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Glossary
Beneficiary: The person or legal entity the owner of an insurance policy names to receive the policy benefit if the event insured against occurs.
Cash Value: The amount, before adjustments for factors such as policy loans, that the owners of a permanent life insurance policy is entitled to receive if the policy does not remain in force until the insured’s death.
Convertible Term Insurance: A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance.
Death Benefit: The amount of money paid by an insurer to a beneficiary when a person insured by a life insurance policy dies.
Face Amount: The amount of the death benefit payable if the insured person dies while the policy is in force.
Level Premium Term Life Insurance: Premiums remain the same each year the contract is in force.
Paid-Up Insurance: An insurance policy that requires no further premium payments but continues to provide coverage.
Participating Policy: A type of insurance policy that allows owners to receive policy dividends.
Premiums: The price of an insurance policy.
Term Life Insurance: A form of life insurance that covers the insured person for a certain period of time, the “term”, that is specified in the policy. It pays a death benefit to a designated beneficiary only when the insured dies within that specified period, such as 1, 5, 10, 20 or 30 years. Term life policies are renewable but premiums increase with age.
Whole Life Insurance: The oldest kind of cash value life insurance that combines protection against premature death with a savings component. Premiums are fixed and guaranteed to remain level throughout the policy lifetime.
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The Beginnings of Insurance
The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.
The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses.*
*From Wikepedia, the free encyclopedia
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Service Center
Questions? Talk to an insurance professional by calling 1-800-638-8565 any weekday 9 a.m. to 7 p.m. Eastern time.
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