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Glossary of Life Insurance Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Definitions written so you can actually understand them. Browse alphabetically, or search for a word or term by typing it into the search field located in the top navigation by the GO button (above right).
Face Amount
When a life insurance policy has a non-variable benefit, the face amount is the amount stated as payable at the death of the policyholder or, in the case of an annuity, at that point when the contract matures.. Also called the face value, this amount t is generally shown on the first page of the life insurance policy. See also basic death benefit, death benefit, and policy proceeds.
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Face Page
This is the first page of a life insurance policy and generally includes the policyholder’s name and age, the premium, the policy number, the date the policy was issued and the signature of the insurance carrier’s president and secretary.
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Facility-of-Payment Clause
This life insurance policy provision permits an insurance carrier to pay all or part of the policy proceeds either to a blood relative of the policyholder or to anyone who has a valid claim to those proceeds. The purpose of the clause is to allow the carrier to pay benefits in a timely manner when they cannot be made to the beneficiary identified in the insurance contract.
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Fair Credit Reporting Act (FCRA)
This federal law is designed to ensure that consumer reporting agencies act fairly, impartially, and with respect for the consumer's right to privacy when preparing consumer reports on individuals. See also consumer reporting agency.
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Family Benefit
This life insurance policy rider provides term insurance coverage on the policyholder’s spouse and children.
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Family Insurance Policy
This life insurance policy covers all the members of a family under one contract.
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Fiduciary
A person, party or organization who holds, manages and has discretionary authority and control over money belonging to another person, party or organization, or who provides investment advice in exchange for compensation. When a life insurance carrier manages pension funds, that insurance carrier is acting as a fiduciary.
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Fifth Dividend Option
See additional term insurance option.
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Final Beneficiaries
People or institutions designated to receive life estate trust property outright upon the death of the life beneficiary.
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Financial Institution
An organization that accepts the surplus money of savers and channels those funds through an economy by supplying it to borrows who, in turn, pay to use the money. Life insurance carriers are financial institutions and are subject to the laws and oversight procedures that keep such institutions in check.
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Financial Intermediary
One type of financial institution that borrows money on its own account and loans that money to other borrowers. Life insurance companies are financial intermediaries.
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Financial Settlement
The lump sum payment made by an insurance carrier to a disabled policyholder that effectively ends the carrier’s responsibility under the disability contract. Also known as a buy-out or commutation.
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Fixed Amount Option
This life insurance settlement option uses the policy proceeds plus interest to pay the beneficiary a sum of money in a series of annual (or more frequent) installments for as long as the proceeds plus interest last. Also called the fixed payment option.
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Fixed Period Option
This life insurance settlement option pays the beneficiary the policy proceeds plus interest in a series of annual (or more frequent) installments for a specified length of time, regardless of when the proceeds plus interest becomes exhausted.
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Foreseeability
Describes the ability a policyholder to reasonable anticipate the harm or injury that is likely to occur as a result of a given act or failure to act.
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Fractional Premiums
Premiums that are paid in installments during a year, such as semiannually, quarterly, or monthly. Although they are supposedly “fractions” of the total premium, fractional payments generally add up to more than the single-payment-per-year premium.
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Fraternal Benefit Society
An organization that exists to provide social and insurance benefits to its members. A list of such societies and links to their Web sites may be found here.
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Fraternal Insurance
Insurance coverage issued by a fraternal benefit society. See also open contract.
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Fraudulent Claim
When a claimant intentionally uses any false information in an attempt to collect on a policy, however minor, the entire claim is considered to be fraudulent.
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Fraudulent Misrepresentation
A false statement made knowingly by one party in order to induce a second party to enter a contract that then goes on to cause the second party to suffer some kind of loss.
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Free Examination Period
Also called a ten-day free look, this is the period of time after the policyholder receives his new insurance policy. During this period, the policyholder may review and, for any reason, return the policy to the insurance carrier for a full refund. During this period, full coverage is in force.
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Life insurance...because
life is unpredictable. |
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