Accidental Death Benefit - A benefit that is paid in addition to the basic face amount if an insured dies as a result of an accident. This is also known as, "Double Indemnity."

Actuary - An actuary is a professional mathematician in the insurance industry. An Actuary is responsible for calculating premiums, reserves and dividends for participating policies; developing products and in many insurance institutions overseeing the general financial function.

Annual Policy Statement - This statement is generated and sent out to policyowners at each policy anniversary. This statement contains information on policy performance since the last anniversary and covers charges, interest credited, dividends if any and for Variable Universal Life policies the number of units in each of the sub-accounts.

APS - Also known as an Attending Physician's statement, an APS is a form filled out by a medical doctor who has treated an insured or a proposed insured for an illness or injury. The form provides the insurance company with information relevant to underwriting the risk or settling a claim.

Assignee - The person (including corporation, partnership, or other organization) to whom a right or rights under a policy are transferred by means of an assignment.

Assignment - The legal transfer of ownership rights under a life insurance policy to another person or business.

Assignor -A person who transfers his or her rights under an insurance policy to another person by means of an assignment.

Automatic Premium Loan (APL) - This is a non-forfeiture feature that is available for whole life insurance policies. If for some reason the policyowner does not make the planned premium payment, it will be taken as a loan against the policy and the policy will remain in force.

Beneficiary - This is the person to whom the Death Benefits will be paid.

Cash Surrender Value (Cash Value) - This is the value of a policy that will be paid the policyowner when they surrender the policy to the company thus terminating coverage.

Collateral Assignment - This is an assignment of a policy to a creditor as security for a debt. The creditor does not completely own the policy, it is merely assigned as collateral. The creditor is entitled to be reimbursed out of policy proceeds for the amount owing to him in the event of a death claim or surrender. If it is a death claim, the beneficiary will receive any excess of policy proceeds over the amount due the creditor in the event of the insured's death.

Contestable Period - This is the period when a life insurer may exercise its right to contest the life insurance contract for reasons of misrepresentation or concealment. The exact length of the period is specified in the contract under the incontestable clause.

Convertible Term Insurance - This type of term insurance contract allows the policyowner to convert their policy to a whole life insurance contract.

Death Benefit (Face Amount) - This is the dollar amount that will be paid out to a beneficiary when the insured under the policy dies. This amount does not include various adjustments such as late premiums, outstanding policy loans, different death benefit options, collateral assignment(s), paid-up additions or dividends.

Death Claim - This is the process of the Beneficiary establishing rights to the Death Benefit. A proof of death of the life insured form is filed with the insurer along with an original certified death certificate.

Demutualization - This is the process of converting a corporation from being a mutual company into a stock company. A mutual company is owned by its policyholders in contrast to a stock company that is owned by its shareholders. Manulife Financial recently completed demutualization in September 1999.

Dividends - (1) Are a refund of excess premiums paid on participating whole life policies. Dividends are paid from the insurance company's divisible surplus. (2) When a business makes a periodic payment to its shareholders.

Dividend Options - These are the different ways that policyholders can elect to use their dividends. This is usually elected at the beginning of the contract however it can usually be changed during the contract.

Dollar Cost Averaging - This is a strategy used by investors to make regular investments of fixed dollar amounts regardless of unit price. The investment will be made when the unit price is low, moderate and high. The investor purchases more units when the price is low and fewer units when the price is high, thus lowering the average cost per unit over time.

Estate Planning - An insurance program designed not only to provide funds for client's dependents upon the death of the insured, but also to conserve, as much as possible, the personal assets that the client wants to bequeath to heirs. Estate planning usually involves accountants, lawyers, and the trust officers of banks, as well as insurance agents.

Extended Term Insurance - Is a nonforfeiture option that uses the cash value of an ordinary life policy as a single premium to purchase term life insurance in the amount of the original policy. The length of the term policy depends on the size of the cash value and the attained age of the insured.

Face Amount - In a life insurance policy where the death benefit is not variable, the amount stated as payable when the insured dies.

General Account - The account that holds all of an insurer's assets other than those in the separate accounts. The general account holds the contributions paid for participating policies.

Grace Period - Is a period of time (usually 31 days) after a premium is due and unpaid during which the policy, including all rider will remain in force. If a premium is paid during this period the payment will be considered to be on time and no interest will be charged.

Irrevocable Trust - A trust that cannot be altered by the creator.

Insured - The person whose life is insured.

Interpolated Terminal Reserve - The reserve on any life insuance policy between anniversary date, regardless of whether further premium payments are due. It is determined by a pro rata adjustment upward (or downward in the case of certain term policies of long duration) between the previous terminal reserve and the next terminal reserve.

Inter-vivos Trust - This is a trust that is established by people still alive.

Intestate - An insured is said to have died intestate when they die without having drawn a will. Under this circumstance the State will follow State law in determining the distribution of the estate of the deceased.

Lapse - Is the termination of an insurance policy because a renewal premium is not paid before the end of the grace period.

Level Premiums - Is a premium that remains unchanged while the policy is in force.

Maturity Date - This is the date when an endowment life insurance policy matures. The face amount will be paid out if the insured is still alive at that time.

Mode of Premium Payment - The frequency with which premiums are paid. Examples are annually, semi-annually, quarterly, and monthly.

Mortality Charge - This is the cost of insurance protection element of a universal life and variable universal life policy. This charge is based on the net amount at risk, the insured's current age and the insured's risk classification when the policy was purchased.

Net Amount at Risk - In life insurance, it is the difference between the policy face amount and the cash value.

Nonforfeiture features - The various ways in which a policyowner may apply the cash value of a life insurance policy if the policy lapses. There are a number of options that are available and usually selected at issue such as automatic premium loan (APL), cash surrender value option, extended term insurance option, and reduced paid-up option.

Non-Participating Policy - This is a policy that does not earn dividends and is usually considered an investment vehicle.

Non-smoker Rates - These rates are offered to people who have not used tobacco products within a specified period, usually one-year. These people usually pay lower premiums than people who use tobacco products do.

Owner - The person or people who own an individual insurance policy. The policyowner is not necessarily the person whose life is insured.

Paid-Up Additions (PUA) - Additional insurance purchased by policy dividends. The amount of insurance purchased depends upon the attained age of the insured at the time when the dividends purchase the additions.

Partial Withdrawal - This is also known as a partial surrender. It is money removed from the cash value of the policy that may be subject to pro-rata surrender charges. This money cannot be paid back. A partial withdrawal may at times also reduce the amount of the policy's death benefit.

Participating Policy - A policy that earns dividends.

Payee - The person or party who is to receive the proceeds of a life insurance policy.

Payor - The person or other party, other than the owner, who is paying the premiums on the policy.

Policy Anniversary - This is the anniversary date on which the policy was issued.

Policy Loan - A loan that is taken against a life insurance policy. The policy is secured by the net cash value of the policy. A policy loan can never be higher the net cash value. If the insured dies while there is an outstanding loan, then the loan will be subtracted from the death benefit payable.

Policy Provisions - The statements of an insurance policy, which describe the operation of an insurance policy.

Pre-Authorized Checking - A method of paying premiums under which the policyowner authorizes the insurance company to generate checks against the policyowner's account. The insurer then sends these checks directly to the policyowner's bank for payment when premiums are due.

Preferred Risk - This is an underwriting class. People is this risk class have a good physical condition, occupation, mode of living, and other characteristics that indicate a prospect for longevity which is superior to that of the average longevity of unimpaired lives of the same age.

Premium - A payment by a customer to a insurance company for coverage.

Premium Allocation - A premium allocation tells the insurer how to apply each premium payment among the various sub-accounts in a variable contract as chosen by the policyowner.

Premium Tax - Tax levied on an insurer's premium income by the government.

Prospectus - This is a legal document that must be given to every investor that purchases a variable contract. The information in the prospectus outlines investment objectives and policies for the sub-accounts as well as the charges.

Qualified Plan - A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. Such plans receive tax advantages.

Rated Policy - A policy issued on an individual that is classified as a substandard risk. A rated policy has a premium rate is higher than the rate for a standard policy or the policy is issued with special limitations or exclusions or both.

Reduced Paid-Up Insurance - A non-forfeiture option under which the net cash value of a life insurance policy is used as a net single premium to purchase a smaller amount of fully paid insurance of the same kind and for the same period as the policy being surrendered.

Registered Representative - This is an individual who is licensed to sell securities to the public. An insurance agent who sells Variable products is required to pass all of the required examinations given by the National Association of Securities Dealers (NASD).

Reinstatement - The process by which the insurance company puts back into force a policy that has been terminated for nonpayment of premiums or a life policy that has been continued as extended term or reduced paid-up insurance.

Reinsurance - Companies place a limit on the amount of insurance they will risk on a single life and, therefore, when issuing policies for larger amounts than their own limit, they reinsure the excess over that limit with some other company.

Renewable Term Insurance - Is a type of term insurance which includes a renewal provision that gives the policyowner the right to renew the insurance coverage at the end of the specified term without submitting evidence of insurability.

Rider - An amendment to an insurance policy that becomes part of the contract and expands or limits the benefits payable. A rider is also known as an endorsement.

Risk Class - A group of insureds that present a substantially similar risk to the insurance company. The most common risk classes used by insurance companies are standard, preferred, nonsmoker/smoker, substandard and uninsurable.

Sales Illustration - A graphic representation used by a sales representative to help explain an insurance product to a potential customer. Sales illustrations often consist of numeric charts describing the customer's goals and the cost elements and mechanics of the insurance product being proposed. Sometimes simply called an illustration.

Securities and Exchange Commission (SEC) - Is a federal agency that regulates the securities markets. Congress created the commission in 1934 to regulate the securities market and protect investors. The SEC has 5 commissioners that are appointed by the President of the United States and approved by the Senate. The commissioners each serve a 5-year term.

Standard Risk - A person who according to a company's underwriting standards is entitled to insurance protection without extra rating or special restrictions.

Stock - An instrument that signifies an ownership position in a corporation.

Stock Life Insurance Company - One that is owned and controlled by a group of stockholders whose investment in the company provides the safety margin necessary in the issuance of guaranteed fixed premium, non-participating policies. The stockholders share in the profits and losses of the company. Some stock companies also issue participating policies.

Sub-Account - Is also known as a separate account. These funds are kept separated from the insurer's general account and are invested in a portfolio of securities the match the investor's objectives.

Substandard Risk - A person who is considered an impaired insurance risk because of his physical condition, family or personal history of disease, occupation, or dangerous habits.

Suicide Clause - Most policies provide that if the insured commits suicide within a specified period, usually two years, after date of issue, the company's liability will be limited to a return of the premiums paid. This is also called a suicide exclusion provision.

Surrender Charge - This is an expense charge imposed when a policyowner terminates their Universal Life or Variable Universal Life contract within a specific time called the surrender charge period. A policy's surrender charge period can be found in the terms of the contract.

Term Insurance - Insurance protection during a limited number of years but expiring without value if the insured survives the stated period. The protection period may be one or more years but ordinarily is five to twenty years since such periods usually cover needs for temporary protection.

Testate - Having left a will.

Trust - An arrangement in which a person or corporation (trustee) for the benefit of others (beneficiary) holds property. The grantor (person who transfers the property to the trustee) gives legal title to the trustee, subject to the terms set forth in a trust agreement. Beneficiaries have equitable title to the trust property.

Trustee - Is the person to whom a trustor transfers property. The trustee is obligated to safeguard, manage, and use the property in accordance with the terms and conditions of the trust.

Trustor - The individual who puts his/her thoughts in writing concerning the terms of the trust and the process of transferring the property to the trustee.

Underwriter - (1) The person who assesses and classifies the potential degree of risk that a proposed insured represents. (2) The person or organization that guarantees that money will be available to pay for losses that are insured against. In this sense, the insurance company is the underwriter.

Underwriting - (1) The process of assessing and classifying the potential degree of risk that a proposed insured represents. Also called selection of risks. (2) Providing guarantees that money will be available to pay for losses that are insured against.

Universal Life Insurance - This is permanent life insurance that has flexible premiums, face amounts and death benefit options. This type of insurance builds value from which insurance related charges are deducted.

Variable Universal Life Insurance - A form of whole life insurance that combines the premium and death benefit flexibility of Universal Life insurance with the investment flexibility and risk of Variable Life insurance.

War Clause -A provision in an insurance contract that relieves or limits the insurer of liability to pay the death benefit if the insured dies in connection with war or military service.

Waiver of Premium - A provision under which payment of premiums or insurance charges are waived (that is, not required) if the policyowner becomes totally and permanently disabled.

Will - A written document stipulating the disposition of one's property, to take effect upon his death.

Whole Life Insurance - The type of policy, which continues during the whole of the insured's life and provides for the payment of amount insured at his death, or at age 100.

Yearly Renewable Term (YRT) - Term life insurance that gives the policyowner the right to continue the coverage for another year at the end of each policy year. This renewal right continues for a specified number of years or until the insured reaches the age specified in the contract. Also called annually renewable term (ART) insurance.