Glossary

Quote Page Indicators. Click on each of the following links for a description of your Quote Page "Indicators," P+, Pf, and Rg.

Application
A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.

Beneficiary
The person who benefits from the terms of your life insurance policy. A spouse, parent, offspring or grandchild is generally considered to be a preferred beneficiary. A policy owner may appoint someone to act as trustee for a minor in the designation of a beneficiary.

Binder
A temporary or preliminary agreement which provides coverage until a policy can be written or delivered.

Contingent Beneficiary
A person designated to receive the death benefit of a life insurance policy if the primary beneficiary dies before the life insured. This designation is of significant consequence when spouses make each other beneficiary of their respective insurance policy and they both subsequently die in the same accident, or other occurrence. In such an instance, death benefits would typically go to each other's estate. If minor children are potential survivors, then a trustee contingent beneficiary should be named.

Contingent Owner
This is the person designated to become the new owner of a life insurance policy if the original owner dies before the life insured.
The following definitions are credited to moneyminded.com, a Hearst Communications, Inc. publication and women.com Web site.

Face Amount
The dollar amount in a life insurance policy to be paid to the beneficiary when the insured dies. It does not include other amounts that may be paid from insurance purchased with dividends or any policy riders.

Grace Period
A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

Inception Date
The date on which a policy begins.

Insured
The policyholder - the person(s) protected in case of a loss or claim.

Insurer
The insurance company.

P+ - indicates a rate for an individual in very preferred (preferred plus) health. A company offering a P+ premium also offers a preferred (Pf) and a regular (Rg) health premium. Pf premiums are less difficult to qualify for. Rg premiums are much less difficult to qualify for.

Pf - indicates a rate for an individual in preferred health. A company offering a Pf premium also offers a regular (Rg) health premium. Rg premiums are less difficult to qualify for.

Policy
The written contract of insurance.

Policy Limit
The maximum amount a policy will pay, either overall or under a particular coverage.

Premium
The amount of money an insurance company charges for insurance coverage.

Quote
An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

Rg - indicates a rate for persons in normal health who do not have any medical or lifestyle condition that would increase their future risk of dying.

Example: A person who has moderately elevated blood pressure may not qualify for P+ or Pf premium rates, but might qualify for Rg. For instance, a private pilot may not qualify for P+ or Pf premiums, but might qualify for Rg rates. You will need to speak with an ITECH insurance Advisor for more details (just call 800-400-4832). Premiums quoted for smokers already take into account that the insured person smokes and therefore has a greater risk of death than a non-smoker. Premiums offered to smokers are already higher than those for non-smokers.

Types of Life Insurance (Source: Moneyminder.com)

Term

So called because it covers policyholders for a fixed span of time, term is usually the cheapest of all insurance products - at least for policyholders ranging in age from their 20's to their early 40's. Term is often cheaper even for healthy people in their 50's. There are two types of premiums: level term and annual renewable. Level-term premiums remain constant throughout the life of the policy, while premiums for annual renewable increase as you age. Ordinarily, level premiums are higher than renewable premiums in the early years of the policy and lower in the later years.
There are three things you can do when your term policy is up: Drop it, renew it or convert it to a permanent insurance product -- at a higher premium, of course. Some policies are guaranteed renewable -- that is, you do not need to submit to another physical examination to renew your policy when the term is expired. Almost all have a conversion feature that allows you to convert the policy to a permanent product later without having to submit to a medical exam. That's a good choice if you're in poor health.

Whole

Whole life combines a death benefit with a savings component. It's often appropriate for people over 50 who need insurance and find themselves priced out of the term market. It's also good for younger people with a family history of early-onset cancer or heart disease. Even then, whole life is hardly cheap.

A whole-life policy has two elements: the mortality charge, which is the part of your premium that pays for the insurance coverage, and a reserve, which is the savings component that earns interest. As you age, the portion that goes into the reserve decreases while the portion that pays for the mortality charge increases. In addition to interest, many companies credit the reserve with an annual dividend, depending on the insurer's loss experience and investment performance. This dividend can be sizable.

The cash surrender value (which is also called the cash value) is what you'd get if you cashed in your policy. If you decide to give up your policy, your cash surrender value can be paid in cash or paid-up insurance. There are several problems with using whole life as a savings vehicle, however. One is that the policy's advertised rate of return, as disclosed in a set of hypothetical numbers called the policy illustration, can have little or no relation to reality. In fact, the policy's returns will fluctuate with the markets -- and will usually trail returns available from other investments, such as equity mutual funds. Another problem is that whole is extremely expensive, and if you're on a limited budget, you may not be able to afford all the insurance coverage you actually need.

Wealthy people sometimes use whole life policies as an estate-planning vehicle. They can set up an insurance trust, which applies the proceeds of the policy to their estate taxes when they die. That can save their heirs the considerable expense of settling the estate with Uncle Sam.

Universal

Universal, like whole, combines insurance with savings. The savings component, called an accumulation fund, earns interest monthly and is used to pay the mortality charge. The oft-repeated sales pitch for universal is that premiums are flexible -- as long as you pay enough to maintain the mortality charge, you can skip adding to the accumulation fund if money is tight. And if you contribute enough to the accumulation fund in the policy's early years, it can throw off enough income to pay your premium in later years.

But there are significant drawbacks to universal policies. If you skimp on premiums in the policy's early years, you can be socked for higher charges later on, when you expected to be paying little or nothing. The alternative is to drop the policy and withdraw the savings you may have built up. If you drop the policy, you may have to pay a surrender charge.

Variable

Variable-life insurance combines a mortality charge with a savings vehicle that you choose from among a number of alternatives offered by your insurer. The savings vehicle is usually one of several investment portfolios that are structured like mutual funds. On average, most companies offer 10 different portfolios, including stock, bond and money-market funds. The insurers often manage these funds themselves, collecting fees for administering the insurance and managing the portfolios.

There are two basic types of variable life. One demands a fixed premium payment. The other, variable-universal life, has a flexible premium like universal life. Remember, though, that variable returns can fluctuate along with the financial markets. If the stock market takes a hefty dive, you may find the cash-value portion of your policy in the tank. Variable life is not appropriate for people who are on a tight budget or are likely to need to tap their savings on short notice. Many variable buyers would be better off buying term and making a separate investment in a mutual fund.