Insurance Glossary: Page 6

Secondary Beneficiary: An alternate beneficiary designated to receive payment, usually in the event the original beneficiary predeceases the insured.

Senior Health Coverage: Senior Medicare supplement insurance or also known as Medigap insurance is specifically designed to supplement Medicare's benefits by paying some of the amounts that Medicare does not pay for covered services and may pay for certain services not covered by Medicare.

Single Premium Policy: A whole life policy for people who want to buy a policy for a one-time lump sum, and then be covered for the rest of their lives without paying any additional premiums.

Standard Risk: Person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

Substandard Risk: Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.

Survivorship Life Insurance Survivorship life insurance is a type of whole life insurance that insures two people and pays benefits only after the second person dies. It is generally designed to provide funds to pay estate taxes. Also called "second to die life insurance", "joint and last survivor" and "last to die insurance". Introduction benefits of survivorship life insurance estate planning and survivorship life insurance taxes imposed on the transfer of assets introduction survivorship life insurance or second to die insurance pays a death benefit at the death of the survivor of two individuals, usually husband and wife. The proceeds of the policy become available at the second death when estate tax and estate settlement costs may cause an excessive financial burden. Since estate taxes are based upon the total current value of all assets9liquid or not), Survivorship life insurance can protect family estates such a s real estate, property, family farms and other hard assets from liquidation.

Term Life Insurance: Term is the lowest cost and simplest product available. Term life life insurance is a life insurance contract that provides protection for a limited number of years. The death benefit is only payable if death occurs during the agreed upon term. If the insured survives the time period, the policy expires. This means it has no cash value. However, some policies have a convertible feature permitting a policy owner to exchange a term policy for a cash value policy without evidence of insurability. Term is basically designed to provide a maximum amount of protection for a temporary period of time.

Term: Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.

Tertiary Beneficiary: In life insurance, a beneficiary designated as third in line to receive the proceeds or benefits if the primary and secondary beneficiaries do not survive the insured.

Third-Party Owner: A policy owner who is not the prospective insured. The policy owner and the insured may be, and often are the same person. If for example, you apply for and are issued an insurance policy on your life, then you are both the policy owner and the insured and may be
known as the policy owner-insured. If, however, your mother applies for and is issued a policy on
your life, then she is the policy owner and you are the insured.

Underwriter: Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.

Uninsurable Risk: A person who is not acceptable for insurance due to excessive risk.

Universal Life: Universal life insurance is a combination of term protection with the cash savings value of whole life. Interest rates paid on the cash value are typically higher with universal life than whole life because they tend to follow the markets. This type of contract is designed with flexibility in mind. Premiums can be paid in a lump sum, annually or anywhere in between. Interest on the cash value is usually guaranteed, but will vary according to the investment performance. Each month deductions are made from the cash value fund to support the costs of the insurance protection. As long as the cash value is substantial enough to maintain the monthly costs, the policy will remain in force, cash value is accessible through loans and withdrawals that will reduce cash value by the amount borrowed plus interest. Withdrawal and/surrender charges may also apply.

Variable Life: Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The assets fluctuate according to the investment experience of funds managed by the life insurance company. Premium payments may be fixed as to timing and amount (scheduled premium variable life) or subject to change by the policy holder (flexible premium variable life).

Waiver of Premium: Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.

Whole Life Insurance: Whole life insurance provides a death benefit and an accumulating cash value. It has a fixed premium and a level death benefit to age 100. The premiums don't increase with age, which averages the cost of the policy over your life. The cash value increases with time until it equals the death benefit. Whole life is also known as Permanent life insurance. This type of policy never has to be renewed or converted. The cash value is an amount of money that you are guaranteed to receive in the event of policy cancellation. You also have the right to borrow against the cash value on a loan basis. Cash value is accessible through loans and withdrawals that will reduce cash value by the amount borrowed plus interest. Withdrawal and/surrender charges may also apply.