Glossary of Life
Insurance Terms

A rider allowing the policyowner to access a portion of the death benefit early if the insured is diagnosed with a
qualifying terminal or chronic illness. In Florida, benefits are generally income tax-free if structured properly under
federal law.

A licensed individual authorized to sell and service insurance policies. In Florida, agents must be licensed under the
Florida Statutes Chapter 626 and adhere to continuing education requirements.

A type of term insurance that renews each year with increasing premiums based on age, without requiring new
underwriting.

A contract with an insurer designed to provide income, often for retirement. Florida regulates annuities under
suitability standards to ensure they align with client needs. (Fla. Stat. §627)

The person or entity designated to receive policy proceeds. In Florida, properly named beneficiaries allow
proceeds to bypass probate entirely

The savings component of permanent life insurance policies (e.g., whole life, universal life) that grows tax-deferred
and may be accessed via loans or withdrawals.

A term policy that can be converted into permanent insurance without additional medical underwriting, subject to
time limits.

The amount paid to beneficiaries upon the insured’s death. In Florida, life insurance proceeds are generally
protected from creditors when payable to a named beneficiary. (Fla. Stat. §222.13)

A return of excess premium from a mutual insurance company. Dividends are not guaranteed and may be used for cash, premium reduction, or paid-up additions.n with client needs. (Fla. Stat. §627)

Medical and financial information required by insurers to assess underwriting risk.

The stated death benefit of a life insurance policy, excluding riders or loans.

A statutory period (typically 10–14 days in Florida) allowing the policyowner to cancel a new policy for a full
refund. (Fla. Stat. §627.455)

A period (typically 30–31 days) after a missed premium payment during which coverage remains in force.

A policy issued without medical underwriting, typically with graded death benefits in early years.

Prevents the insurer from contesting the validity of a policy after it has been in force for two years, except in cases
of fraud. (Fla. Stat. §627.455)

A legal requirement that the policyowner must have a legitimate financial or emotional interest in the insured’s life
at the time of policy issuance.

A trust designed to own life insurance outside of the insured’s estate, providing estate tax benefits and creditor
protection when properly structured.

Termination of a policy due to nonpayment of premiums or insufficient cash value.

The sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its death benefit. Regulated in Florida under Florida Life Settlement Act.

Borrowing against a policy’s cash value. Loans accrue interest and reduce the death benefit if not repaid.

Options available if a policy lapses, such as reduced paid-up insurance or extended term insurance. (Fla. Stat.
§627.476)

Policies that provide lifelong coverage and include a cash value component (e.g., whole life, universal life, indexed
universal life).

The individual or entity that owns and controls the policy, including rights to change beneficiaries and access cash
value

The payment required to maintain coverage, which may be fixed or flexible depending on the policy type.

The act of replacing an existing policy with a new one. Florida imposes strict disclosure requirements to protect consumers. (Fla. Stat. §626.9541)

An optional provision that modifies a policy, such as waiver of premium, long-term care rider, or accidental death
benefit.

The amount received if a policy is voluntarily terminated, after fees and charges.

Coverage for a specified period (e.g., 10, 20, 30 years) with no cash value component.

The process insurers use to evaluate risk and determine eligibility and pricing.

A flexible premium permanent policy with adjustable death benefits and cash value tied to interest rates.

A policy where cash value is invested in sub-accounts similar to mutual funds; subject to securities regulation

A provision that waives premiums if the insured becomes disabled, subject to policy definitions and waiting
periods.

A tax-free exchange of one life insurance or annuity contract for another under Internal Revenue Code Section
1035.

A state safety net that provides limited protection to policyholders if an insurer becomes insolvent. (Fla. Stat. §631)