Life Insurance Definitions

There are lots of important definitions with all insurance, but especially life insurance.   Life insurance definitions are definitions about various aspects of the insurance industry.

Why Should Consumers Read Life Insurance Definitions?

Consumers should be aware of the terms being used so that they understand what they may be purchasing.

Do Insurance Definitions Really Matter:

They certainly matter as it relates to the life insurance contract that you may be buying, so yes, life insurance definitions matter.

How to Use these Definitions:

Learn what you are buying before signing any paperwork.

Where does WholeVsTerm Get their life insurance definitions from?

It depends, in general we pull our various definitions from trust sources, such as state regulators or financial outfits – we generally attempt to cite those sources.  On rare occasion, where we see fit, we have created our own, by reviewing others and enhancing them.  We also attempt to note this for you to see.

Always consider getting your definitions from an independent source such as Wikipedia or Investopedia or a (your) state insurance regulator.

Ask lots of questions.

Do Not Sign Anything you Don’t Understand.

What is the Average Face Amount?

Written by Scott W Johnson

According to the National Association of Insurance Commissioners or NAIC for short: About $163,000 is the average Face Amount of Individual Life Insurance policies for calendar year 2017.  The Average yearly face amount, changes each and every year.Calendar Year 1997: Average Face Amount (Individual Policy): $103,000Calendar Year 1999: Average Face Amount (Individual Policy): $120,000Calendar Year 2001: Average.. More

Goodman Triangle

Written by Scott W Johnson

The Goodman Triangle is a potential tax trap created when too many parties are involved on a life insurance contract. The original case from 1946 is considered a required reading for estate attorneys and seasoned insurance agents. The Goodman case can quickly prove that the old maxim (that life insurance is tax free) to be wrong.

What is the Face Amount of Life Insurance

Written by Scott W Johnson

The Face amount of life insurance is exceptionally similar to the death benefit, but technically not the exact same. For our purposes the differences are almost irrelevant as long as consumer under how death benefits can be amended or changed.

How are Policyowner Dividends Treated in Regards to Income Tax?

Written by Scott W Johnson

Are policyowners / policyholders participating whole life insurance dividends really tax free? As with numerous simple questions no one simple answer is there. Policy owners generally may not have to pay income taxes but there are several cavets and reasons why someone might have to pay an income or another type of tax.

Death Benefit

Written by Scott W Johnson

The death benefit is a simple and easy concept to understand if you are shopping for life insurance. Commonly referred to as the DB or Benefit, it is the contractual obligation for the insurer to pay out if the insured dies.

Policyholder Surplus

Written by Scott W Johnson

The policyholder surplus is a very important financial metric and assessment tool that too few consumers truly understand. PHS metrics show a slight bias to larger insurers by its own definition. Policy Holder metrics are extremely important for those wanting to purchase or consider purchasing longer term permanent policies and annuity contracts such as Whole, Universal, or various Annuities,

Questions and Answers

Written by Scott W Johnson

Life Insurance Questions and Answers is our list of some salient questions that we have had about insurance. Some specific, some totally random, we have added numerous questions to this list.

Portability vs Conversion

Written by Scott W Johnson

Portability and Conversion are two options when you leave a group life insurance plan, such as an employer sponsored plan. Not to be confused with convertible term life insurance, conversion and portability are slightly different versions that results in vastly different outcomes. Portability allows you to take your term plan with you while conversion allows to you change the policy to a permanent one.

How Long Does Life Insurance Last

Written by Scott W Johnson

One of the more common questions that all life insurance agents get is How Long Does Life Insurance Last? Well there is no simple answer to this complex question. Whole, Term, and Universal life insurance all of have slightly different answers to this question. Add to this that several important conditions that must be met. After all a life insurance policy cannot last any longer if the yearly premiums go unpaid – right? Whole contracts typically will last until either the policy end date (which may be 100 or 120) or your entire life.

Preferred Plus Life Insurance

Written by Scott W Johnson

What is preferred plus pricing? Preferred Plus is the highest of the standard health classes for term and whole life insurance. Preferred Plus is the best pricing (lowest price) that consumers can qualify for. Consumers that do qualify for this best in class price, would do well to stock up on the most amount of insurance that they can afford to buy at that time. There are so many benefits to this health rating class that it can difficult to summarize them all.