Commonly Used Terms Flashcards
AUL
American United Life Insurance Company
Accelerated death benefit
A benefit allowing terminally ill or chronically ill life insurance policyholders to receive cash advances of all or part of the expected death benefit. The accelerated death benefit can be used for health care treatments or other purposes.
Annuity Care
Annuity Care helps you convert your taxable assets to tax-free when they’re used for qualifying LTC. It uses a single premium deferred annuity to help protect your retirement income stream if the need for care arises.
Asset Care
Asset Care allows the policyholder to have the option to accelerate their life insurance death benefit to help pay for needed care.
Cash surrender value
This term is also called “cash value,” “surrender value,” and “policyholder’s equity.” The amount of cash due to a policyholder who requests the insurance company cancel his life insurance policy before it matures or death occurs.
Expected death benefit
The face amount of the policy, less any policy loan amounts, that the insurance company is expected to pay the beneficiaries named in the life insurance policy upon the insured’s death.
Face amount
The death benefit the insurer must pay the beneficiaries named in the life insurance policy upon the insured’s death, as stated in the policy. The actual death benefit may differ due to such factors as policy loans, failure to pay premiums, and for some types of policies, investment performance.
Golden Rule
Lapse
Refers to a life insurance policy ending or expiring when a policyholder stops making premium payments.
Life settlement
Refers to a contract in which the policyholder sells their life insurance policy to a third party for a one-time cash payment greater than the cash surrender value but less than the policy’s death benefit. A life settlement includes a viatical settlement.
Policy loan
A loan issued by an insurance company using the cash value of a person’s life insurance policy as collateral.
Viatical settlement
An arrangement in which someone with a terminal illness sells their life insurance policy at an amount less than the death benefit. The ill person receives cash, and the buyer receives the full death benefit. The death benefit is payable once the former policyholder dies.
Gift
The ability to give a policy to a beneficiary, who would then assume responsibility for paying premiums.
Rider
An addition to an existing insurance policy that allows you to add specific insurance products to your basic coverage.
State Life
Policy Changes
The ability to reduce or eliminate future premium payments by obtaining a paid-up policy, by reducing optional coverage, or through other options available from the life insurer.
Third-Party Loan
Obtaining a loan from another party to pay the policy’s premiums; in return, the lender may require an assignment of a portion or all of the policy’s death benefits.
Acceleration of Benefits (AOB)
Allows the policyholder to take an advance against the life insurance death benefit to help pay for long-term care.
