UT Life & Health key terms

A financial or love-and-affection relationship in which one person benefits from another's continued life or would suffer a loss from their death. It must exist at the time of application for coverage to be valid.

The money a policyowner pays, usually monthly, quarterly, or annually, to keep an insurance policy in force. Nonpayment can lead to lapse after any grace period ends.

The death benefit stated on the policy's face page, payable to the beneficiary when the insured dies, before adjustments for loans, unpaid premiums, or dividend options.

The savings element of a permanent life policy that builds over time, earns interest on a tax-deferred basis, and can be accessed through loans, withdrawals, or surrender.

Temporary coverage lasting a specified number of years, paying a death benefit only if the insured dies during that term. It builds no cash value and is usually renewable or convertible.

Permanent coverage with level premiums for life, a guaranteed death benefit, and guaranteed cash value that grows on a tax-deferred basis. It typically pays dividends only if participating.

Permanent coverage with flexible premiums and an adjustable death benefit. Its cash account is credited with current interest rates, and it may lapse if the account value cannot cover costs.

Permanent coverage in which cash value and death benefit fluctuate with separate-account investments the owner selects. The owner, not the insurer, bears the investment risk.

A return of divisible surplus paid to owners of participating policies. It is not guaranteed, is generally treated as a return of premium for tax purposes, and may be taken in cash or other options.

Guaranteed choices for using accumulated cash value when a permanent policy lapses or is surrendered: cash surrender, reduced paid-up insurance, or extended term insurance.

A set number of days, commonly 31, after a premium due date during which coverage remains in force. If death occurs, any unpaid premium is usually deducted from the benefit.

Allows a lapsed policy to be restored, usually within three to five years, by paying overdue premiums with interest and providing evidence of insurability. New contestability periods may restart.

After a policy has been in force for a stated period, typically two years, the insurer cannot deny a claim or rescind coverage because of misstatements in the application.

A provision limiting the insurer's liability to a refund of premiums if the insured dies by suicide within a stated period, usually two years from the policy issue date.

A rider that waives premiums while the insured is totally disabled beyond a waiting period, keeping the policy and its cash value growth intact during that disability.

A rider allowing the insured to receive part of the death benefit early when diagnosed with a terminal or qualifying chronic illness, with the remainder paid to the beneficiary later.

Money borrowed from an insurer using a permanent policy's cash value as collateral, charged interest at a stated rate. An outstanding loan reduces the death benefit if not repaid.

A review period after policy delivery, commonly 10 to 30 days, during which the owner may cancel the policy and receive a full refund of premiums paid.

A contract in which an insurer accepts a lump sum or periodic premiums and later pays a stream of income, typically used to accumulate retirement savings and then liquidate them.

The point at which a deferred annuity's accumulated value is converted into a guaranteed stream of periodic payments, based on a chosen payout option and assumed interest rate.

A fee imposed for withdrawing more than the allowed free amount or canceling a deferred annuity during its early years. It usually declines each year over the surrender period.

An annuity crediting a guaranteed minimum interest rate during accumulation and paying a level, stated dollar income later. The insurer bears the investment risk.

The person or entity first entitled to receive the policy proceeds if the insured dies. Payment requires the primary to be living when the insured dies.

The backup beneficiary who receives the death benefit only if the primary beneficiary dies before the insured or at the same time. Naming one avoids proceeds going to the estate.

A beneficiary distribution method that splits a deceased beneficiary's share among that beneficiary's descendants, preserving each family branch's portion of the proceeds.

A written receipt showing coverage takes effect on the application or medical exam date, provided the proposed insured proves insurable under the insurer's standard rules.

The underwriting step that groups applicants as preferred, standard, substandard, or declined based on health history, occupation, hobbies, and lifestyle factors that affect mortality or morbidity.

The amount an insured must pay out of pocket for covered health services each year before the plan begins paying benefits. Higher deductibles usually mean lower premiums.

The percentage of covered health expenses shared between insurer and insured after the deductible is satisfied, such as the plan paying 80 percent and the member 20 percent.

Rules that determine which of two or more health plans pays first when a person is covered by both, preventing duplicate payment and limiting total reimbursement to actual expenses.

A health condition diagnosed or treated before coverage took effect. Depending on the policy and applicable law, treatment may be excluded or subject to a waiting period.

A managed care plan that provides services through contracted providers using a primary care gatekeeper for referrals. Non-emergency care outside the network is generally not covered.

A managed care plan contracting discounted rates with a provider network. Members pay less using network providers and may use out-of-network providers at a higher share of cost.

Coverage that replaces a portion of earned income, commonly 60 to 70 percent, when the insured cannot work because of illness or injury, after an elimination period.

Federal health insurance for people age 65 and older and certain younger disabled individuals, delivered through Part A hospital coverage, Part B medical coverage, Part C Medicare Advantage, and Part D drugs.

A joint federal-state program providing health coverage to low-income children, families, elderly, and disabled people, and paying for much of the nation's long-term care.

Monthly cash payments to workers who cannot work because of a qualifying disability and who have enough work credits. Benefits convert to retirement benefits at full retirement age.

Illegally mixing money a producer holds in a fiduciary capacity, such as premiums collected for an insurer, with personal or business funds. It can lead to license suspension or revocation.

Offering part of a commission, a special favor, or other inducement to persuade a buyer to purchase insurance. It is an prohibited unfair trade practice for licensed producers.