An add-on to a life insurance policy that pays out a portion of the death benefit while you are still alive if you are diagnosed with a terminal illness. An accelerated death benefit rider is paid out under specific circumstances — typically when death is imminent.
A policy add-on that pays out additional compensation — up to the full amount of the death benefit — if either the insured’s death is the result of an accident or he or she loses a limb because of an accident.
Unless the insured individual has a high-risk job or avocation, it’s usually not worth the extra cost, as the accidental death and dismemberment rider is rarely paid out by insurance carriers because of restrictions on the rider.
Also called a mortality table, an actuarial table is used by underwriters to determine the probability that a person will die at each age. The probability of death determines how risky it is to insure someone and determines the cost of life insurance premiums.
The tendency of those with higher risk lifestyles or dangerous professions to obtain life insurance more than those who are lower risk. Insurers usually try to reduce their risk in insuring high-risk individuals by having rigid underwriting guidelines in place.
A level term life policy that lasts for one year. Also called yearly renewable term, it guarantees coverage for one year, and can be renewed annually at a higher premium or converted to a permanent life insurance policy. Usually, this is purchased as a supplement to existing insurance for temporary needs.
If an underwriter decides it’s necessary to take a closer look at your health, either because of something you disclosed on the application or because of the results of your paramedical exam, then you will need to submit a written summary of your medical history from your doctor or hospital. This document is called an APS, or “attending physician statement.”
An avocation is a hobby or minor occupation, like skydiving, scuba diving, or snowboarding.
Certain avocations are considered a higher risk and may result in higher rates when applying for life insurance. How much more you spend on life insurance is typically determined by how often you participate in the activity or how risky it is.