Life insurance terms: fast glossary
Every industry has its own shorthand. Quick, no-nonsense definitions for the terms used throughout this site, so nothing here leaves you guessing.
- Beneficiary
- Recipient of the death benefit — one person, several, or an organization. Update the list whenever you want, as often as you want, while the policy's active.
- Death benefit
- Cash paid out after death, once the claim clears. The entire reason the product exists.
- Premium
- Recurring payment (usually monthly) that keeps coverage active. Skip too many, coverage ends.
- Face amount
- The coverage number printed on the policy — baseline for the death benefit before any graded/modified adjustment kicks in.
- Cash value
- Slow-building savings feature inside whole life/final expense policies, separate from the death benefit, accessible while alive. Full breakdown here.
- Simplified issue
- Skips the medical exam. Short yes/no health questionnaire instead, cross-checked against prescription history in the background. Health condition in the mix? See how that's handled.
- Guaranteed issue
- Also called guaranteed acceptance. Typically no health questions and no exam; applicants in the eligible age range are generally accepted, usually with a waiting period on natural-cause death.
- Level / graded / modified
- Three payout shapes for early-policy death. Level: full amount, day one. Graded: partial payout that climbs yearly. Modified: premiums refunded (often plus interest) instead of a benefit. All three flip to full payout once the early window closes.
- Contestability period
- Early window, typically two years, where a carrier can dig into and challenge a claim if the original application had a material lie or omission.
- Underwriting
- The behind-the-scenes evaluation — health answers, prescription check, related verification — that decides approval and terms.
- Look-back period
- How far back a carrier's questions dig for a past diagnosis, treatment, or hospitalization. Not fixed — shifts by carrier and by condition.
- Free-look period
- Short post-delivery window to cancel for zero reason and get every dollar of premium back.
- Grace period
- Buffer window after a missed due date — coverage keeps running while you catch up, right up until an actual lapse.
- Lapse
- The end result of unpaid premiums surviving even the grace period. Coverage: gone.