Term
| Fully insured status (under Social Security) |
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Definition
| requires 40 quarters (10 years) of covered employment. A fully insured worker is eligible for full retirement, disability, and death benefits under the Social Security laws. A worker can have less than 40 quarters and be fully insured for certain benefits, but a minimum of 6 quarters is required for any benefits. |
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Term
| Currently insured status (under Social Security) |
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Definition
| requires 6 quarters of covered employment, during the 13 quarters ending with the worker's death, disability, or retirement |
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Term
| Disability-insured status (under Social Security) |
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Definition
for a worker 31 years of age or older requires 20 quarters of coverage during the 40-quarter period ending when the worker is disabled. For workers under age 30 or workers disabled from blindness, the requirements are more lenient. |
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Term
| Guaranteed-dollar, or fixed-dollar, policies |
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Definition
cash-value life insurance policies that guarantee the amounts of cash value projected to accumulate and guarantee a minimum rate of return which will be earned on cash value. In other words, the investment risk is entirely on the insurance company. |
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Term
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Definition
| require the policyowner to pay a set premium periodically, and the amount of the premium is determined in advance based on the insured's age, sex, and risk status |
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Term
| Flexible-premium contracts |
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Definition
| allow the policyowner to vary the amount of the periodic premiums within limits |
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Term
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Definition
| pays a death benefit if the insured's death occurs within a specified period, and nothing is paid if the insured survives the period. No cash value accumulates in a term life policy. For insureds of the same age, the premium is generally lower with term life than with whole life policies per $1,000 of face value, but the premium cost generally increases with the age of the insured. |
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Term
| Renewable (term life insurance policy) |
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Definition
| term life insurance that can be purchased for successive periods at the policyowner's option, without submitting evidence of insurability. The right of the policyowner to renew can be valuable, particularly where the insured has become uninsurable. The premiums for renewable term life insurance will increase as the insured ages. |
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Term
Convertible (term life insurance policy) |
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Definition
| a term insurance policy that can be changed to permanent life insurance, such as a whole life policy, without providing evidence of insurability. Typically, the policy can be converted to the permanent coverage in an equal or lessor amount during a limited conversion period, such as up to age 65. |
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Term
| Preferred term (life insurance policy) |
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Definition
| term insurance that is offered to insureds who satisfy higher underwriting standards. Underwriting standards are the insurer's specification of who is an acceptable risk and, therefore, insurable at that premium. Preferred term is usually purchased at a lower rate than other similar term policies |
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Term
| Participating cash-value life insurance |
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Definition
| a life insurance policy that accumulates a cash value, requires payment of a fixed premium periodically for coverage, and provides for the insurer to pay dividends to the policyowners based on the insurer's claim experience. These dividends are not guaranteed and will vary. |
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Term
| Nonparticipating cash-value life insurance |
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Definition
| a life insurance policy that accumulates cash value, requires a fixed premium, but does not pay dividends. Cash value is the dollar amount that a policyowner accumulates in a life insurance policy as a result of paying premiums that exceed the costs of insuring his or her life. The cash value will be paid to the policyowner if the policy is surrendered back to the insurer, or it can be borrowed by the policyowner. Cash value is invested by the insurer in its general portfolio account, so it will grow from investment earnings. |
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Term
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Definition
| the transfer of an insurance policy by the policyowner of all ownership rights to another person. |
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Term
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Definition
| a transfer of an insurance policy by the policyowner of some ownership rights to another person, typically to provide security for a loan. |
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Term
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Definition
| an amount of time specified in the life insurance policy during which the insurer can deny a claim due to concealment, misrepresentation, or other error by the insured, and then after the period has run, the insurer can no longer deny a claim for these reasons. |
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Term
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Definition
| life insurance sold without the insurance company obtaining a medical examination of the insured. |
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