benefit

Adjustable life insurance is a term and whole life hybrid insurance plan that allows policyholders the option to adjust policy features.

Adjustable life insurance is a hybrid of term life and whole life insurance that allows policyholders the option to adjust policy features, including the period of protection, face amount, premiums, and length of the premium payment period. Adjustable life insurance is a hybrid of term life and whole life insurance that allows policyholders the option to adjust policy features, including the period of protection, face amount, premiums, and length of the premium payment period. As with other permanent life insurance, adjustable life insurance has a savings component that earns cash value interest, usually at a guaranteed rate. Adjustable life insurance differs from other life insurance products in that there is no requirement to cancel or purchase additional policies as the insured’s circumstances change. Effectively, adjustable life insurance policies allow policyholders to customize their life insurance to meet current or anticipated needs.

Adjustable Life Insurance

The adjusted premium method is a common formula that insurance companies use to calculate the cash surrender value of a life insurance policy.

The adjusted premium method is an approach used by insurance companies to calculate the amount owed to a customer who decides to cancel their insurance policy prematurely. When a policyholder pays regular insurance premiums on their life insurance policy, a portion of those premiums is applied toward savings while the remainder is applied toward a reserve fund. The adjusted premiums method is used by insurance companies to calculate the cash surrender value (CSV) of a life insurance contract. The adjusted premium method is the most commonly used formula that insurance companies use to calculate the cash surrender value of a life insurance policy. To calculate this value, the insurance carrier starts by looking at the net-value premium, which is essentially the death benefit of the policy divided by the number of years in which premiums are expected to be paid.

Adjusted Premium Method

Aggregate Mortality Table is data on the death rate of everyone who has purchased life insurance, without categorization based on age or time of purchase. 

Life Tables for the United States Social Security Area 1900-2100

U.S. Population Mortality Rates 2000-2015

An aggregate mortality table provides data on the imputed death rates of everyone covered by life insurance policies, but without categorization based on age or the time of purchase. Aggregate mortality tables can be compared with select mortality tables, which provide data on the death rate of specific individuals who have recently purchased life insurance. These tables may be referred to as mortality tables (if they provide rates of or death) or morbidity tables (if they provide rates of disability and recovery). A mortality table, also known as a life table or actuarial table, shows the statistical rate of deaths occurring in a defined population during a selected time interval, or survival rates from birth to death. Insurance companies rely on aggregate mortality tables, alongside other types of mortality tables, to determine how much to charge applicants for coverage.

Aggregate Mortality Table

Allocated loss adjustment expenses (ALAE) are part of an insurer’s expense reserves that are attributed to the processing of an insurance claim.

Some commercial liability policies contain endorsements, which require the policyholder to reimburse its insurance company for loss adjustment expenses (ALAE or ULAE).
Allocated loss adjustment expenses, along with unallocated loss adjustment expenses (ULAE), represent an insurer's estimate of the money it will pay out in claims and expenses. ALAE, along with unallocated loss adjustment expenses (ULAE), represent an insurer's estimate of the money it will pay out in claims and expenses. Some commercial liability policies contain endorsements, which require the policyholder to reimburse its insurance company for loss adjustment expenses (ALAE or ULAE). Allocated loss adjustment expenses (ALAE) are expenses attributed to a specific insurance claim.

Introduction to Allocated Loss Adjustment Expenses (ALAE)

The American Council of Life Insurers (ACLI) is an association of American life insurance carriers.

The American Council of Life Insurers (ACLI) is an association of American life insurance providers. As accounted by the ACLI, 2.4 million jobs in the U.S. are created by life insurers, which encompasses direct employees of life insurance companies, individuals that sell life insurance products, and jobs that are not life insurance related but support the industry. In its objective of protecting Americans from financial uncertainties, ACLI members provide life insurance, disability income insurance, and long-term care insurance. The American Council of Life Insurers (ACLI) is an association of American life insurance companies that supports its members in assisting individuals with financial stability and retirement planning. Products offered by the member companies include life insurance, annuities, long-term care insurance, disability income insurance, reinsurance, dental and vision, retirement plans, and other supplemental products.

American Council of Life Insurers (ACLI)

Annual Renewable Term insurance is term life insurance with a guarantee of future insurability for a set period of years on a renewable basis.

Annual renewable term insurance (ART) is a form of term life insurance which offers a guarantee of future insurability for a set period of years. Annual renewable term insurance is a less common type of term life than level term insurance. Annual renewable term insurance (ART) is a form of term life insurance which offers a guarantee of future insurability for a set period of years. Annual renewable term insurance is a short-term life insurance product and may not be best suited for most situations. He might be a good candidate to buy annual renewable term life because he needs temporary coverage for his family's protection and anticipates purchasing group life insurance through a future employer soon.

Annual Renewable Term – ART Insurance

An automatic premium loan is an insurance policy provision that lets an insurer deduct an outstanding premium from the cash value of a policy.

An automatic premium loan is an insurance policy provision that allows the insurer to deduct the amount of an outstanding premium from the value of the policy when the premium is due. Automatic premium loan provisions help both the insurer and the policyholder: The insurer can continue to automatically collect periodic premiums rather than sending reminders to the policyholder, and the policyholder is able to maintain coverage even when they forget or are unable to send in a check to cover the policy premium.
The policyholder may still choose to pay the premium by the regularly scheduled due date, but if the premium is not paid within a certain number of days after the grace period, such as 60 days, the outstanding premium amount is deducted from the policy's cash value. to take an automatic premium loan, you have to have a cash-value life insurance policy, in which every premium you pay adds to the cash value of the policy. An automatic premium loan is an insurance policy provision that allows the insurer to deduct the amount of an outstanding premium from the value of the policy when the premium is due. The loan is taken out against the cash value of the policy, and the loan balance is deducted from the policy’s cash value if not repaid.

Automatic Premium Loan Definiltion

Bank-owned life insurance is a type of life insurance bought by banks as a tax shelter, leveraging tax-free savings provisions to fund employee benefits. 

Bank-owned life insurance (BOLI) is a form of life insurance purchased by banks where the bank is the beneficiary and also usually the owner of the policy. Bank-owned life insurance (BOLI) is a form of life insurance purchased by banks where the bank is the beneficiary and also usually the owner of the policy. As BoliColi.com, a firm that helps manage corporate-owned and bank-owned life insurance portfolios, notes, BOLI was traditionally combined with benefit plans for new senior executives. Bank-owned life insurance is a kind of tax shelter providing funds (tax free) to the bank to offset costs. Bank-owned life insurance (BOLI) is a form of life insurance used in the banking industry.

Bank-Owned Life Insurance (BOLI)

Cash value life insurance is permanent life insurance with a cash value savings component.

What Is Cash Value Life Insurance?: How Can I Withdraw Cash Value From Life Insurance

What Is Cash Value Life Insurance?: How Does Cash Value Life Insurance Work?

What Is Cash Value Life Insurance?: Taking Out a Loan on Your Policy

Table of Contents
What Is Cash Value Life Insurance?
How Cash Value Life Insurance Works
Example of Cash Value Insurance
Advantages and Disadvantages The policy has no outstanding loans or prior cash withdrawals and an accumulated cash value of $5,000. Upon the death of the policyholder, the insurance company pays the full death benefit of $25,000. Money collected into the cash value Traditionally, cash value life insurance has higher premiums than term life insurance because of the cash value element. Most cash value life insurance policies require a fixed-level premium payment, of which a portion is allocated to the cost of insurance and the remaining deposited into a cash value account. As the life insurance cash value increases, the insurance company’s risk decreases, because the accumulated cash value offsets part of the insurer’s liability.

Cash Value Life Insurance

Cash surrender value is the sum of money an insurance company pays to the policyholder or account owner upon the surrender of a policy/account.

Cash surrender value is defined as the internal value of an insurance policy at any point that is equal to the value of the accumulation account minus a surrender charge. Cash surrender value is the accumulated portion of a permanent life insurance policy's cash value that is available to the policyholder upon surrender of the policy. Cash surrender value is defined as the internal value of an insurance policy at any point that is equal to the value of the accumulation account minus a surrender charge. Depending on the age of the policy, the cash surrender value could be less than the actual cash value. The cash surrender value is the sum of money an insurance company pays to a policyholder or an annuity contract owner if their policy is voluntarily terminated before its maturity or an insured event occurs.

Cash Surrender Value

Charitable gift life insurance is a method of contributing to charity by taking out life insurance on yourself with the charity as a beneficiary.

Publication 559: Survivors, Executors, and Administrators

26 U.S.C. 264 - Certain amounts paid in connection with insurance contracts

Table of Contents
Charitable Gift Life Insurance An insurance policy can be structured to give flexibility to the donor, such as by allowing them to change the beneficiary prior to their death.
Charitable gift life insurance can be a convenient vehicle for philanthropy for several reasons. In doing so, the donor pays the premiums on the life insurance policy, with the intention that proceeds from the policy will be paid to one or more charitable organizations upon the donor's death. Depending on the details of the insurance contract, the donor may or may not retain the right to change the beneficiary of the life insurance policy prior to their death. Charitable gift life insurance refers to a life insurance policy where the beneficiary is a registered charity.

Charitable Gift Life Insurance

Clean sheeting is the fraudulent act of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease.

Clean sheeting is the fraudulent act of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease. In clean sheeting, the policy's seller benefits from the lump sum payment received for the policy while the purchaser benefits from the heavily discounted price of the policy. Clean sheeting is the fraudulent act of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease. Clean sheeting is the fraudulent practice of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease. In insurance, an incontestability clause is a clause in most life insurance policies that prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed.

Clean Sheeting

A cleanup fund is an insurance term referring to the final expenses associated with an individual after his/her death.

BP Establishes $20 Billion Claims Fund for Deepwater Horizon Spill and Outlines Dividend Decisions

A cleanup fund is an insurance term referring to the final expenses associated with an individual after his/her death. In the case of individual insurance, costs most often associated with a cleanup fund include:
Funeral, memorial service, cremation, etc;
travel associated with such services, whether for the body of the deceased, or for family members to attend the services;
burial, grave, vault, crypt, etc;
paying off credit cards, medical bills, etc;
settling the estate, realtor fees, auction fees, etc;
legal fees, executor fees, etc. and
misc expenses. The cleanup fund, or funds for final expenses, is a type of life insurance policy intended to cover the deceased's final expenses. The cleanup fund provides the estate with a means of paying for certain expenses related to the death, including funeral expenses and the costs of settling the remaining estate. A cleanup fund is an insurance term referring to the final expenses associated with an individual after his/her death.

Cleanup Fund

Company-owned life insurance is a type of policy that companies purchase to insure against the death of one or more employees.

Corporate-Owned Life Insurance (COLI): Insurance and Tax Issues

Company-owned life insurance (COLI) is a life insurance policy that pays a benefit to the company if an insured employee dies. The company pays the insurance premiums and receives the death benefit if a covered employee dies.
COLI policies are a way for a company to minimize its tax burden, increase after-tax net income, finance employee benefits, and help cover the expenses associated with replacing an insured employee upon that employee’s death.﻿﻿﻿﻿﻿ COLI policies typically continue to cover employees up to the year after they leave the company.
Because some companies used COLI policies to exploit tax loopholes, the Internal Revenue Service (IRS) now requires that they meet certain conditions to receive a tax-free death benefit. Company-owned life insurance (COLI) is a life insurance policy that pays a benefit to the company if an insured employee dies. Company-owned life insurance (COLI) is a life insurance policy that pays a benefit to the company if an insured employee dies. Because companies used COLI policies to exploit tax loopholes, the Internal Revenue Service now requires that they meet certain conditions to receive a tax-free death benefit.

Company-Owned Life Insurance (COLI)

The comparative interest rate method is a way to calculate the difference in cost between two different types of insurance policies.

The comparative interest rate method is a way to calculate the difference in cost between two different types of insurance policies. To understand the comparative interest rate method, it is helpful to first review the structure of the two types of life insurance products that it is used to compare: whole life policies and decreasing term policies. It consists of comparing the annual equity gain of a whole life policy to the annual interest rate of the side fund associated with a decreasing term policy. Specifically, the comparative interest rate method is used to illustrate the difference between the cost of a whole life policy and a decreasing term policy with a side fund. The comparative interest rate method is an approach for comparing whole life and decreasing term life insurance policies.

Comparative Interest Rate Method

A convention statement is a document filed by an insurance or reinsurance company that serves as its annual financial statement.

Financial Statement Filing & Step Through Guide

A convention statement is a mandatory document filed by an insurance or reinsurance company that serves as its annual financial statement. A convention statement is a mandatory document filed by an insurance or reinsurance company that serves as its annual financial statement. The convention statement serves to address any such concerns and may serve as an advance warning to the state insurance commissions that a company may be having financial problems. A convention statement serves as the financial statement of an insurance or reinsurance company. Since the insurance industry has state-level regulations, the structure of the convention statement will change from state to state.

Convention Statement

Convertible insurance allows a policyholder to change a term policy into a whole or universal policy without going through another health screening.

Convertible insurance is a type of life insurance that allows the policyholder to change a term policy into a whole or universal policy without going through the health qualification process again. When purchasing a convertible insurance policy, make sure you understand when you can convert the policy (for example, each year on the policy renewal date); the point at which conversion is no longer allowed (for example, after age 65); and the features of the permanent policy (for example, how much savings it lets you accumulate, how you can invest those savings, and whether the policy pays annual dividends).
Most term life insurance policies have a conversion deadline. Immediately after getting her first job, River purchased a $100,000 convertible term life insurance policy for 30 years and has the option to convert part of or the entire policy into a whole life insurance policy before the age of 50. You might choose a convertible term policy if you can only afford a less expensive term policy now, but think you might prefer and be able to afford a more expensive permanent policy later and don’t want to take the risk that a change in your health could disqualify you from life insurance coverage. If the policyholder decides to make the conversion on their convertible insurance, the permanent policy will have the same value as the term policy, but the permanent policy will have higher premiums.

Convertible Insurance

Corporate ownership of life insurance, corporate-owned life insurance, and dead peasant insurance refer to insurance obtained by a company on employees.

Bank-Owned Life Insurance: A Primer for Community Banks

Corporate ownership of life insurance (COLI), or corporate-owned life insurance, refers to insurance policies taken out by companies on their employees, typically senior-level executives. Corporate ownership of life insurance (COLI), or corporate-owned life insurance, refers to insurance policies taken out by companies on their employees, typically senior-level executives. COLI policies provide the same tax benefits to the owner that other life insurance products do: Death benefits are not taxable and investment earnings on the policy's cash value can grow tax-free or tax-deferred within the policy. Corporate ownership of life insurance (COLI) refers to insurance obtained and owned by a company on its employees, typically senior-level executives. If the purchaser of a corporate-owned policy is a bank, the policy is often referred to as bank-owned life insurance (BOLI).
COLI is generally used to protect the financial interests of the company that buys it.

Corporate Ownership of Life Insurance (COLI)

Credit life insurance is a policy designed to pay off a borrower's debt if the borrower dies.

Can I Be Responsible to Pay Off the Debts of My Deceased Spouse?

Credit life insurance is a type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies. It is against federal law to require credit life insurance in a loan, or to base loan decisions on the acceptance of credit life insurance.﻿﻿ Nevertheless, credit life insurance is sometimes built into a loan, which makes your monthly payments higher, so it’s important to ask your lender about it.
Credit life insurance pays off a borrower's debts if the borrower dies. Moreover, credit life insurance drops in value over the course of the policy, since it only covers the outstanding balance on the loan; the value of a term life insurance policy stays the same. Credit life insurance is a specialized type of life insurance policy intended to pay off specific outstanding debts in case the borrower dies before the debt is fully repaid. Credit life insurance is a type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies.

Credit Life Insurance

A death benefit is a payout to the beneficiary of a life insurance policy, annuity or pension when the insured or annuitant dies.

A death benefit is a payout to the beneficiary of a life insurance policy, annuity, or pension when the insured or annuitant dies. Beneficiaries of life insurance policies receive the death benefit payment free of ordinary income tax, while annuity beneficiaries may pay income or capital gains tax on death benefits received. Beneficiaries of life insurance policies receive the death benefit payment free of ordinary income tax, while annuity beneficiaries may pay income or capital gains tax on death benefits received. Once the insurance company is identified, beneficiaries must complete a death claim form, providing the insured's policy number, name, Social Security number, and date of death, and payment preferences for the death benefit proceeds. For life insurance policies, death benefits are not subject to income tax and named beneficiaries ordinarily receive the death benefit as a lump-sum payment.

Death Benefit

Decreasing term insurance is a renewable term life insurance with coverage decreasing at a predetermined rate throughout the policy's life.

Decreasing term insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Decreasing term insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Numerous in-force decreasing term insurance policies take the form of mortgage life insurance, which affixes its benefit to the remaining mortgage of an insured’s home. Decreasing term insurance allows a pure death benefit with no cash accumulation, unlike, for example, a whole life insurance policy. Decreasing term insurance is a more affordable option than whole life or universal life insurance.

Decreasing Term Insurance

A dread disease rider is added to a life insurance policy to help cover the costs of a critical illness, such as cancer or a stroke.

What Is Cancer or Critical Illness Insurance?

A dread disease rider, also called a critical illness rider, is an addition to a life insurance policy that provides the policyholder a percentage of the death benefit if they are diagnosed with a severe disease. A dread disease rider, also called a critical illness rider, is an addition to a life insurance policy that provides the policyholder a percentage of the death benefit if they are diagnosed with a severe disease. Types of ailments that are covered can include life-threatening forms of cancer, Alzheimer’s disease, Parkinson’s disease, heart disease, loss of limbs, organ transplants, paralysis, blindness, coma, and others. The costs associated with critical diseases can be substantial and cause financial distress—even bankruptcy—which a dread disease rider insurance can help alleviate. Dread disease riders are added to life insurance policies to help cover the costs of a critical illness.

Dread Disease Rider

Embedded value is a common valuation measure in the life insurance industry used to estimate the consolidated value of shareholders' interests.

Embedded value (EV) is a common valuation measure used mainly by life insurance companies outside of North America to estimate the consolidated value of shareholders' interest in an insurance company. For instance, the 40-page report for 2018\[cite\] contains an executive summary, an analysis of embedded value earnings and value of business in-force, sensitivities, reconciliation of shareholders' equity to embedded value, the regional analysis of embedded value, methodology, assumptions, a statement by directors and an auditor's report on embedded value. The present value of future profits captures projected future profits from in-force policies, while net asset value of capital and surplus represents the funds belonging to shareholders that have been accumulated in the past. Embedded value (EV) is a common valuation measure used mainly by life insurance companies outside of North America to estimate the consolidated value of shareholders' interest in an insurance company. In particular, asset and liability cash flows are valued using risk discount rates consistent with those applied to similar cash flows in capital markets, and options and guarantees are valued using market consistent models calibrated to observable market prices.

Embedded Value

An endorsement is an amendment to a document or contract, an authorizing signature, or a public declaration of support.

Depending on the context of its use, an endorsement can have different meanings. In a financial transaction where one party gives a check to another, the payee named on the check must endorse the check before it is cashed. (For example, if the check is written out to John Doe _and_ Jane Doe, both people must sign the check.) Anyone can cash or deposit a check with a blank endorsement, even if the check is not written to that individual. If more than one person is listed as a payee on the check, then the endorsement requirements differ depending on how the names are written.

Endorsement

Equity-indexed universal life insurance combines permanent life insurance with a cash value that increases with market returns.

Equity-indexed universal life insurance is a type of permanent life insurance policy that ties its accumulation to a stock market index. It is more complex than other forms of permanent life insurance policies and potential investors may want guidance on how this policy works before committing to it.
Equity-indexed universal life insurance, like all universal life insurance, builds a cash value that the insured can borrow against, invest with and use to cover increases in the cost of insurance, potentially eliminating out-of-pocket premium payments should the cash value overtake increases in the costs of insurance.
Unlike variable universal life insurance, which allows policyholders to invest a portion of the cash value into a range of funds and stocks with various risk profiles Furthermore, equity-indexed universal life insurance policies are a form of advanced life insurance, a complicated life-insurance vehicle that is difficult to explain or understand. , equity-indexed universal life insurance offers policyholders the opportunity to place the cash value in an equity index account, which pays interest according to a market index without actually investing the money in the market. Equity-indexed universal life insurance policies offer some of the benefits of variable universal life insurance without the risk of holding positions in the stock market.

Equity-Indexed Universal Life Insurance

The European Life Settlement Association (ELSA) promotes fair standards for the European life settlement industry.

ELSA Represents European Funding Sources, Service Providers and Intermediaries in the Life Settlement Market

The European Life Settlement Association (ELSA) promotes fair standards for the European life settlement industry. ELSA members are expected to conform to a best practices code of conduct written by ELSA as part of an overall strategy to advance the reputation of the life settlement industry in Europe. The European Life Settlement Association (ELSA) promotes fair standards for the European life settlement industry. In addition to adhering to the Code of Ethics, networking with colleagues and attending conferences, members benefit from ELSA’s stature as a thought-leader within the life settlement industry. ELSA utilizes a committee structure to engage its members in a variety of development projects intended to sustain and advance the life settlement industry for decades to come.

European Life Settlement Association (ELSA)

A family income rider is a life insurance add-on that provides a beneficiary with money equal to the policyholder's monthly income if the insured dies.

A family income rider is an addition to a life insurance policy that provides the beneficiary with an amount of money equal to the policyholder's monthly income in the event the policyholder dies. A family income rider is an addition to a life insurance policy that provides the beneficiary with an amount of money equal to the policyholder's monthly income in the event the policyholder dies. A family income rider is an add-on to a life insurance policy that provides money equal to a policyholder's monthly income to beneficiaries, should the policyholder die. With a family income benefit rider, you can specify the amount of time that you would like your family to receive this monthly income. Income is paid out in installments in addition to a lump-sum death benefit, which beneficiaries receive at the end of the family income rider period.

Family Income Rider

A free look period is the time period when a new life insurance policyholder can terminate the policy without any penalties, such as surrender charges.

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. The free look period is a required period of time, typically 10 days or more, in which a new life insurance policy owner can terminate the policy without penalties, such as surrender charges. 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. During the free look period, the contract holder can decide whether or not to keep the insurance policy; if they are not satisfied and wish to cancel, the policy purchaser can receive a full refund. During the free look period, sometimes known as the free examination period, the purchaser can continue to ask the insurer questions regarding the contract as a way of better understanding the policy.

Free Look Period

Free of Particular Average (FPA) is an insurance contract clause that eliminates an insurer’s liability for partial losses.

In American FPA provisions, the insurer’s liability for partial cargo loss is eliminated unless stranding, sinking, fire, or collision caused the loss. In English FPA provisions, the insurer’s liability for partial cargo loss is eliminated except in the case that a stranding, sinking, fire, or collision event occurred. In the American version, the policyholder must prove that stranding, sinking, fire, or collision caused the partial loss, whereas the English version only requires a stranding, sinking, fire, or collision to have occurred at all. Free of Particular Average (FPA) clauses in maritime insurance policies specifically address cargo coverage.

Free of Particular Average (FPA)

A group carve-out plan is a type of life insurance arrangement that employers can use to reward and retain their key employees.

A group carve-out plan is a type of life insurance benefit employers can use to reward key employees beyond what is available to them through the company’s group term life insurance policy. As part of a group carve-out plan, the employee receives $50,000 of ordinary group term life insurance coverage, plus an individual permanent life policy, such as universal life, to provide additional coverage. A group carve-out plan is a type of life insurance benefit employers can use to reward key employees beyond what is available to them through the company’s group term life insurance policy. A group carve-out plan rewards certain employees with insurance benefits unavailable through the company's basic group term life insurance plan. In a carve-out plan, the employer receives a current tax deduction for the premiums it pays for the group term life insurance and, in some cases, for the employee's individual insurance policy.

Group Carve-Out Plan

Group life insurance is offered by an employer or other large-scale entity, such as an association or labor organization, to its workers or members.

Table of Contents
What Is Group Life Insurance? By purchasing group life insurance policy coverage through an insurance provider on a wholesale basis for its members, companies are able to secure costs for each individual employee that are much lower than if they were to purchase an individual policy. Employees who elect coverage through the group policy usually receive a certificate of coverage, which is needed to provide to a subsequent insurance company in the event that an individual leaves the company or organization and terminates their coverage. Group life insurance is a single contract for life insurance coverage that extends to a group of people. Whole life insurance policies are permanent, have higher premiums and death benefits, and constitute the most popular type of life insurance.

Group Life Insurance

Group term life insurance is life insurance offered as an employee benefit. Often a base amount is covered at no charge, with the option to add more.

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Group term life insurance is a type of term insurance in which one contract is issued to cover multiple people. When you leave a job, you may be able to convert a group term life insurance policy to an individual life insurance policy. It is possible, and may be prudent, to have group term life insurance and an individual life insurance policy at the same time. Employers or association groups offering the insurance often limit the total coverage available to employees or members based on things like tenure, base salary, number of dependents, and employment statuses such as full-time, associate, or executive, with the amount of available coverage varying by group. Group term life insurance is relatively inexpensive compared to individual life insurance.

Group Term Life Insurance

A group universal life policy is universal life insurance offered to a group that is less expensive than what is typically offered to an individual.

The term group universal life policy refers to a form of universal life insurance offered to a group of people at a lower cost than what is typically offered to an individual. The term group universal life policy refers to a form of universal life insurance offered to a group of people at a lower cost than what is typically offered to an individual. A group universal life policy is universal life insurance offered to a group of people at a lower cost than what is typically offered to an individual. Group universal life insurance is commonly purchased by corporations that want to provide their employees with life insurance coverage. The cost to cover each individual is much cheaper because the policy is designed to cover a large group, just as purchasing a large amount of a particular grocery item is cheaper on a per-item basis than buying each item separately.

Group Universal Life Policy

Guaranteed issue life insurance is a small whole life insurance policy with no medical questions or exam.

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What Is Guaranteed Universal Life Insurance?

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Guaranteed issue life insurance, or guaranteed acceptance life insurance, is a type of whole life insurance policy that does not require you to answer health questions, undergo a medical exam, or allow an insurance company to review your medical and prescription records. Guaranteed issue life insurance, or guaranteed acceptance life insurance, is a type of whole life insurance policy that does not require you to answer health questions, undergo a medical exam, or allow an insurance company to review your medical and prescription records. If you are outside of this age range, you may still be able to get a guaranteed issue policy with some insurance companies, but you will have fewer options.
Given these age requirements and the lack of medical underwriting (health questions), you can see why insurance companies market guaranteed issue policies to this age group.﻿﻿ Guaranteed issue life insurance is a small whole life insurance policy with no health qualifications. These are all standard features of a whole life insurance policy, and guaranteed issue is a type of whole life insurance.

Guaranteed Issue Life Insurance

Hazardous activity is a hobby or pursuit which falls under an insurer's definition of high risk and could prevent a person from coverage approval.

Hazardous activity refers to a recreational pursuit that life or disability insurance policy considers high-risk. Other exclusions may include some lesser-known exclusions, including:
Injuries caused by aircraft (except to passengers on scheduled airline flights)
War or acts of war
Suicide attempts
Normal pregnancy
Injuries on the job
Intentional acts causing disability
Some travel and sports insurance companies work with extreme sports enthusiasts and adventure travelers by offering Adventure Activities Coverage. If a hobby falls under an insurance company’s definition of hazardous activity, the policyholder may not be able to purchase a life or disability insurance plan. The balloon again crashed into the ground, more violently this second time, and Parekh sustained injuries to both of his legs and received treatment for fractured bones.
Parekh's insurance denied medical and disability coverage and rejected his claim for reimbursement. Adventure Activities Coverage is an insurance rider that requires an additional premium to provide coverage for a high-risk hobby or job.

Hazardous Activity

A person has incidents of ownership if they can change beneficiaries on a life insurance policy, borrow from the cash value, or change or modify the policy in any manner. 

A person (including a trustee) has incidents of ownership if they have the right to change beneficiaries on a life insurance policy, to borrow from the cash value, or to change or modify the policy in any manner. Major types of life insurance policies include whole life, term life, universal life, and variable universal life (VUL) policies. Also, upon completion of the transfer, if the insured or transferor dies within three years of the date from which the policy was transferred, the life insurance proceeds will be included in the gross value of the original owner's estate (called the three-year rule).
Stepping back, life insurance policies are numerous and all have a range of special features, such as incidents of ownership. A person (including a trustee) has incidents of ownership if they have the right to change beneficiaries on a life insurance policy, to borrow from the cash value, or to change or modify the policy in any manner. Whole life, one of the most common types of life insurance, guarantees coverage for the entire life of the insured and includes a death benefit and savings component where cash value may accumulate.

Incidents of Ownership

An incontestability clause is a clause that prevents providers from voiding coverage due to misstatement by the insured after an amount of time.

An incontestability clause is a clause in most life insurance policies that prevent the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed. In most states, if the insured person misstates age or gender when applying for life insurance, the insurance company may not void the policy, but it can adjust death benefits to reflect the policyholder’s true age. The clock starts to run on the contestability period, the minute that a life insurance policy is purchased from a life insurance company. An incontestability clause is a clause in most life insurance policies that prevent the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed. If an applicant forgets a single detail, the insurance company has potential grounds to deny paying life insurance benefits later on.

Defining an Incontestability Clause

An insurance company credit rating indicates an insurance company's solvency, financial strength, and ability to pay policyholder claims.

An insurance company credit rating is the opinion of an independent agency regarding the financial strength of an insurance company. In addition, an insurance company’s credit rating is considered an opinion, not a fact, and ratings of the same insurance company can differ among rating agencies. An entity that appears to be a single, major insurance company may be composed of several smaller insurance companies, each with its own insurance company credit rating. Insurance company credit rating agencies seek to prevent insurance company insolvency by issuing insurer financial strength ratings (IFS ratings) that are freely available for public inspection. An insurance company credit rating indicates an insurance company's solvency, financial strength, and ability to pay policyholder claims.

Insurance Company Credit Rating

An insurance trust is an irrevocable trust set up with a life insurance policy as the asset, allowing the grantor to exempt assets from a taxable estate.

An insurance trust is an irrevocable trust set up with a life insurance policy as the asset, allowing the grantor of the policy to exempt assets away from his or her taxable estate. The life insurance trust, or irrevocable life insurance trust (ILIT), is often used to set aside cash proceeds that can be used to pay estate taxes, as the life insurance policy should be exempt from the taxable estate of the decedent. Steps that are ideal when establishing an ILIT:
1.  ILIT is executed prior to policy application and any premium payment
2.  Grantor transfer funds or gifts to ILIT for premium payments
3.  ILIT trustee notify beneficiaries of Crummey withdrawal rights each time gifts are transferred to the ILIT.
4.  ILIT trustee applies for policy on grantor's life as owner and beneficiary of the insurance policy. An insurance trust is an irrevocable trust set up with a life insurance policy as the asset, allowing the grantor of the policy to exempt assets away from his or her taxable estate. This eliminates the need to have the spouse acquire an insurance policy as an owner on a policy on the insured spouse, who would then subsequently transfer the life insurance policy into the irrevocable trust.

Insurance Trust

An irrevocable beneficiary has guaranteed rights to assets in an insurance policy or a segregated fund.

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Irrevocable Trust Forms — Irrevocable Trust

Table of Contents
Expand How Often Should I Review My Beneficiaries?
Is an Irrevocable Beneficiary a Primary Beneficiary?
How Can I Remove an Irrevocable Beneficiary?
An irrevocable beneficiary is a person or entity designated to receive the assets in a life insurance policy or a segregated fund contract. If you name a beneficiary on a life insurance policy and then put that policy in an irrevocable life insurance trust (ILIT), the proceeds are then considered removed from your estate—thus avoiding potential estate and gift taxes after your death. If someone is listed as an irrevocable beneficiary, then denial of income from the policy after the death of the insured is not possible, nor are any changes made to policy payout terms—unless the beneficiary agrees to them. If a parent wanted to guarantee money to a child, then the parent could designate that child as an irrevocable beneficiary, thus ensuring the child will receive death benefits from the life insurance policy or segregated fund contract.

Irrevocable Beneficiary

A joint-life payout is a payout structure for pensions and retirement plans that provides income to a surviving spouse after the account holder dies.

Retirement Topics - Qualified Joint and Survivor Annuity

Though joint-life payouts refer to pension plans, there is also a type of life insurance policy that goes by the name of joint life. A joint-life payout is a payment structure for pensions and other retirement plans that provides income to a second person, typically a spouse, after the account holder dies. With a joint-life payout, a pension or other retirement plan will first pay benefits to the account holder and then switch to their spouse if the spouse survives them. The term joint-life payout refers to a payment structure for pensions and retirement plans in which a surviving spouse will continue to receive income after the account holder dies.

Joint-Life Payout

A level death benefit is an insurance payout that is the same whether the insured person dies shortly after purchasing the policy or many years later.

A level death benefit is a payout from a life insurance policy that is the same regardless of whether the insured person dies shortly after purchasing the policy or many years later. If, for example, a healthy 30-year old purchases a life insurance policy with a level death benefit of $500,000, the beneficiaries will receive that $500,000 benefit regardless of whether the policyholder dies the very next day or 30 years into the future. Generally speaking, life insurance policies with level death benefits will carry lower premiums than those with an increasing death benefit. The decision of whether to opt for a level death benefit or an increasing death benefit will depend on several factors, including the policyholder’s personal budget and their expectations of alternative investment returns. However, this does not necessarily mean that level death benefits offer superior value, since inflation can reduce the level death benefit’s real value.

Level Death Benefit

Level-Premium Insurance is a term life insurance where the premiums remain the same throughout the duration of the contract.

What Are the Different Types of Term Life Insurance Policies?

Level-premium insurance is a type of term life insurance. If the policyholder passes away during the term of the policy, the person's family could receive a cash payout to be used to pay off an existing mortgage, help with ongoing household bills, and help with other basic needs—or even pay for the policyholder's funeral or memorial service.
While level-premium insurance and decreasing term life insurance are similar, there are several key differences. But Beth, who opted for an annual renewal plan, held steady at $240 per year for the first five years and then saw her premiums rise 10% per year for the last 15 years, ended up paying more than $24,000 over the term of the policy. This policy is included under term life insurance, meaning it provides coverage only for a specified duration and it has only a death benefit, as opposed to a savings component (as in whole life coverage). Level-premium insurance is a type of life insurance in which premiums stay the same price throughout the term, while the amount of coverage offered increases.

Level-Premium Insurance

A life settlement is the selling of one's life insurance policy to a third party for a one-time cash payment.

A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment. As we noted above, the insured party receives a cash payment in exchange for the policy—more than the surrender value, but less than the policy's prescribed payout at death. Instead of letting the policy lapse and be canceled, an insured person can sell the policy using a life settlement. A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment. A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment.

Life Settlement

Life expectancy is defined as the age to which a person is expected to live, or the remaining number of years a person is expected to live.

Retirement Topics-Required Minimum Distributions (RMDs)

Retirement Plan and IRA Required Minimum Distributions FAQs

Life expectancy is the statistical age that a person is expected to live until, based on actuarial data. Conversely, the longer you wait to purchase life insurance, the lower your life expectancy, and that translates into a higher risk for the life insurance company. When couples are planning for retirement or annuity payments, they often use a joint life expectancy in which they take the life expectancy of their partner (who may become the beneficiary of a retirement fund or annuity plan) into account as well. Additional factors that can influence your life expectancy include:
Personal health
Family medical history
Whether you smoke cigarettes or make other risky lifestyle choices
You can view the federal government's data on U.S. life expectancy on the National Center for Health Statistic's website and the Social Security Administration's Actuarial Period Life Table. Most retirement plans, including the traditional and Roth, SEP, and SIMPLE IRA plans, also use life expectancy to determine the implementation of required minimum distributions
(RMDs) for the plan. Most retirement plans expect participants to begin taking at least the RMD by the time they reach the age of 72 (previously 70½).

Life Expectancy

Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insured’s beneficiaries when the insured dies.

Life Insurance & Disability Insurance Proceeds

Liens, Adjustments and Recoveries, and Transfers of Assets

Life insurance is a contract between an insurer and a policy owner. \-
AIG Life Insurance
Allstate Life Insurance
American Fidelity Life
American Income Life
Ameritas Life Insurance
Assurity Life Insurance
Bankers Life Insurance
Banner Life Insurance
Bestow Life Insurance
Brighthouse Life Insurance
CMFG Life Insurance
Colonial Penn Life Insurance
Continental Life Insurance
CUNA Mutual Life
Ethos Life Insurance
Family First Life Insurance
Fidelity Life Insurance
Foresters Life Insurance
Freedom Life Insurance
GEICO Life Insurance
Genworth Life Insurance
Gerber Life Insurance
Guardian Life Insurance
Haven Life Insurance
Jackson National Life
John Hancock Life
Kemper Life Insurance
Ladder Life Insurance
Liberty Mutual Life
Lincoln Heritage Life
Lumico Life Insurance
Manhattan Life Insurance
Mass Mutual Life Insurance
Max Life Insurance
MetLife Life Insurance
Midland National Life
Mutual of Omaha Life
National Life Group
Nationwide Life Insurance
Navy Federal Life Insurance
NEA Life Insurance Company
New York Life
North American Life
Northwestern Mutual Life
Oxford Life Insurance Company
Pacific Life Insurance
Primerica Life Insurance
Protective Life Insurance
Prudential Life Insurance
Securian Life Insurance
SelectQuote Life Insurance
State Farm Life Insurance
Texas Life Insurance
Transamerica Life Insurance
TruStage Life Insurance
Unum Life Insurance
USAA Life Insurance
VA Life Insurance
Zander Life Insurance
\- **Young adults whose parents incurred private student loan debt or cosigned a loan for them**—young adults without dependents rarely need life insurance, but if a parent will be on the hook for a child’s debt after their death, the child may want to carry enough life insurance to pay off that debt.
**Children or young adults who want to lock in low rates**—the younger and healthier you are, the lower your insurance premiums. Unlike term and whole life, the premiums can be adjusted over time and can be designed with a level death benefit or an increasing death benefit.
**Indexed Universal**—this is a type of universal life insurance that lets the policyholder earn a fixed or equity-indexed rate of return on the cash value component. More Life Insurance Company Reviews
**Company**
AAA Life Insurance
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