Try to read your life insurance policy and you may stumble over many unfamiliar terms. These short definitions can help you understand common policy language and ensure your coverage fits your needs. For a broader look at available options, see Individual Life Insurance Overview.
Beneficiary
The person who receives the proceeds of a life insurance policy after the insured dies. Primary, secondary and tertiary beneficiaries refer to the order in which beneficiaries receive the payout.
Medical Examination
The exam required before an insurance company can issue certain policies; it’s usually conducted in-home by a licensed paramedical professional.
Mortgage Protection
A policy designed so the policyholder’s mortgage will be paid upon his or her death. For policies focused specifically on this need, see Life Insurance (Mortgage Insurance).
Nearest Age
Insurers often use a person’s nearest age when determining premiums. For example, someone who is 27 years and five months may be rated as a 27‑year‑old.
Non-Medical Term Policy
A term policy that does not require a medical exam. The insurer will ask questions about age and health history before deciding on coverage.
Preferred Risk
An underwriting category for applicants whose health, occupation, and other factors suggest they will live longer than average for their age.
Premium
The payment made to keep a life insurance policy in force.
Rider
An add-on to the policy that expands or waives a coverage or condition. Common riders include accelerated benefits, accidental death and dismemberment, disability income, and coverage for an additional insured.
Smoker Ratings
Ratings assigned based on whether an applicant has smoked in the past 12 months; these ratings affect the policy premium.
Standard Risk
An applicant entitled to coverage without extra ratings or special restrictions.
Sub-Standard Risk
An applicant with a health condition, family history, risky occupation, or habit that could reduce life expectancy and lead to higher premiums or restrictions.
Protects the insured for a set term and expires when that term ends.
Underwriter
The company that receives premiums and accepts responsibility for the insurance contract, or the company employee who evaluates and approves or denies claims.
Whole Life Insurance
Provides coverage for the policyholder’s entire life rather than for a set term, and typically includes tax‑deferred cash value accumulation.
Now that you know common life insurance terms, review your policy at least once a year to ensure your coverage still meets your needs. If you have questions or want to compare options, talk to an agent.
Frequently Asked Questions
How do I change my beneficiary?
Contact your insurer or review your policy documents to submit a beneficiary change form; requirements vary by company.
Will my premiums change if my health worsens?
For most term and whole life policies, premiums are fixed after issuance; changes usually apply only at renewal or for new policies.
What is the difference between term and whole life?
Term life provides coverage for a set period, while whole life provides lifelong coverage and typically builds cash value.