Here you will find brief definitions of some of the more common life insurance terms and descriptions of several of the different types of life insurance available in today's marketplace. For more accurate information, always refer to your life insurance policy or the life insurance policy you plan to purchase.

Accelerated Death Benefit Rider- This rider allows for the pre-payment of a portion of the policy's face amount when the insured is terminally ill or has an injury that will result in death.

Accidental Death & Dismemberment Rider (AD&D)- An extra benefit which generally equals the face of the contract or principal sum, payable in addition to other benefits in the event of death or dismemberment (a few examples of what may typically be covered under the dismemberment clause would be the loss of an eye, limb, finger, foot, etc.) either of which was the result of an accident.

Adjustable Life- insurance is Whole Life with added adjustable features. It contains cash value, nonforfeiture value, dividend options, policy loan provisions and settlement options, the same as Whole Life. The difference is that with Adjustable Life, the policyowner may increase or decrease the face amount; increase or decrease the protection period; increase or decrease the premium level; or increase or decrease the premium payment period - all without getting a new policy. Initially, the type of plan (Term, Endowment, Whole Life, Limited Pay Life) is determined by the face amount and the insured's attained age. Later, cash value, the insured's age and other factors help to determine the allowable changes. The insured's age and other factors help to determine the allowable changes. The policyowner may specify the plan and face amount, and the company can determine the premium amount. The policyowner can determine the the insurance plan and the amount of the premium can be specified, and the company can determine the face amount; or the policyowner can specify the face amount and the amount of the premiums he or she can afford, and the company chooses the appropriate plan.

Cancellation- Once a policy is issued it cannot be cancelled by the insurance company for any reason, providing that the information supplied on the application was not inaccurate or deliberately misleading and the the premium payments are made on time in in the correct amount.

Incontestibility Period- Incontestability period is a time limit (usually two years) on the life insurance company's right to dispute a policy's validity based on incorrect information provided in the application. This limit doesn't apply in cases of fraud.

Permanent Insurance- There are different types of permanent insurance, with most having the ability to earn a "cash value", most have a "cash surrender value", and may or may not have loan options. Some of the names you may see include the following:

· Adjustable Life
· First to Die
· Last to Die
· Ordinary Life
· Standard Life
· Survivor Life
· Universal Life
· Variable Life

Return Of Premium Term Life- The concern most expressed in regards to term life insurance policies is that once they’re done...they’re done. The money you’ve put into the policy for life insurance protection is gone once the policy has completed the planned term of coverage.

Enter ROP term insurance...Return of Premium term life insurance. Return of premium term life insurance is an alternative to whole life, which is much more costly than term insurance. And whereas ROP term insurance is more expensive than regular term life insurance; and although the ROP term insurance also does not earn cash value like whole life...the plus is that you get your premiums back at the policies maturity without the large outlay of premium a whole life policy requires.

Return-of-premium policies are more suited to healthy young individuals who are most likely to live out the policy term and can discipline themselves to stay in the plan until maturity. Policies that are surrendered early can forfeit all or a good portion of the return premium benefit.

Survivorship Life, also called Second-To-Die or Joint-And-Last Survivor Life Insurance- is a policy that insures two lives and pays the death benefit after the second death. The most common use of this type of insurance is by a husband and wife who have a large estate and plan for the proceeds of the policy to pay estate taxes so as to leave the assets of their estate intact.

Without proper planning, estate taxes could take up to 55% of the assets of your estate. How survivorship life works. If you leave your assets to your spouse, the spouse can take the unlimited marital deduction and pay "no" estate taxes. The taxes will be due in full when the spouse dies, however, that's when the survivorship life policy plays in. At the second death, the benefit from the policy covers the taxes and leaves the estate assets to be divided according to your wishes.

Other uses for survivorship life insurance are:
· Grandparents who want to leave a tax-free legacy for their grandchildren.
· Parents with children or anyone who has been named guardian of someone else's child.
· When the death of two key employees would mean the death of your business.

As with any estate plan you should first consult your tax advisor or estate attorney and review all of your options.

Term Insurance- If your concern is cost and your need for life insurance is 30 years or less, term insurance may be good option for you. Term life insurance covers you for the full amount of benefit you choose for a designated number of years. Additionally should your needs change, many term policies have a conversion privilege that allows you to convert your term coverage to permanent insurance with the same company without further medical underwriting.

There are different choices of term insurance policies, decreasing term, increasing term, level term, etc. Be certain you understand what you are purchasing. Some policies may start off with a premium that is generally lower than permanent insurance, but as you grow older the premiums may increase. And once the term of insurance expires, you may no longer be eligible for coverage or the premiums may be more than you can afford.

Term life insurance policies offer pure insurance protection only, for specified periods of time. If the named insured dies during the specified term period, the company pays the face amount as a death benefit. However, if the named insured lives to the end of the term period, the policy expires (unless renewed or converted) generally without a cash value.

Purchase term insurance for:
· Mortgage Protection
· Family Protection
· Final Expenses
· Medical Costs
· Death Benefit
· College Expenses
· Estate Taxes

Business Owner Term Life Term life insurance is one of the most affordable types of insurance policies.

Tobacco VS Non-Tobacco User- Smoker rates are higher than rates for non-smokers. Most companies require you to be a non-tobacco user for at least one year. A person that has been a non-tobacco user for a longer period of time and is in excellent health may qualify for a special reduced rate with some companies. Tobacco use includes cigarettes, cigars, pipe smokers, chewing tobacco, etc.

Underwriting Criteria- Each companies underwriting criteria varies. They look at overall health, lifestyle, height, weight, blood pressure, cholesterol and any current or past health issues. They also look at family health history. Lifestyle takes into consideration hobbies, occupation, travel to under-developed countries and other factors.

Universal Life- combines death protection and savings. The savings can make the insurance useful during your lifetime. Through cash value accumulation, Universal Life can help you achieve your financial goals, which may be college expenses and/or retirement savings. Universal Life is essentially level or decreasing term insurance plus an investment (cash value) account. It functions as the traditional Whole Life policy and is taxed the same - the death benefit is tax free. Any excess interest (amounts credited to the cash value in excess of the guaranteed amount) is not taxed so long as the policy remains in force and is not surrendered. The policy's protection element (mortality and expense charges) and the investment element are separate, making possible the following features:
(1)Flexible premiums. After the initial premium payment, the policyowner may pay premiums at different intervals in variable amounts within certain limits set by the company and by law. Moreover the cash value may be used to pay premiums without borrowing. As long as the cash value is substantial enough to keep the policy in force, the policy will not lapse.
(2)Adjustable coverage. The amount of coverage may be increased or decreased to meet the policyowner's current situation.
(3)Flexible withdrawal rights. The policyowner may make partial withdrawals of the cash value.
(4)Responsiveness to interest rates. There is usually a guaranteed minimum interest rate. However, a higher rate of return, generally, is credited to the cash value portion of the policy than with traditional Whole Life products as it's interest rates tend to follow the markets. The administrative costs of the policy are deducted from the cash value of the policy on a monthly basis.
(5)Favorable tax treatment. Universal Life receives the same favorable tax treatment as traditional permanent insurance policies.

Purchase Universal Life Insurance for:
· Mortgage Protection
· Family Protection
· Final Expenses
· Medical Costs
· Death Benefit
· College Expenses
· Estate Taxes
· Living Benefits
· Tax-Deferred Cash Value
· Retirement Planning

Variable Life- is an interest-sensitive form of insurance. The goal of the product is to combine the protection of life insurance with the growth potential of the medium it is invested in; which can be stock funds, real estate funds, bond funds or any combination of these. The policy is similar to whole life in that it has fixed premiums. Although variable life policies actual death benefit varies dependent upon market conditions and the investment chosen, there is a minimum guaranteed death benefit. However, because it is based on market growth, there is no guarantee to the cash value of the policy. As with whole life policies, a loan provision to allow the owner to borrow form the cash value, is usually available.

Waiver of Premium Benefit Rider- is offered by most insurers and is available for purchase up to age 55. The coverage usually ends at age 60. This will provide payment for premiums usually after six months of a disability (disability as qualified by the terms of the policy) for the length of the disability, but not to exceed the policy term.

Whole Life, also known as Ordinary Life- or Straight Life, often is thought of as the standard model policy in life insurance. The following characteristics distinguish the Whole Life policy:
(1)A fixed premium. The premium never changes.
(2)Insurance protection extends to the insured's age 100. If the insured dies at any time before then, and if all premiums have been paid to time of death, the company will pay the face amount as a death benefit.
(3)The policy period extends to age 100, and premiums are payable to that age. Although policyowners have the privilege of paying premiums to age 100, it is not likely they will live that long or will want to pay premiums all that time if they do live. It is important to understand that policyowners can stop their premium payments before age 100 and take their cash values or other values that are available to them.

The policy endows at age 100. The policy's structure permits the cash value to increase constantly until, at the policyowner's age 100, it equals the face amount. So if the policyowner is living at age 100 and has paid all required premiums, the company will pay an amount equal to the face amount and the contract is ended.

There are several variations of whole life: modified or graded premium and limited paid. The major differences between whole life policies with different companies is the way in which the premium is paid.