Inforce – Inforce means that life insurance is active.
Insurance – Usually stated as proof of insurance cover, this is proof that the applicant can qualify for the life insurance cover applied for. The insurance company reviews the application, medical records and other reports to determine insurance during the insurance process.
Insurable interest – Insurable interest exists when a person can prove that another person's death would affect them financially. Insurable interest is required when a person applies to buy life insurance from someone else.
Insured – The insured is the person whose life is covered by life insurance. If the insured dies while the life insurance is inforce (active), a death benefit is paid to the beneficiaries.
Length of coverage – The coverage period is how long an insured has life insurance. Permanent life insurance has a lifetime coverage, while life insurance only applies to a temporary period.
Level premiums – Level or fixed premiums means that the price remains unchanged during the life of the insurance.  Substantially incorrect presentation – Substantially incorrect statement is a factually incorrect statement, whether intentional or not, in a life insurance application. If significant petitions are discovered during the competition period after a death grant has been made, the insurance company has the right to refuse payment.
Medical Information Bureau (MIB) – The Medical Information Bureau (MIB) is a secure computer database that provides insurance companies with information on previously significant medical or non-medical history of life insurance applicants. Member companies report to the MIB, through a coding system, all significant medical or non-medical conditions of an applicant. By exchanging such information, MIB helps to detect and deter insurance fraud.
Death risk – Death risk is the probability of death. Insurance companies estimate an applicant's risk of death based on their individual risk factors. Mountaineering without equipment is an example of an activity that increases a person's risk of death.
Payer – The payer is the person who pays the premiums for a life insurance to keep it informed. The payer is often the insurance owner, but not always.
Insurance owner – The insurance owner is the one who has control over a life insurance. The policyholder can also be the same person as the payer, insured or beneficiary.
Quote – A quote is an estimate of what it can cost to buy a life insurance policy. A full evaluation of an applicant can lead to the final interest rate being higher or lower than the original quote.
Rider -A rider is an optional supplement that you can include in your life insurance that provides extra benefits. Riders often cost extra but some are available free of charge.
Risk Class – A risk class is a category a life insurance company assigns to an applicant based on their health and lifestyle factors. These risk classes group people with similar risks together. The risk class ultimately determines the cost of the policy.
Risk factor – Risk factors are unique to individuals. Risk factors help life insurance guarantees to determine the risk of death of a proposed insured. Risk factors are weighed differently and affect how much you pay for life insurance. Risk factors can be categorized as a health or lifestyle factor.
Substandard risk – When a proposed insured by the life insurance company is considered high risk, he or she can be classified as substandard risk. Offers with substandard risks often include either table valuation of an applicant or adding a flat extra to the premium. A table rating requires a policyholder to pay a certain percentage in addition to the standard interest rate. A flat extra is an extra dollar amount per $ 1,000 policy cover that a policyholder may have to pay to mitigate extra risk taken by the carrier.
Underwriting – Subscription is the process of evaluating an applicant's risk to determine if he or she can be eligible for life insurance. This step also determines the applicant's risk class and how much the coverage will cost. This process is performed by the insurance company.
The terms explained today are some that you are likely to encounter whether you are buying a life insurance policy or a permanent life insurance policy. For more life insurance terms, check out our glossary and comprehensive glossary.
We are here to make the life insurance purchase process as easy as possible for you. After the application, your dedicated Quotacy agent will keep you updated as your application goes through the process. If you have any questions, your agent will be happy to provide answers.
Start the process today by getting a quote on life insurance. Run as many quotes as you want without even giving away any contact information. When you are ready to apply, the online application only takes a few minutes.
Do not wait. Life insurance is an important financial protection for your family.
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