Insurance glossary - Why Insurance Me

Glossary

Plain-language definitions of insurance terms.

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Annuity: A contract with an insurer in which you pay a lump sum or series of payments in exchange for income later, often in retirement. Types and terms vary widely.
Beneficiary: The person or entity named in a life-insurance policy to receive the payout when the insured dies.
Cash Surrender Value: The amount a permanent life policyholder receives if they cancel the policy, equal to the cash value minus any surrender charges and outstanding loans.
Cash Value: The savings component of certain life-insurance policies (whole, universal) that grows over time and can sometimes be borrowed against.
Contestability Period: A window, usually the first two years of a life policy, during which the insurer can investigate and deny a claim for material misstatements made on the applica...
Death Benefit: The amount an insurer pays to the beneficiaries when the insured person dies, as stated in the policy.
Final Expense Insurance: A small whole-life policy designed to cover funeral and burial costs. It is easier to qualify for but costs more per dollar of coverage than larger policies.
Free Look Period: A short window after buying a life insurance policy during which you can cancel it for a full refund. The length is set by state law.
Indexed Universal Life (IUL): A form of universal life insurance whose cash-value growth is tied to a market index, with caps and floors that limit both gains and losses.
Term Life: Life insurance that covers you for a fixed period (often 10–30 years). Pays a death benefit only if you die during the term; no cash value.
Universal Life Insurance: A type of permanent life insurance with flexible premiums and a cash-value component that earns interest. Coverage can last your lifetime if the policy stays ad...
Variable Life Insurance: Permanent life insurance that lets you invest the cash value in subaccounts similar to mutual funds. Values rise and fall with the investments, which adds risk.
Whole Life: Life insurance that covers you for your entire life and includes a cash-value component. More expensive than term life.