Life Insurance terms-to-know

Chapter 1. Parties to the contract, Money mechanics, Risk and Integrity concepts, Umbrella definitions

Insurer (Principal)

The company who issues an insurance policy.

Agent/Producer

A legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer.

Applicant or proposed insurer

A person applying for insurance

Insured

Person covered by the insurance policy; may or may not be the policy owner

Policyowner

The person entitled to exercise the rights and privileges in the policy

Beneficiary

A person who receives the benefits of an insurance policy

Premium

The money paid to the insurance company for the insurance policy.

Death benefit

The amount paid upon the death of the insured in a life insurance policy

Lapse

Policy termination due to nonpayment of premium

Adverse selection

Insuring the risks that are more prone to losses than the average risk

Fraud

Intentional misrepresentation of deceit with the intent to induce a person to part with something of value

Insurance policy

A contract between the policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Life Insurance

Coverage on human lives.