Common Insurance Terms

Annual Premium

The annual premium is the cost of your life insurance policy per year.

ART (Annual Renewable Term)

This is a term policy where the premium increases annually and the coverage stays the same. 


This is the person or entity (trust or estate) the death benefit is made payable to when an insured dies.  

Cash Surrender Value

For cash value products, the cash surrender value is the sum of money an insurance company pays to the policy owner in the event their policy is voluntarily terminated.

Conditional Receipt

A receipt involved in certain life insurance contracts where, if the insured is deemed to be covered by the insurer, the coverage begins on the date the insured receives the conditional receipt.  Two important conditions are: (1) a valid premium payment must be received by the insurer and (2) a completed and acceptable application must be received by the insurer. 

Contestability Period 

The contestability period is two years. It is a period during which an insurer may investigate the validity of the representations made on an application for life insurance.  The contestability period begins on the issue date of the policy. You should confirm the time period with your agent and review it in your policy. 

Contingent Beneficiary

This is an individual or entity (trust or estate) the death benefit is made payable to, when the insured dies, if the primary beneficiary dies before  the insured.  

Death Taxes

Death taxes are generally taxes placed on the property of a person who died. Federal death taxes are called "estate taxes.” State death taxes (if any are required) are also known as "inheritance tax.”

Evidence of Insurability

Evidence provided to an insurer to support that you are an acceptable risk. You have to meet the standard requirements of the insurer regarding age, health, occupation, etc. to be considered eligible for coverage.


An heir is a person who is legally entitled - and/or referenced in the terms of a will - to inherit a deceased individual’s estate (e.g. money, property).

Permanent Life Insurance

Permanent life insurance (e.g. whole life and universal life) is a type of coverage that is designed to provide life insurance protection usually throughout your lifetime. These policies may have a cash value.


The payment you make on a life insurance contract. 

Suicide Clause

In most states, the suicide exclusion is between one to two years. It is a period during which the death benefit is limited to the return of premium if the cause/manner of death is determined to be suicide.


When the policy owner voluntarily terminates the life insurance policy.  Should this occur, the policy will need to be returned to the insurer and/or agent, signed and noted with the surrender date.

Term Life Insurance

Insurance coverage that does not accumulate a cash value and is designed to provide coverage for a fixed period of time. 


A trust can be created for estate planning purposes and may be established to make a person or entity (trustee) the owner of property to be held or used for the benefit of one or more others.  There are many types of trusts, and the type you choose depends on your individual needs.  It is strongly encouraged to seek a financial planner’s advice when establishing a trust.


A legal document by which a person expresses their wishes as to how their property is to be distributed at death and who will manage/distribute the estate.  

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