Insurance Definitions

What are Accelerated benefits?

Accelerated benefits, also known as "living benefits," are life insurance proceeds that are to be paid to the policyholder before he or she dies in the event of, for example, terminal illness occurs. Also, the stipulation on this is the policy holder was given (by a licensed medical professional) a life expectancy of two years or less.

What are Annual Expenses?

Annual expenses: Approximate annual expenses of the owner and any spouse/partner, including, but not limited to, rent/mortgage payments; utilities; travel and transportation; insurance premiums; health care including insurance premiums and any deductibles or copayments; debt repayment; support for dependents; membership costs; vacation costs; charitable contributions; and property taxes.

What is Annual Income?

Annual income: Approximate household income of the owner and any spouse/partner, including, but not limited to, earned and investment income, such as salary and wages; Social Security payments; pension and IRA payments; rental income; and interest and dividends earned on other financial instruments. (Income currently earned on financial instruments that will be used to fund the annuity purchase should not be included.)

What is an annuity?

An annuity is a long-term investment contract that is issued by an insurance company and it's main purpose is to help protect the annuitant from the risk of outliving your income. This is also known as "forever income" or "lifetime income".

 

 

What is a beneficiary?

The beneficiary of a life insurance policy is the individual who will receive the death benefit payment equal to the amount of the policy amount on the insurance policy after the insured passes away.

What is a Cash Benefit?

The Cash Value or Cash Benefit is the amount in a life insurance policy that may accumulate interest and made available for withdraw to the policy or beneficiary.

What is a Critical Illness?

A Critical Illness is an illness such as heart attack, stroke, ESRD (End Stage Renal Disease or Kidney Failure).

Some insurance companies offer plans specifically tailored to these individuals however will have waiting periods usually 2 years.

 

What is Disability Insurance?
Disability insurance, often called DI or disability income insurance, or income protection that replaces a portion of your monthly income if injury or illness prevents you from working. For the most part, disability insurance does not replace all of a person's income. Instead, disability insurance provides wage replacement benefits that cover, on average, up to 65% of an employee's total earnings.

What is a Death Benefit?

 

What is Final Expense Insurance? Final expense or "Burial Insurance" will cover your final expense like burial costs, maybe some debts and leave some monies left over for loved ones.
The average cost of a funeral and burial expenses is around $10,000. That cost doubles every 7-10 years, Make sure that you have enough to cover those expenses, debts, and some cash for loved ones you leave behind.
What is a Fixed Indexed Annuity? A Fixed Indexed Annuity is an contract by you and an insurance company that may accrue interest on funds deposited into that said contract. With fixed indexed annuities, the annuitant benefits from the upside of the index market that the contract is tied to such as the S&P 500 or the NASDAQ. For more information, please visit our Fixed Indexed Annuity page.

What is a Graded Insurance Policy?

For this type of life insurance underwriting class - Health conditions may be different based on the individual carrier. For example, having chronic illnesses such as Diabetes with insulin usage, ALS (Lu Gehrig's Disease),  Parkinson's, lupus, liver disease, or Chronic obstructive pulmonary disease (COPD), might put the applicant in a graded insurance classification.

Graded policy benefits usually have a 2-year waiting period before the entire death benefit can be paid to a beneficiary. 

If non-accidental death occurs before two years, the policy will only pay a percentage of the death benefit.

For example:

  1. If death occurs in the first year, perhaps only 30% of the death benefit will be paid.
  2. If non-accidental death occurs in year two, 70% of the death benefit will be paid.
  3. Death in year three or later will pay 100% of the death benefit.

In case you were wondering, here are some examples of “accidental death”:

  • Car accident
  • Death from fall
  • Poisoning
  • Drowning
  • Fire-related death
  • Suffocation
  • Firearms (excludes acts of war and suicide)
  • Industrial accidents
  • General accidents (medical professional mistakes, falling objects, air transport injury, etc.)

“Non-accidental deaths” include:

  • Illnesses
  • Old age
  • Suicide

Below you can see the difference between Level, Graded, Modified, and Guaranteed Issue:

Level Graded Modified GI

What is a Guaranteed Issue Policy?

GI or "Guaranteed Issue" underwriting policy benefits are very similar to a modified policy, but more expensive because there is no health underwriting. There may be some general health questions, but no underwriting.

Guaranteed Issue also has a 2-year waiting period before the entire death benefit can be paid to a beneficiary. If death (non-accidental) occurs before two years, the policy will only pay a return of premiums plus a percentage.

Below you can see the difference between Level, Graded, Modified, and Guaranteed Issue:

Level Graded Modified GI

What is a Indexed Account?

An indexed account is an insurance policy or contract that is tied to a major market index such as the S&P 500 or the NASDAQ that has the potential to earn interest credits to the policy or contract. The policy or contract is not inside the market like a stock, however it is tied to it so that it has the potential to earn interest from it. It takes advantage of the upside in the market or potential gains in interest, but do no suffer the losses in the market.

What is an Indexed Annuity?

Please also see "What is a Fixed Indexed Annuity?"

An Indexed Annuity is an contract by you and an insurance company that may accrue interest on funds deposited into that said contract. With fixed indexed annuities, the annuitant benefits from the upside of the index market that the contract is tied to such as the S&P 500 or the NASDAQ.

For more information, please visit our  Indexed Annuity page.

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What is Insurance?

In short, Insurance is a means of protection from financial loss.

The legal definition of Insurance is: 

"a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium."

What is a Last Will and Testament?

A Last Will and Testament allows you to control what happens to your estate (your money, property, and other assets) after your death.

What is a Level Policy?

Level policy benefits typically are given to applicants who are in excellent health. If you've had any surgeries, are on any prescriptions, or have any health conditions, we will check with our carriers of choice to see if you might pass through underwriting. 

This kind of policy offers the full death benefit immediately after death occurs. This is the only type of final expense insurance policy that will immediately and fully cover your client.

Below you can see the difference between Level, Graded, Modified, and Guaranteed Issue:

Level Graded Modified GI

What are Liquid Assets?

Liquid assets: Assets that can be accessed without substantial penalty such as checking and savings accounts, money markets, short-term certificates of deposit, and no-load mutual funds.

What is a Long-Term Care Insurance Plan?

Long-term care insurance is a type of insurance policy that assists the policy holder with paying for costs that are generally associated with long-term care (LTC)

LTC insurance provides an alternative to paying the out-of-pocket and Medicaid. This insurance helps seniors pay for assisted living care, skilled nursing or specialized services that would be deemed as long term care.

According to MorningStar.com, over 52% of people will need some type of long-term care after they turn 65 years of age. Most people aren't prepared for it because they don't think they will need it. Don't put it off, tomorrow is not promised to any of us. Be Prepared!

 

What is a Modified Insurance Policy?

Like graded underwritten plans, carriers have health conditions that would place an applicant into a Modified plan, such as aneurysm, angina, stroke, alcoholism, or cancer.

Modified underwriting policy benefits usually also have a 2-year waiting period before the entire death benefit is paid to a beneficiary. If non-accidental death occurs before two years, the policy will only pay a return of premiums plus a percentage, usually 10%.

Below you can see the difference between Level, Graded, Modified, and Guaranteed Issue:

Level Graded Modified GI

What is a Mortgage Protection Insurance Policy?

Mortgage protection insurance is coverage that will pay off some or all of your mortgage in the event you pass away. Unlike traditional insurance that you can elect to have your beneficiary as a loved one, this insurance gets paid directly to the mortgage company. One other major benefit is ROP (Return of premium). You get all of your premium back in the case that you outlive your policy term.

Please visit our page for more information on Mortgage Protection Insurance.

What is Net Worth?

Net worth: Total assets minus total liabilities (e.g., debts, loans, mortgages, or any other liabilities).

What is a Paramed?

A paramed exam is a physical exam performed by a licensed medical professional. During the exam, the nurse or tech performing the exam will gather important health data about your medical history as well as your current medical status. During most paramed exams, they perform certain task such as taking patient complete body measurements, including patient height, patient weight (both are used determine BMI or body mass index), waist & chest measurements, blood samples, and blood pressure, and urine sample.

Some companies like ExamOne will allow you create an online account to see your results as they come back.

Sample ExamOne Chart
Sample Of Chart With Details Of Results Of Exam

The results are very detailed and have clickable options to see the metric and the purpose of the screening, and the average levels expected as well as the level of the patient.

Sample ExamOne Chart Detail
Sample Explanation Of Rating

 

What is an Insurance Policy?

An Insurance Policy is a contract between the insurance company and the policyholder, that will outline the terms in which the insurer is legally required to pay in the event of a loss. As long as the insured policy holder makes their payments, known as premiums, the insurance company guarantees payment up to the policy amount outlined in the insurance contract in the event of a loss.

Sample Life Insurance Policy
Sample Life Insurance Policy

What is a Policy Owner?

A policy owner is the owner of the insurance contract. Most of the time, the policy owner will also be the one paying the premiums, they control the contract and normally are also the beneficiary.

What is Preferred Rate Class?

Preferred is the second best life insurance rate class.

What is Preferred Plus Rate Class?

Preferred Plus is the best life insurance rate class. 

What is a Premium Bonus on an insurance  or annuity contract?

A Premium Bonus is a bonus added to the annuity contract, usually stated as a percentage. Most of the time, these are introductory bonuses only to entice enrollment. They are usually subject to a vesting schedule.

What is a Replacement in Insurance or Annuities?

Replacement: A transaction in which a new policy is to be purchased and it is known or should be known to the proposing Producer, or to the proposing insurer if there is no Producer, that by reason of the transaction, an existing policy has been or is to be: (a) lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurer, or otherwise terminated; (b) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of non-forfeiture benefits or other policy values; (c) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (d) reissued with any reduction in cash value; or (e) used in a financed purchase.

 

What is a "Rider"?

rider in an insurance policy is an insurance policy provision that adds or incorporates additional benefits to the standard insurance policy to which will grant more benefits to the policy holder.

An RMD is an IRS-mandated amount of money that you must withdraw from traditional IRAs or an employer-sponsored retirement account each year. It's important to understand when you need to take an RMD, how to avoid potential costly penalties for late distributions, and maximize your withdrawal strategy.

What is ROP (Return Of Premium)?

Return of premium (ROP) is a benefit inside of certain life insurance policies that will return all or some of the premiums the insured has paid for their coverage. How it works is, if the insured lives longer than the policy's term, and the benefits have not been used, some or all of the insurance premiums will be returned to the insured.

What is Simplified Issue Insurance?

Simplified issue insurance is a life insurance policy you can be typically approved for the applicant with very minimal health questions.

Typically this type of policy is good for those individuals that either don't want to take a Paramed exam or they simply want something enforce rather quickly without the time constraints.

 

What is Standard Rate Class?

Standard Rate Class is the fourth best life insurance rate class.

What is Standard Plus Rate Class?

Standard Rate Class is the third best life insurance rate class.

What is Term Life Insurance?
Term life insurance can help you get the coverage you need for less than the cost of your whole life insurance. Typical terms range from 10-30 years. Make sure that you have enough to cover those expenses, debts, and some cash for loved ones you leave behind. Check more information on Term Life Insurance

What is a Terminal illness?

Terminal illness also known as an end-stage disease, is a disease that medical professionals state can not be cured or adequately treated by the medical profession and is expected to result in the death of the patient.  Typically prognosis will state that the patient has a remaining life expectancy of 24 months or less.

What is an Insurance Underwriter?

Insurance underwriters are professionals who evaluate and analyze the risks involved in insuring people and assets.

What is Universal Indexed Life Insurance?

You can take out loans against the cash value or leave it in the policy to grow. The cash account is tied to a market index like the S&P 500 or NASDAQ. Unlike investing directly in an index fund, however, you won't lose money when the market has a downturn. IUL policies provide an interesting retirement-planning vehicle with greater upside potential and tax advantages.

This cash is not exposed to market risk, can be accessed tax-free, and is liquid.

You do not have to wait until you are age 59.5+ to use this cash without penalties and taxes…unlike your 401(k).

 

What is Universal Life Insurance? 

Universal life insurance is a type of permanent life insurance that has a cash value benefit attached to it. Universal life is typically whole life, however with more flexibility such as the ability to vary policy premiums and death benefit. Universal life grows the cash value based on a declared interest rate by the insurance company.

What is whole life insurance?

Whole life insurance can help you get the coverage you need with a permanent solution, rather than a term. We have whole life amounts that can go up to $65,000,000. With whole life insurance, you are sure to have enough to cover all of your funeral expenses, personal & business debts, while still having enough to leave some cash for loved ones you leave behind.

 

What does Variable mean in insurance?

A Variable policy or insurance contract has "variable" interest earnings as well as interest payouts. They are tied to a major market index such as the S&P 500. They benefit when the market goes up conversely they suffer when the market takes a downturn.