Glossary of Insurance Related Terms

Backdating

Making the effective date of an insurance policy earlier than the date of the application so that the premium rate will be lower. State law usually limits back-dating to not more than six months.

Bank Loan Plan

See Financed Insurance. (LI)

Basic death benefit

The death benefit according to the terms of the original, basic contract of a life insurance policy. The basic death benefit does not include the benefit for any supplementary riders, such as an accidental death benefit (ADB) rider. For policies in which the death benefit remains constant, the basic death benefit is equivalent to the face amount.

Beneficiary

The person or party the owner of an insurance policy names to receive the policy benefit if the event insured against occurs.

Benefit

The amount of money paid when an insurance claim is approved.

Benefit period

The time during which periodic income benefits will be paid under a disability income insurance policy.

Benefits

The sum of money specified in a life insurance contract to be paid to the beneficiary when a loss occurs.

Benefits of Survivorship

Funds available to pay an annuitant who survives longer than statistically expected from premiums paid by annuitants who died before they had collected amounts equal to their contributions. (LI)

Binder

A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.

Binding premium receipt

A type of premium receipt that provides a potential insured with temporary insurance coverage from the time the applicant receives the receipt until the insurer declines the application or issues and delivers a policy.

Binding Receipt

A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the receipt.

Blackout Period

The period of time during which a surviving spouse no longer receives survivors benefits (after the youngest child is no longer eligible) and before he or she is eligible for retirement benefits. (LI)

Blended Product

A general term used to describe products structured with both Whole Life and Term components.

Broker

(1) A commissioned sales agent who is under contract to and sells the insurance products of more than one insurance company. (2) For a career agent, to submit insurance applications to companies other than the agent’s own company.

Bundled insurance product

An insurance product in which the mortality, investment, and expense factors used to calculate premium rates and cash values are not identified separately in the policy. Traditional whole life insurance is an example of a bundled insurance product.

Burial Insurance

A life insurance policy of minimal face amount intended to provide just enough insurance to cover the burial and funeral expenses.

Business

The face amount of Life insurance written. (LI)

Business insurance

Insurance that is intended to serve the insurance needs of a business rather than the needs of an individual.

Business Life Insurance

Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee.

Business-continuation insurance

An insurance plan that enables the owner(s) of a business to provide for the continued operation of the business if the owner or a key person dies.

Buy-Sell Agreement

An agreement made by the owners of a business to purchase the share of a disabled or deceased owner. The value of each owner's share of the business and the exact terms of the buying-and-selling process are established before death or the beginning of disability.

Buyer?s Guide

In the United States, a publication that many states require insurance companies to give to an applicant for life insurance. The Buyer’s Guide helps the applicant make an informed choice among policies.