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Life Insurance to Plain English Translation Guide

In our efforts to make buying Transamerica life insurance online a clear process, we’ve included this handy reference guide to make some common insurance terms easier to understand.

Application Process

Underwriter

Another name for a life insurance company, or a person or department at a life insurance company that does underwriting.

Underwriting

A process which provides an insurance company the opportunity to review and assess customer risk prior to acceptance of the application. May require a potential customer to take a physical exam to satisfy the underwriting requirements.

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Benefits

Beneficiary

The person or party you’ve chosen to receive the benefits from your life insurance policy.

Contingent beneficiary

The person who will receive your life insurance benefits if your primary beneficiary dies before you.

Death benefit

The amount of money paid or due to be paid when a person insured under a life insurance policy dies, after adjustments for any outstanding policy loans, dividends, paid-up additions or late premium payments (if applicable) are made.

Irrevocable beneficiary

A beneficiary whose interest cannot be cancelled without his or her consent.

Primary beneficiary

The person you’ve chosen to have the first right to receive insurance payments or proceeds upon your death.

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General

Beneficiary

The person or party you’ve chosen to receive the benefits from your life insurance policy.

Life insurance

Insurance that provides protection against the financial loss caused by the death of the person insured.

Policy

The written document that spells out the insurance contract between the insurance company and you.

Premium

The payments you make to the insurance company for the insurance coverage. Depending on the type of coverage, premiums may be fixed or flexible.

Rider

Optional protection you can add to your insurance plan. Provides a benefit in addition to what is contained in the base policy.

Underwriting

A process which provides an insurance company the opportunity to review and assess customer risk prior to acceptance of the application. May require a potential customer to take a physical exam to satisfy the underwriting requirements.

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Insurance Type

Convertible term insurance

A type of term insurance that allows you to exchange the term insurance policy for a permanent life insurance policy (whole or universal) without having to take a new medical exam. The premium rate is normally based on the age of the insured at the time of the conversion.

Decreasing term life insurance

Term life insurance, where the death benefit decreases in amount over the policy term.

Increasing term life insurance

Term life insurance, where the death benefit increases in amount over the policy term.

Life insurance

Insurance that provides protection against the financial loss caused by the death of the person insured.

Term life insurance

Life insurance which pays a benefit if the insured dies during a specified period.

Universal life insurance

A permanent life insurance product that builds cash value at an interest-crediting rate declared by the company. Within certain limits, you can choose the premium you wish to pay, and this affects the policy's cash value. Each month, a monthly deduction to cover the cost of the insurance protection provided by the policy is deducted from the policy cash value.

Whole life insurance

Life insurance that remains in force during your entire lifetime, provided premiums are paid as specified in the policy. Whole life insurance also develops a cash value as a result of the level premium approach to funding the death benefit.

Yearly renewable term (YRT) insurance

Term life insurance that gives you the right to continue the coverage for another year at the end of each policy year. This renewal right continues for a specified number of years or until you reach the age specified in the policy. Also called annually renewable term (ART) insurance.

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Making Payments

Automatic withdrawals

Amount of dollars you authorize Transamerica to automatically and periodically deduct from your bank account to pay premiums.

Draft date

The pre-authorized checking withdrawals are set up to draft on a certain day. It is not always the premium payment due date.

Grace period

The length of time (usually 31 days) after a premium is due and unpaid during which the policy, including all riders, remains in force.

Lapse

The termination of an insurance policy if premium is not paid by the end of the grace period.

Premium

The payments you make to the insurance company for the insurance coverage. Depending on the type of coverage, premiums may be fixed or flexible.

Reinstatement

In certain cases, if your policy lapses, you can restore it by providing acceptable evidence of insurability and bringing unpaid premiums plus interest up to date. The policy must not have been surrendered for its cash value.

Renewal premiums

Premiums payable after the initial premium

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Policy

Accumulation value

See "Cash value."

Cash value

The amount of money and interest accumulated in your life insurance account (after adjustment for factors like policy loans or late premiums). If you cancel your coverage and surrender the policy to the insurance company, you will get your cash value back. Cash value is a feature of most types of permanent life insurance, such as whole life and universal life insurance.

Fraudulent claim

Giving false or exaggerated information when filing a claim in an attempt to collect policy benefits that would otherwise not be paid.

Insured

The person whose life is insured by the policy. This may or may not be you.

Policy

The written document that spells out the insurance contract between the insurance company and you.

Reinstatement

In certain cases, if your policy lapses, you can restore it by providing acceptable evidence of insurability and bringing unpaid premiums plus interest up to date. The policy must not have been surrendered for its cash value.

Renewal provision

When the specified term for your life insurance is over, this provision allows you to continue coverage without taking another medical exam to prove your insurability.

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Premiums

Level premiums

Premiums that are scheduled to remain the same each year for a specified duration.

Premium

The payments you make to the insurance company for the insurance coverage. Depending on the type of coverage, premiums may be fixed or flexible.

Renewal premiums

Premiums payable after the initial premium.

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Riders

Accident indemnity rider

An optional benefit that will increase the death benefit amount if your death is due to an accident.

Conversion privilege

The right to change insurance coverage in certain situations from one type of policy to another, such as the right to change from an individual term insurance policy to an individual whole life insurance policy or universal life insurance policy.

Face amount

The amount of the death benefit payable if the insured person dies while the policy is in force.

Rider

Optional protection you can add to your insurance plan. Provides benefit in addition to what is contained in the base policy.

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