Term Life Insurance Glossary

D

Death Benefit

The amount of money paid or due to be paid when a person insured under a term life insurance policy dies. This amount does not include adjustments for outstanding policy loans, dividends, paid-up additions, or late premium payments.

See also basic death benefit and policy proceeds.

Death Claim

A request for payment under the terms of a life insurance policy.

Decreasing Term Life Insurance

A type of term life insurance in which the amount of coverage decreases during the term of coverage.

Deductible

A flat amount of covered medical expenses that an insured must incur before the insurer will make any benefit payments under a medical expense policy.

Also called the deductible amount or initial deductible.

Deferred Premiums

Premiums that are due after an insurer’s Annual Statement date but before the next policy anniversary.

Demutualization

The process of converting a mutual insurance company to a stock insurance company.

Dependent Life Insurance

Group life insurance made available to group members, usually on an optional and contributory basis, to cover the spouse, children, or other dependents of the group member. It is usually sold in small amounts which are intended to pay funeral expenses.

Deposit Term Life Insurance

A type of level term life insurance that requires a substantially larger premium payment in the first year than the amount of level annual premiums payable in subsequent years.

Direct Insurer

See ceding company.

Disability

Inability to work due to an injury or sickness.

See also partial disability, presumptive disability, and total disability.

Disability Benefits

Benefits that are payable periodically while an insured continues to be disabled. “Being disabled” is generally defined in terms of inability to work.

See also total disability.

Disability Buy-Out Insurance

Insurance that provides cash funds to a business or professional partnership so that the business interests of a totally disabled partner or stockholder may be purchased if the disability is long-term or permanent.

Disability Income benefit

A supplementary life insurance policy benefit that provides a monthly income benefit to a policyowner-insured who becomes totally disabled.

Disability Income Insurance

A type of health insurance designed to compensate insured people for a portion of the income they lose because of a disabling injury or illness. Generally, benefits for disability income insurance are provided for the disabled person in the form of monthly payments. Sometimes called loss of time insurance.

See also long-term disability income insurance and short-term disability income insurance.

Dividend

(1) A refund of excess premium paid to the owner of an individual participating term life insurance policy. Such a dividend is paid out of an insurer’s divisible surplus. Also called a policy dividend or a policyowner dividend.

(2) The portion of a group insurance premium that is returned to a group policyholder whose claims experience is better than had been expected when the premium was calculated. Also called experience rating refund, experience refund, and retroactive rate reduction.

(3) A periodic payment paid by a business to a stockholder. A dividend paid in cash is called a cash dividend. A dividend paid in the form of additional shares of stock is called a stock dividend.

Dividend Accumulations

Amounts that result when a policyowner decides to leave policy dividends on deposit with an insurer.

Dividend Options

Several alternatives that participating policyowners can choose from to indicate the manner in which they want to receive their share of the insurance company’s divisible surplus.

See additional term insurance dividend option, automatic dividend option, cash payment dividend option, dividend accumulations, and paid-up additions.

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