Insurance, in plain English.
Forty-plus of the terms you will hear when shopping a life insurance policy or working with a PlondoLife agent — including the riders and annuity mechanics most consumer glossaries skip. Defined without jargon and without sales spin.
Accelerated death benefit (rider)
An optional rider that lets you draw on a portion of the policy’s death benefit while you are still alive if you are diagnosed with a terminal, chronic, or critical illness. Available on most modern policies.
Annuity
A contract with an insurance carrier that converts a lump sum or series of premiums into income, often for life. Fixed annuities pay a set rate; indexed annuities credit interest based on market index performance, capped and floored.
Beneficiary
The person, people, or entity who receives the death benefit. You can name primary and contingent beneficiaries, and you can change them at any time as long as the policy is in force.
Cash value
The savings component of a permanent life insurance policy. It grows tax-deferred over time and can be borrowed against or withdrawn, subject to the policy’s rules.
Change of insured (rider)
An optional rider on some permanent policies that lets the policyowner substitute a new insured for the original one without surrendering the contract — common in business-owned life insurance when a key employee leaves.
Common carrier accidental death (rider)
A narrow accidental-death rider that pays an additional benefit if the insured dies while traveling as a fare-paying passenger on a regulated public-transit carrier (commercial airline, train, bus, ship). Distinct from broader accidental-death riders.
Confined care (rider)
An accelerated benefit rider that triggers when the insured is confined to a nursing home, assisted-living facility, or extended-care facility. Pays a portion of the death benefit forward to help cover the cost of care.
Contestability period
A window — typically two years from policy issue, one year in some states — during which the carrier can rescind the policy if it discovers material misstatements on the application.
Convertible term
A term life policy that can be converted to a permanent policy without new underwriting (medical questions, exam) within a specified window. Useful if your health changes during the term.
Death benefit
The amount paid to your beneficiary when the insured passes away while the policy is in force.
Decreasing term
A term policy whose death benefit decreases on a schedule, usually matched to a mortgage balance. Often called “mortgage protection.”
Final expense
Whole life policies sized for funeral, burial, and end-of-life costs — typically $5,000 to $30,000 — with simplified or guaranteed-issue underwriting.
Fixed indexed annuity (FIA)
An annuity contract whose interest credit is tied to the performance of a market index, with a floor that protects principal and a cap or participation rate that limits upside.
Free look period
A window after the policy is issued — usually 10 to 30 days, varies by state — during which you can cancel and receive a refund of premiums paid.
Grandchild term insurance (rider)
An optional rider on some permanent policies that adds a small term-life benefit on each named grandchild for a low fixed monthly cost. Often convertible to permanent coverage on the grandchild’s adulthood without underwriting.
Guaranteed insurability (rider)
An optional rider that lets you buy additional permanent insurance on the same insured at preset future dates — typically tied to age milestones, marriage, or the birth of a child — without new underwriting. Useful for locking in insurability before health changes.
Guaranteed issue
A policy issued without medical underwriting. Anyone within the eligibility ages is approved, but premiums are higher and the death benefit may be limited during the first two policy years (graded benefit).
Guaranteed lifetime withdrawal benefit (GLWB)
An optional annuity rider that, once activated, pays you a fixed percentage of your benefit base each year for the rest of your life — even if your contract value runs to zero. The rider has its own annual fee, deducted from the contract value.
Hospital stay waiver of premium (rider)
A rider that waives your premiums during any inpatient hospital stay of a defined length (typically 30+ consecutive days). Different from disability waiver of premium, which is broader.
Identity theft waiver of premium (rider)
An unusual rider offered by a few carriers that waives premiums for a defined period if the insured is the victim of confirmed identity theft. Designed to reduce financial pressure during recovery.
Income protection option (rider)
A death-benefit-payout option on some term policies that pays the benefit to your beneficiary as a guaranteed monthly income stream — over 10, 20, or 30 years — instead of a single lump sum. Often costs nothing extra and helps families budget the proceeds.
Indexed Universal Life (IUL)
A permanent life insurance policy whose cash value earns interest based on the performance of a market index, subject to caps and floors. Combines a death benefit with a tax-advantaged savings component.
Insured
The person whose life the policy covers. The insured and the policy owner can be different people (e.g., a spouse owns a policy on the other spouse).
Lapse
When a policy terminates because premiums were not paid. Most policies have a 30-day grace period before lapsing, and some can be reinstated within a window.
Mortgage protection insurance
Term life insurance sized to your mortgage balance so the home can be paid off if you pass away. The death benefit goes to your family — not the lender.
Multi-year guaranteed annuity (MYGA)
A fixed annuity that pays a guaranteed interest rate for a stated multi-year period (typically 3, 5, 7, or 9 years). Simpler than an FIA — no index, no caps, no participation rates — and often used as a CD-style alternative for long-term safe money.
Overloan protection (rider)
A rider on some permanent policies that prevents the policy from lapsing due to outstanding loan balance — useful for IUL or whole-life owners who plan to take ongoing policy loans for retirement income. Triggers under specific conditions defined in the contract.
Participation rate
In an indexed product, the percentage of an index gain that is credited to your policy. A 70% participation rate on a 10% index gain credits 7%.
Permanent life insurance
Life insurance designed to last your whole life — whole life, universal life, indexed universal life — typically with a cash-value component. Premiums are higher than term but the coverage does not expire.
Policy loan
Borrowing against the cash value of a permanent policy. Loans accrue interest. Outstanding loans reduce the death benefit and can cause the policy to lapse if not managed.
Premium
The amount you pay (monthly, quarterly, or annually) to keep the policy in force.
Premium deposit account (rider)
A feature that lets you pre-fund several years of premiums into a side account that earns interest and is drawn down to pay each year’s premium automatically. Useful for clients who want to lock in funding now without paying a lump-sum single-premium policy.
Rider
An optional add-on that modifies the policy — accelerated death benefit, child term, waiver of premium, return of premium, accidental death, and others. Riders may have separate costs.
Suicide exclusion
A clause in most life insurance policies that limits the death benefit to a return of premiums if the insured dies by suicide within the first two years (one year in some states).
Surrender charge
A fee charged by the carrier if you withdraw cash value from a permanent policy or annuity within the surrender period (typically 5 to 15 years). Surrender charges decline over time.
Survivorship life insurance
Permanent insurance — usually whole life or IUL — written on two lives (typically a married couple) that pays a single death benefit when the second insured passes away. Often used for estate-planning to fund estate taxes; sometimes called “second-to-die” coverage.
Term life insurance
Life insurance that covers you for a fixed number of years — typically 10, 20, or 30 — at a level premium. The cheapest way to buy a large death benefit. Coverage ends when the term does (renewable or convertible options vary).
Underwriting
The carrier’s process for evaluating an application. May involve a medical exam, prescription history, motor vehicle record, financial information, and a phone interview. Determines eligibility and final premium.
Unemployment waiver of premium (rider)
A rider that waives your premiums for a defined period (typically up to six months) if you are involuntarily laid off and certified as unemployed. Distinct from the more common disability waiver of premium.
Universal life insurance
A flexible permanent life insurance policy that lets you adjust premiums and death benefit within limits. Cash value grows based on a credited interest rate set by the carrier.
Whole life insurance
A permanent life insurance policy with a guaranteed level premium, guaranteed cash-value growth, and a guaranteed death benefit. The most predictable form of permanent coverage.
Have a term we missed?
Email support@plondo.com and we will add it. Want to talk to a real agent? Request a quote.