Life Insurance Terms, In Plain English
Graded benefit, guaranteed issue, simplified issue, free look — every term on this site, defined.
Accelerated Death Benefit
A rider that lets the insured take part of the death benefit early after a terminal (and at some carriers chronic or critical) illness diagnosis. Often included at no extra premium on term and whole life.
Accelerated Underwriting
A carrier's process for issuing full-size term life without a medical exam by checking prescription, motor-vehicle, MIB and credit-based records electronically. Same price as fully underwritten coverage if you qualify.
Accidental Death Benefit (AD&D)
Coverage that pays only if death (or dismemberment) results from an accident. Cheap because most deaths are not accidents; a supplement to life insurance, never a substitute.
Agent Of Record
The licensed agent a carrier recognizes as servicing a policy. Applications started through this site's online tools name Phamella Bauer (NPN 22053821) of NovaVida Group.
Beneficiary
The person or entity you name to receive the death benefit. You can name more than one and set percentages, and you can change them while the policy is in force.
Cash Value
The savings component of a whole life policy that grows slowly over time and can be borrowed against or taken if you surrender the policy. Term life has none.
Contestability Period
The first two years of a policy, during which the carrier can investigate and rescind coverage for material misstatements on the application. Not the same as a graded death benefit.
Conversion Privilege
The right to convert a term policy to permanent coverage without a new medical exam, inside a window set by the carrier (for example through the 5th or 10th policy anniversary).
Death Benefit (Face Amount)
The amount the policy pays to the beneficiary when the insured dies — generally income-tax-free under IRC §101(a).
Final Expense Insurance
A small whole life policy, usually $2,000–$50,000, bought by people aged 50–85 to cover a funeral and the bills a death leaves behind. Most versions ask a few health questions; guaranteed acceptance versions ask none.
Free Look
A period after delivery (10 to 30 days, set by state and carrier) during which you can cancel the policy for a full refund.
Graded Death Benefit
On guaranteed issue policies: if the insured dies of natural causes in the first two years (three at some carriers), the beneficiary receives the premiums paid plus interest or a stated percentage (commonly 110%) instead of the face amount. Accidental death pays the full amount from day one.
Guaranteed Issue (Guaranteed Acceptance)
Whole life insurance with no health questions and no exam; acceptance is guaranteed inside the carrier's age band (typically 45–85) for amounts usually between $2,000 and $25,000, with a graded death benefit for the first two or three years.
Insurable Interest
The requirement that the policy owner would suffer a financial or emotional loss at the insured's death — satisfied by spouses, parents and children, and business relationships. You cannot insure a stranger.
Lapse
Termination of a policy for non-payment after the grace period (usually 31 days). Whole life policies may have nonforfeiture options that keep reduced coverage in force.
Living Benefits
Riders that pay part of the death benefit while the insured is alive — terminal, chronic or critical illness accelerations.
Pre-Need (Funeral) Insurance
A policy or contract sold through a funeral home to fund a specific funeral with that home. Different from final expense insurance, which pays cash to your beneficiary for use anywhere.
Rider
An optional add-on to a policy (child rider, waiver of premium, accidental death, living benefits) that changes coverage, usually for an extra premium.
Simplified Issue
No exam, but a short list of health questions; the answers set the price and the benefit structure. Usually cheaper than guaranteed issue for people with managed conditions, and the full benefit is payable from day one if approved at the level-benefit tier.
Term Life Insurance
Coverage for a set number of years (10–40) at a level premium that pays a death benefit only if the insured dies during the term. No cash value; the lowest price per $1,000 for healthy applicants.
Underwriting Class
The rate category a carrier assigns after reviewing age, sex, tobacco use, health and records: Preferred Plus, Preferred, Standard, Standard Extra and table ratings.
Waiting Period
Consumer shorthand for the graded death benefit period on guaranteed issue policies. You are covered for accidental death from day one; natural death in the period returns premiums plus interest.
Whole Life Insurance
Permanent coverage with a level premium for life and a cash value component. Final expense and guaranteed issue policies are small whole life policies.