When it comes to choosing a Life Insurance policy, you have several choices. Whether you select a Term or Permanent Life Insurance policy, this glossary will help you understand the basic types of coverage along with the terms included in your policy.

Understanding Life Insurance Terms. 

BENEFICIARY – The person or party named by the owner of a life insurance policy to receive the policy benefit.CASH VALUE – The savings element of a permanent life insurance policy, which represents the policy owner’s interest in the policy.

CONTINGENT BENEFICIARY – The party designated to receive proceeds of a life insurance policy following the insured’s death if the primary beneficiary predeceased the insured. 

CONVERTIBLE TERM INSURANCE POLICY – A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance. DIVIDEND – A return of part of the premium.

FACE AMOUNT – The amount of the death benefit payable under a life insurance policy.

IRREVOCABLE BENEFICIARY – A life insurance policy beneficiary who has a vested interest in the policy proceeds even during the insured’s lifetime because the policy owner has the right to change the beneficiary designation only after obtaining the beneficiary’s consent.

INSURABLE INTEREST – The interest an insurance policy owner has in the risk that is insured.  The owner of a Life Insurance policy has an insurable interest in the insured when the policy owner is likely to benefit if the insured continues to live and is likely to suffer some loss or detriment if the insured dies. 

INSURED LIFE – The person on whose life the policy is issued.

ORIGINAL AGE CONVERSION – A conversion of a Term Life Insurance policy to a permanent plan of insurance at a premium rate, based on the insured’s age when the original term policy was purchased.

PERMANENT LIFE INSURANCE – Life Insurance that provides coverage throughout the insured’s lifetime and also provides a savings element.

POLICY ANNIVERSARY – As a general rule, the date on which coverage under an insurance policy became effective. 

PREMIUMS – Amount paid to the insurance company to buy a policy and keep it in force.

RENEWABLE TERM LIFE INSURANCE – A Term Life Insurance policy that can be renewed at the end of the policy term.

TERM LIFE INSURANCE - A life insurance policy which provides a stated benefit upon the holder's death, provided that the death occurs within a certain specified time period. Policy does not build up a cash value.

UNIVERSAL LIFE INSURANCE - A type of flexible Permanent Life Insurance offering both Term Life Insurance as well as a savings element, which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder's circumstances change.

WHOLE LIFE INSURANCE – A basic type of Permanent Life Insurance. It provides coverage that lasts a lifetime and also builds up a cash value that you can borrow against, withdraw or use to pay future premiums.

Using Life Insurance to Fund A Buy Sell Agreement

Even if you have personal life insurance with your spouse or family member as the beneficiary, you can still use a separate life insurance policy through your company or co- owner(s) to fund a buy-sell agreement.  

Protection and Peace of Mind
A chief concern among business owners is what will happen upon the death of one of the owners: how will it affect the business, the other owners and the heirs of the deceased owner? Surviving owners want to ensure the continuity of ownership, and not risk having a large share of ownership fall into the hands of potentially inexperienced heirs of the deceased. In addition, they want to protect themselves and the company financially. On a personal level, owners want to also ensure that their family is financially secure and compensated fairly in case something happens to them.

Grant Davis Qualifying Member of the Million Dollar Round Table 

Million Dollar Round Table

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Code of Ethics

1. Always place the best interests of your clients above your own direct or  indirect interests. 2. Maintain the highest standards of professional competence and give the  best possible advice to clients by seeking to maintain and improve   professional knowledge, skills and competence. 3. Hold in strictest confidence, and consider as privileged, all business and  personal information pertaining to your clients' affairs. 4. Make full and adequate disclosure of all facts necessary to enable clients to  make informed decisions. 5. Maintain personal conduct that will reflect favorably on the life insurance  industry and MDRT. 6. Determine that any replacement of an insurance or financial product must  be beneficial for the client. 7. Abide by and conform to all provisions of the laws and regulations in the  jurisdictions in which you do business.