Life Insurance Terms and Definitions

Beneficiary

The person(s) named in the policy to receive the life insurance proceeds upon the death of
the insured.

Cash (Surrender) Value

The amount that is available in cash for loans and that may be available for withdrawals.
Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of
lapse. Please note that the cash value only pertains to permanent life insurance and not
term life insurance.

Cash Value Life Insurance

Cash Value Life Insurance is a type of insurance where premiums charged are higher at the
beginning than they would be for the same amount of term insurance. The part of the premium
that is not used for the cost of insurance is invested by the company and builds up a cash
value that can be used in a variety of ways. You may borrow against a policy’s cash value.
This is called a policy loan. If you do not pay back the loan and the interest on it, the
amount you owe will be subtracted from the benefits when you die, or from the cash value if
you stop paying premiums and take out the remaining cash value.

You can also use your cash value to keep insurance protection for a limited time or to buy
a reduced amount without having to pay more premiums. You also can use the cash value to
increase your income in retirement or to help pay for needs such as a child’s tuition
in addition, not cancel the policy. However, to build up this cash value, you must pay higher
premiums in the earlier years of the policy. Cash value life insurance may be one of
several types; whole life, universal life or variable life insurance.
(Taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)

Convertible Term Insurance

Term insurance in Akron Oh which can be exchanged (converted), at the option of the policy owner and
without evidence of insurability, for a permanent insurance policy.

Face Amount

The amount stated on the policy that will be paid in case of death. It does not include
additional amounts payable under accidental death or other special provisions or acquired
through the application of policy dividends, and can be reduced by loans or withdrawals.

Insurability

This is the acceptability to the company of an applicant for insurance.

Insured or Insured Life

The person on whose life the policy is issued.

Level Premium (Life Insurance)

Life insurance for which the premium remains the same from year to year. The premium is
normally more than the actual cost of protection during the earlier years of the policy and
less than the actual cost in the later years. The building of a reserve is a natural result
of level premiums. The payments in the early years, together with the interest that is to
be earned, serves to balance out the underpayment of the later years.

Loan (Policy Loan)

A loan made by a life insurance company from its general funds to a policy owner on the
security of the cash value of a policy.

Paid-up Insurance

Insurance that will remain in force with no need to pay additional premiums.

Participating Policy
A life insurance policy that is eligible for the payment of dividends by the insurer.

Permanent (Life Insurance)

Any form of life insurance in Akron Oh except term life insurance; generally insurance that builds up a
cash value, such as whole life.

Policy owner

The person who owns a life insurance policy. This is usually the insured person, but it may
also be a relative of the insured, a partnership or a corporation.

Premiums

Payments to the insurance company to buy a policy and to keep it in force.

Renewable Term Insurance

Term insurance in Akron Oh which can be renewed at the end of the term, at the option of the
policy owner and without evidence of insurability, for a limited number of successive terms.
The rates generally increase at each renewal as the age of the insured increases.

Term Insurance

Term Insurance covers you for a term of one or more years. It pays a death benefit only if
you die in that term. Term life insurance generally offers the largest insurance protection
for your premium dollar. It generally does not build up cash value. You can renew most term
insurance policies for one or more terms even if your health has changed. Each time you
renew the policy for a new term, premiums may be higher. Ask what the premiums will be if
you continue to renew the policy. Also, ask if you will lose the right to renew the policy
at some age.

For a higher premium, some companies will give you the right to keep the policy
in force for a guaranteed period at the same price each year. At the end of that time you
may need to pass a physical examination to continue coverage, and premiums may increase. You
may be able to trade many term insurance policies for a cash value policy during a
conversion period — even if you are not in good health. Premiums for the new policy will
be higher than you have been paying for the term life insurance.
(taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)

Universal Life Insurance

Universal Life Insurance is a kind of flexible policy that lets you vary your premium
payments. You can also adjust the face amount of your coverage. Increases may require proof
that you qualify for the new death benefit. The premiums you pay (less expense charges) go
into a policy account, that earns interest. Charges are deducted from the account. If your
yearly premium payment plus the interest your account earns is less than the charges, your
account value will become lower. If it keeps dropping, eventually your coverage will end.

To prevent that, you may need to start making premium payments, or increase your premium
payments, or lower your death benefits. Even if there is enough in your account to pay the
a premium, continuing to pay premiums yourself means that you build up more cash value.
(Taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)

Variable Life Insurance

Variable Life Insurance is a kind of insurance where the death benefits and cash values
depend on the investment performance of one or more separate accounts, which may be
invested in mutual funds or other investments allowed under the policy. Be sure to get the
prospectus from the company when buying this kind of policy and study it carefully.

You will have higher death benefits and cash value if the underlying investments do well.
Your benefits and cash value will be lower or may disappear if the investments you chose
didn’t do as well as you expected. You may pay an extra premium for a guaranteed death
benefit.
(Taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)

Whole Life Insurance

Whole Life Insurance in Akron Oh covers you for as long as you live if your premiums are paid. You
generally pay the same amount in premiums for as long as you live. When you first take out
the policy, premiums can be several times higher than you would pay initially for the same
amount of term insurance. However, they are smaller than the premiums you would eventually pay
if you were to keep renewing a term policy until your later years.

Some whole life policies let you pay premiums for a shorter period such as 20 years, or
until age 65. Premiums for these policies are higher since the premium payments are made
during a shorter period.
(Taken from the National Association of Insurance Commissioners' Life Insurance Buyers