Term Life Insurance Glossary:
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Why Understanding Term Life Matters
At Insure Your Success, we believe that an informed client makes the best financial decisions. Term Life Insurance is often the foundation of financial protection — affordable, flexible, and designed to secure your family’s financial future. This glossary was built to simplify the terminology that can confuse even seasoned professionals.
Each definition below is written in plain language to help you connect the meaning of each term to your goals. Use this glossary to strengthen your understanding, ask better questions, and make informed choices as part of your Financial Assessment → Financial Analysis → Strategy Design process.
Top 3 Trending Terms
1. Living Benefits
Access part of your death benefit if you’re diagnosed with a critical, chronic, or terminal illness.
Pro Tip: Living Benefits transform Term Life from a traditional payout product into a modern protection strategy — helping families cover income gaps, medical expenses, and debt while still alive.
2. Return of Premium (ROP)
A policy option that refunds your premiums if you outlive your term.
Pro Tip: For clients who want coverage without feeling like they’re “wasting money,” ROP provides protection and a potential return.
3. Conversion Privilege
Allows you to convert your term policy to a permanent life policy without a medical exam.
Pro Tip: Conversion is critical for clients whose health changes — it preserves insurability and long-term coverage flexibility.
A - Z Term Life Insurance Glossary
1. Accelerated Death Benefit: Early access to part of the death benefit due to serious illness.
2. Annual Renewable Term (ART): A one-year policy that renews annually, often with rising premiums.
3. Beneficiary: The person(s) who receive the death benefit after the insured’s passing.
4. Cash Value: (N/A for Term) Included here to clarify — Term Life does not build cash value.
5. Conversion Option: Ability to switch to permanent life insurance without new underwriting.
6. Critical Illness Rider: Provides a payout if diagnosed with a qualifying illness like cancer or stroke.
7. Death Benefit: The amount paid to beneficiaries upon the insured’s death.
8. Decreasing Term: A term policy where coverage decreases over time, often aligned with loan balances.
9. Evidence of Insurability: Health information required when applying for or increasing coverage.
10. Face Amount: The original death benefit amount on your policy.
11. Free Look Period: A short period (usually 10–30 days) to cancel a new policy for a full refund.
12. Grace Period: Extra time after a missed payment before coverage lapses.
13. Guaranteed Renewable: Ensures the right to renew a policy regardless of health status.
14. Health Classification: The insurer’s assessment of your risk level, affecting premium rates.
15. Lapse: Termination of coverage due to nonpayment.
16. Level Term: A policy with fixed premiums and coverage for the full term.
17. Living Benefits: Rider that allows early access to death benefits (see Top 3 Terms).
18. Medical Exam: A health screening sometimes required during underwriting.
19. Policyholder: The individual who owns the life insurance policy.
20. Policy Term: The duration of coverage (e.g., 10, 20, or 30 years).
21. Premium: The payment made to keep your policy active.
22. Primary Beneficiary: The first in line to receive the death benefit.
23. Quote: The initial estimated cost of your policy based on underwriting factors.
24. Reinstatement: The process of restoring a lapsed policy, typically within a set timeframe.
25. Rider: An optional feature that adds or modifies coverage.
26. Secondary Beneficiary: Receives the benefit if the primary beneficiary cannot.
27. Simplified Issue: A policy issued without a medical exam but with limited benefits.
28. Term Length: The time period your coverage lasts before expiration.
29. Underwriting: The process insurers use to evaluate risk and determine premiums.
30. Waiver of Premium: Rider that waives payments if you become disabled.
Ready to Apply What You've Learned?
Education without action doesn’t move the needle. Now that you understand Term Life fundamentals, let’s connect your knowledge to your real-world goals. Begin with a Financial Assessment to determine how Term Life fits into your long-term strategy.