FOR REAL life Insurance practice

Increasing term

Death benefit increases according to the contract; may help address inflation or increasing needs.

Annual renewable term (ART)

One-year renewable coverage; premium generally increases as the insured ages.

Renewable term

Policyowner may renew without new evidence of insurability, usually at a higher attained-age premium.

Whole life

Permanent coverage with guaranteed death benefit and scheduled premiums and cash values, if premiums are paid.

Limited-pay whole life

Premiums stop after a set number of years or age; coverage continues for life.

Single-premium whole life

Permanent coverage paid with one lump sum; may be classified as a modified endowment contract.

Modified premium whole life

Lower initial premiums rise once to a higher scheduled level after an introductory period.

Graded premium whole life

Premiums increase in steps during early years, then level off.

Indeterminate premium whole life

Insurer may adjust premiums within contractual maximums; premiums are not fully fixed.

Adjustable life

Policy allows adjustments to face amount, premium, and protection period, subject to underwriting/contract terms.

Universal life (UL)

Flexible-premium permanent insurance with interest-crediting cash value and monthly insurance/expense deductions.

UL target premium

Suggested payment level, not necessarily the amount needed to keep a UL policy active.

UL unbundled pricing

Premium, insurance charges, interest credits and expenses are shown separately.

UL option A

Generally level death benefit; net amount at risk tends to decline as cash value grows.

UL option B

Generally increasing death benefit equal to specified amount plus cash value; higher insurance cost may result.

UL corridor

Minimum death benefit relative to cash value required to preserve life-insurance tax treatment.

UL no-lapse guarantee

Coverage can remain in force if specific premium/timing conditions are met, even with low cash value.

Interest-sensitive whole life

Current-assumption permanent policy: cash value performance reflects insurer's interest-crediting assumptions, subject to guarantees.

Variable life

Fixed scheduled premium, separate-account investment risk, and generally a guaranteed minimum death benefit.

Variable universal life (VUL)

Flexible premium and separate-account investment options; cash value and death benefit can fluctuate, subject to contract terms.

Separate account

Investment account supporting variable products; policyowner generally bears investment performance risk.

FINRA registration

Variable life/annuity sales generally require securities registration as well as an insurance license.

Prospectus

Disclosure describing investment objectives, fees, risks, and other details of variable products.

Endowment policy

Pays face amount on death during term or upon surviving to the stated maturity date.

Double/triple indemnity

Accidental-death feature may pay two or three times base benefit if a covered accidental death meets conditions.

Term rider

Adds temporary coverage to a permanent life policy.

Family rider

Adds specified coverage for spouse and/or children to the main insured's policy.

Face amount plus cash value

Death benefit design pays specified face amount plus cash value, rather than only face amount.

Return-of-premium death benefit

Specified death benefit includes or adds eligible premiums returned, subject to policy design.

Joint life (first-to-die)

Insures two lives and pays when the first insured dies.

Survivorship/last-to-die life

Insures two lives and pays after the second death; often used for estate planning.

Juvenile life

Life insurance written on a child, commonly owned by a parent or guardian.

Jumping juvenile

Juvenile policy with an automatic face-amount increase at a specified age, typically without new underwriting.

Limited benefit life

Provides a restricted death benefit under specified early-policy conditions; review any graded-benefit wording.

Credit life

Typically decreasing term insurance that pays an outstanding covered debt if the debtor dies.

Mortgage protection life

Life coverage intended to pay a mortgage balance; often uses decreasing term.

Annuity

Contract intended to accumulate funds and/or provide periodic income; protects against outliving assets.

Annuitant

Person whose life determines life-contingent annuity payments; need not be owner.

Annuity owner

Person controlling contractual rights, such as withdrawals and beneficiary choices.

Annuity accumulation phase

Before annuitization; money accumulates and withdrawals/surrender may be available.

Annuity annuitization phase

Accumulated value is converted into scheduled income payments under a settlement option.

Single-premium annuity

Funded by one lump-sum payment.

Flexible-premium annuity

Funded by multiple premiums that may vary in amount/timing.

Periodic/fixed-installment premium annuity

Funded through recurring scheduled contributions.

Fixed annuity

Insurer guarantees contractual minimum interest and payment terms; insurer bears investment risk.

Variable annuity

Accumulation value or income depends on separate-account investments; owner bears market risk.

Equity-indexed annuity

Credits interest using an index formula with caps, participation rates or spreads and contract guarantees.

Immediate annuity

Income begins shortly after purchase, generally within 12 months.

Deferred annuity

Income begins at a later date; may have an accumulation period.

Single-life annuity

Life-contingent payments depend on one annuitant's life.

Joint life annuity

Payments continue while both annuitants are alive; may stop at first death, depending on contract.

Joint and survivor annuity

Income continues while either covered annuitant is alive, sometimes at a reduced amount after first death.

Straight/pure life annuity

Highest life-only income for comparable terms; payments stop at death, even after one payment.

Life with period certain

Pays for life, but guarantees payments for a minimum number of years to a beneficiary if death occurs early.

Cash refund life annuity

At death, beneficiary receives any unpaid difference between purchase amount and total annuity payments.

Installment refund life annuity

At death, remaining unrecovered purchase amount is paid to beneficiary in installments.

Fixed-period annuity payout

Pays income for a chosen number of years; amount depends on principal, interest and duration.

Fixed-amount annuity payout

Pays chosen dollar amount until funds are exhausted; duration varies.

Annuity death during accumulation

Contract beneficiary generally receives applicable death benefit/value under contract; not automatically annuitized.

Annuity death after annuitization

Remaining benefit depends on selected payout option; pure life has no remaining death payout.

Annuity surrender

Ending contract for available surrender value, possibly reduced by charges and taxes.

Surrender charge

Fee for early withdrawal/termination during the contract's surrender period.

Guaranteed minimum annuity benefit

Contract guarantee such as minimum income or withdrawal benefit; exact protection varies by rider.

Insuring clause

Insurer's promise to pay covered benefits, subject to contract conditions.

Ownership clause

Identifies policyowner rights to assign, change beneficiary, borrow, or surrender, subject to restrictions.

Entire contract clause

Policy and attached application/riders form the complete insurance contract.

Incontestability clause

NC individual life policies generally become incontestable after 2 years, except nonpayment of premiums and applicable exceptions.

Grace period

NC individual life generally gives 31 days after a premium due date (except first premium); coverage continues and overdue premium may be deducted from death benefit.

Reinstatement

NC individual life generally permits reinstatement within 5 years of default if not surrendered or exhausted, upon satisfactory insurability evidence and payment of arrears and interest.

Misstatement of age/sex

Benefit or premium adjusted to what the correct age/sex would have purchased, rather than automatic voiding.

Absolute assignment

Transfers all ownership rights in policy to another party.

Collateral assignment

Transfers limited policy rights to secure a debt; lender has claim only to amount owed.

Conversion provision

Allows change from one policy form to another under specified conditions, often without new insurability evidence.

Excess interest provision

Allows crediting interest above the guaranteed minimum, subject to insurer declarations.

Free-look provision

Right to review and return a new policy within applicable period for a refund under governing rules.

Withdrawal provision

Permits partial access to cash value; may reduce cash value and death benefit and create taxes.

Other insured rider

Adds coverage for another individual such as spouse or child.

Suicide clause

NC life suicide exclusion may generally apply for up to 2 years; if applicable during exclusion, insurer returns premiums as policy/law requires.

War results exclusion

Excludes death caused by war, even if insured is not a participant, if worded that way.

War status exclusion

Excludes death based on insured's military status, even if death is unrelated to combat, if worded that way.

Aviation exclusion

May exclude specified aviation activities, often noncommercial or hazardous flight, as written.

Cash surrender nonforfeiture

Terminate policy and take available cash value, less applicable loans/charges.

Reduced paid-up nonforfeiture

Use cash value to buy smaller fully paid permanent death benefit.

Extended term nonforfeiture

Use cash value to buy term coverage for same face amount for a limited period.

Nonforfeiture default option

If owner fails to choose, policy specifies which nonforfeiture option applies.

Policy loan

Borrow against cash value; unpaid balance and interest reduce death proceeds.

Fixed policy-loan interest

Loan rate is set according to policy provisions.

Variable policy-loan interest

Loan interest may change according to contractual benchmark/rules.

Automatic premium loan (APL)

If elected, insurer uses policy loan against cash value to pay overdue premiums.

Deferral of cash value payment

Insurer may defer certain cash-value payments for a contractually/statutorily limited time.

Participating policy

May pay dividends based on insurer experience; dividends are not guaranteed.

Nonparticipating policy

Does not distribute policy dividends.

Dividend cash option

Owner receives dividend as cash.

Dividend premium reduction

Dividend offsets all or part of premium due.

Dividend paid-up additions

Dividend buys additional fully paid whole-life insurance.

Dividend accumulation at interest

Insurer holds dividends and credits interest; interest is generally taxable.

Dividend one-year term option

Dividend buys one-year term insurance, subject to availability.

Dividend tax treatment

Dividends generally return excess premiums and are not taxable until exceeding basis; interest is taxable.

Settlement life income

Death proceeds paid as income for recipient's life; unused principal may not pass on.

Settlement fixed period

Death proceeds paid over chosen period; payment size is calculated.