We are dedicated to helping you find solutions that are right for you and the ones that you love. We want to help you understand the terms used in your policy so that you feel secure about your insurance needs and decisions. Please refer to this section for some commonly-used terms.
ACCELERATED DEATH BENEFIT (ADB)
This option provides accelerated death benefits for the terminally ill who have been diagnosed by a licensed physician to have 12 months or less to live.
ACCIDENT INDEMNITY RIDER
Death benefit coverage that pays an additional benefit equal to the basic death benefit of the policy if the insured's death is accidental. Must be applied for and requires an additional premium.
ACCUMULATION VALUE
A certain percentage of each premium is deducted as an expense charge, and the rest of your payment — the net premium — is deposited into your policy's accumulation value. Once a month, Transamerica takes out a monthly deduction from the accumulation value for the cost of providing insurance coverage for that month. Any requested partial surrenders are also deducted from the accumulation value. The balance that remains in the accumulation value earns interest according to the terms of your policy. Interest is credited based on the date premiums are received, so it’s important to pay your premiums on a timely basis. Some policies also provide special credits for the timely payment of required premiums.
ASSIGNEE
The entity who gains certain rights to an insurance policy under an absolute or collateral assignment.
ASSIGNMENT
Generally, a transfer of a property, or right therein, to a separate entity. In life insurance, it is the transfer of a policy's ownership rights to a third party. An assignment can usually occur via either an absolute assignment or a collateral assignment.
AUTO-PAY
Withdrawals that you authorize the Company to automatically and periodically deduct from your bank account to pay premiums.
BENEFICIARY
The person or party designated to receive life insurance policy proceeds. The beneficiary's interests are usually subject to the interest of a collateral assignee, if any. See also Contingent Beneficiary, Irrevocable Beneficiary, and Primary Beneficiary.
CASH VALUE
In a life insurance policy, cash value is the amount of money, before adjustment for factors such as policy loans, surrender charges, or late premiums, that the policy owner will receive if the policy owner cancels the coverage and surrenders the policy to the insurance company. Cash value is a feature of most types of permanent life insurance, such as universal life insurance.
COLLATERAL ASSIGNMENT
The pledge of a life insurance policy as security for the repayment of a loan, which provides the collateral assignee with rights that in many ways are superior to the rights of the policy owner and beneficiary. In the event of the death of the insured, proceeds are first paid to the collateral assignee, with the remainder, if any, then going to the policy's beneficiary.
CONTINGENT BENEFICIARY
The person entitled to life insurance benefits if the primary beneficiary predeceases the insured.
CONVERSION PRIVILEGE
The right to change insurance coverage in certain prescribed situations from one type of policy to another; for example, the right to change from an individual term insurance policy to a universal life insurance policy.
CONVERSION RIDER - (Available on Term Life)
Guarantees the right to convert (see conversion privilege) the policy. Must be applied for and requires an additional premium.
CONVERTIBLE TERM INSURANCE
A type of term insurance that allows the policy owner to exchange the term insurance policy for a permanent life policy without providing new evidence of insurability. The premium rate is normally based on the age of the insured at the time of the conversion.
DEATH BENEFIT
The amount of money paid or due to be paid when a person insured under a life insurance policy dies. This amount is arrived at after the face amount of the policy is adjusted for outstanding policy loans, dividends, paid-up additions, or late premium payments.
DRAFT DATE
The pre-authorized checking withdrawals are set up to draft on a certain day. That day is often informally referred to as the draft date. It is not always the premium payment due date.
ENDOW
At the target year (usually age 100), policy's cash value is approximately equal to the policy's death benefit.
FACE AMOUNT
The amount of coverage purchased under a life insurance policy. The death benefit payable at the insured's death is the face amount, adjusted for any outstanding loans, dividends, or late payments.
FRAUDULENT CLAIM
Presentation of false information in an attempt to collect policy proceeds.
FULL POLICY SURRENDER PENALTY WAIVER ENDORSEMENT (HONEYMOON ENDORSEMENT)
The Honeymoon Endorsement waives surrender charges if a full surrender of a policy is made during the first five policy years. Normal surrender charges will apply to partial surrenders and face reductions in all policy years, and full surrenders in policy years six and later.
GRACE PERIOD
The length of time (usually 31 days for term life insurance and 61 days for universal life insurance) after a premium is due and unpaid during which the policy, including all riders, remains in force.
GRANTOR
The individual who transfers property. Commonly used to describe an individual who establishes and transfers property to a trust.
HONEYMOON ENDORSEMENT (FULL POLICY SURRENDER PENALTY WAIVER ENDORSEMENT)
The Honeymoon Endorsement waives surrender charges if a full surrender of a policy is made during the first five policy years. Normal surrender charges will apply to partial surrenders and face reductions in all policy years, and full surrenders in policy years six and later.
INSURED
The person whose life is insured by the policy. That person may or may not be the policy owner.
INSURER
The party to the insurance contract who promises to pay losses or benefits.
IRREVOCABLE BENEFICIARY
A life insurance policy beneficiary designation which prevents the beneficiary designation from being changed unless the owner first obtains the irrevocable beneficiary's written consent.
KEY PERSON INSURANCE
Life insurance purchased by a business on the life of a person (usually an employee) whose continued participation in the business is necessary to its success and whose death or disability would cause financial loss to the company.
LEVEL PREMIUMS
Premiums that are scheduled to remain the same each year for a specified duration. These may be guaranteed or non-guaranteed depending on the contract.
LIFE INSURANCE
Insurance that provides protection against the economic loss caused by the death of the person insured.
MINIMUM REQUIRED PREMIUM (MRP)
The minimum amount you need to pay each year during the required premium period specified in your policy. The MRP must be received by the Company by the policy anniversary each year. If it is not, the policy will enter a grace period. With certain limitations, you may pay future years' MRPs in advance of the due dates.
MISSTATEMENT OF AGE PROVISION
Life insurance policy wording that specifies the action the insurer will take if the insurer discovers that the insured's age was misstated in the application and the misstatement has resulted in an incorrect premium for the amount of insurance purchased. In an individual life insurance policy, this provision specifies that the policy's death benefit amount will be adjusted accordingly.
NONSMOKER RISK CLASS
An underwriting risk class that includes people who are standard risks and who have not smoked cigarettes or otherwise used tobacco for a specified period of time. People in the nonsmoker risk class pay lower premiums than an equivalent applicant who uses tobacco products.
PARAMEDICAL
A brief exam, consisting of a discussion of health history and usually collection of blood and urine specimens, that the insurer may require of applicants during the underwriting process. It is generally not as thorough as a full medical examination.
PARTIAL SURRENDER
Money removed from the contract or policy by the contract holder or policy owner that cannot be paid back.
PAYOR/PAYER
The person making premium payments on a policy.
PLANNED PERIODIC PREMIUMS (PPPs)
The premium amounts you intend to pay as shown on the original application for insurance or as subsequently communicated to us. We bill you for your PPP.
POLICY ANNIVERSARY
This is the same date each year as the intitial policy date.
POLICY
An insurance contract that contains the pertinent facts about the policy owner, the insurance coverage, the insured, and the insurer.
POLICY OWNER
The individual or an entity who owns an insurance policy, and who has all contractual rights, subject to any interests conveyed to a collateral assignee or an irrevocable beneficiary. The policy owner is not necessarily the same person as the insured or the payor.
PREMIUM
Payments by a customer to the insurance company for life insurance or annuity coverage. Depending on the type of coverage, premiums may be fixed or flexible.
PRIMARY BENEFICIARY
The party or parties who have primary rights to policy proceeds when the death benefits of an insurance policy become payable, subject to the interest of a collateral assignee, if any.
REINSTATEMENT
The process by which a life insurance company puts back in force a policy that had lapsed.
REINSURANCE
A transaction between two insurance companies in which one company purchases insurance from the other to cover part or all of the risks that the first company does not wish to retain in full.
RENEWAL PREMIUMS
Premiums payable after the initial premium.
RENEWAL PROVISION
An individual life insurance policy provision that gives the policy owner the right to continue the insurance coverage at the end of the specified term without submitting evidence of continued insurability.
REPLACEMENT
The act of terminating one (or more than one) insurance policy and purchasing a new one (or more than one) to take it's place.
REQUIRED PREMIUM PERIOD
The time period during which you need to make Minimum Required Premium (MRP) payments.
RIDER
A special policy provision or group of provisions which may be added to a policy to expand or limit the benefits otherwise payable. An additional premium charge may be required.
RISK CLASS
A group of insureds who present a substantially similar risk to the insurance company. Among the most common risk classes used by life insurance companies are standard, preferred, nonsmoker, smoker, substandard, and uninsurable.
SINGLE PREMIUM
Refers to the one-time payment required to cover the entire cost of a life insurance contract.
TERM INSURANCE
Life insurance which pays a benefit only if the insured dies during a specified period.
TRUST
Arrangement involving a grantor (the person who establishes the trust), a trustee (the person who the grantor trusts to hold the property for the beneficiary who may or may not be the grantor), and the beneficiary (the person or persons who will benefit from the trust).
TRUSTEE
The individual or institution with the responsibility of managing assets placed in a trust.
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
Universal life insurance is a permanent life insurance product in which the internal policy charges and interest crediting components are specifically broken out separately in the policy. A universal life insurance policy accumulates cash value at an interest crediting rate declared by the company. Within certain limits, the policy owner can choose the premium he or she wishes to pay and this affects the policy's cash value. Each month, a monthly deduction to cover the cost of the insurance protection provided by the policy is deducted from the policy cash value.
WAIVER OF PREMIUM RIDER (WP) - Available on Term Life
Waives the policy premium upon satisfactory proof that the insured is disabled (as defined in the policy). Must be applied for and requires an additional premium.
WAIVER PROVISION RIDER (WP) - Available on Universal Life
Waives the monthly deductions as well as the cumulative Minimum Required Premium (MRP) check during the MRP period upon satisfactory proof that the insured is disabled (as defined in the policy). Must be applied for and requires an additional charge.