Life insurance glossary
Final expense and life insurance come with their own vocabulary. Here's a fast, plain-language reference for the terms used across this site, so nothing you read here depends on jargon you haven't seen explained.
- Beneficiary
- The person, people, or entity you name to receive your policy's death benefit. Most policies let you name more than one, and you can generally change your beneficiary at any time while the policy is active.
- Death benefit
- The amount of money paid to your beneficiary after you pass away and the claim is approved. This is the core purpose of a life insurance policy.
- Premium
- The payment you make, usually monthly, to keep your policy in force. Miss enough payments and the policy can eventually lapse.
- Face amount
- The stated coverage amount of a policy — the figure used to calculate the death benefit before any early-period adjustments, like a graded or modified payout schedule, apply.
- Cash value
- A savings-like component that builds slowly inside a whole life or final expense policy while you're alive, separate from the death benefit. See our full explanation of cash value for more.
- Simplified issue
- An application process with no medical exam — instead, you answer a short list of health questions, and the carrier checks background sources like your prescription history. See how simplified issue works with pre-existing conditions.
- Guaranteed issue
- Also called guaranteed acceptance. An application process with no health questions and no medical exam — anyone within the eligible age range is accepted, typically in exchange for a waiting period on natural-cause death.
- Level / graded / modified
- The three common payout structures for how much a policy pays if death occurs during its early period. Level pays the full death benefit from day one. Graded pays a partial, increasing amount during the early period. Modified returns paid premiums, often with interest, during that same window. All three pay the full death benefit once the early period has passed.
- Contestability period
- A window, commonly the first two years a policy is in force, during which the insurer can investigate and potentially contest a claim if the application contained a material misrepresentation.
- Underwriting
- The process a carrier uses to evaluate an applicant — health questions, prescription history, and other checks — to decide whether to issue a policy, and on what terms.
- Look-back period
- How far back a carrier's health questions reach when asking about a past diagnosis, treatment, or hospitalization. This window varies by carrier and by the specific condition being asked about.
- Free-look period
- A short window after your policy is delivered during which you can cancel it for any reason and receive a full refund of any premiums paid.
- Grace period
- A set stretch of time after a missed premium due date during which your coverage stays in force while you catch up on payment, before the policy lapses.
- Lapse
- What happens when a policy ends because a premium went unpaid, even through the grace period. Once a policy lapses, coverage stops.