Life Insurance Glossary Below are definitions for many of the terms you will commonly run into when investigating life insurance. Term Life Insurance Term life insurance is so named because it provides financial protection for a limited, specified period of time. If death occurs within the time limits on the policy, the face amount of the policy is payable.
Nothing is paid if the insured person survives the length of the term policy.
Unlike other types of policies, term insurance does not generate cash values. It is for these reasons that term insurance is usually the least expensive means of protection. In addition, some people on limited incomes purchase term insurance for basic insurance protection and, as their incomes rise, convert the policy to other forms of life insurance. Renewable or convertible options may be included in a term life insurance policy. A renewable policy permits the owner of the policy to automatically extend the policy length regardless of the health or occupation of the insured, with a possible increase in premiums at renewal.