Term Life Insurance Glossary
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Face Amount
In a term life insurance policy in which the benefit is not variable, the amount stated as payable at the death of the insured. It is generally shown on the first page of the policy. Also called the face value.
See also basic death benefit, death benefit, and policy proceeds.
Face Page
The first page of an insurance policy. The face page normally includes the insured’s name and age, the name of the policyowner (if different from the insured’s name), the amount of premiums, the policy number, the date on which the policy was issued, and the signatures of the insurance company’s president and secretary.
Family Benefit
A life insurance policy rider that provides term life insurance coverage on the insured’s spouse and children.
Family Insurance Policy
A whole life insurance policy that provides term life insurance coverage on the insured’s spouse and children.
Financial Settlement
A lump sum payment by an insurer to a disabled insured that extinguishes the insurer’s responsibility under the disability contract.
Also known as a buy-out or commutation.
First Beneficiary
See primary benficiary.
First-to-Die Life Insurance
See joint whole life insurance.
Fixed Amount Option
A life insurance settlement option under which the insurer uses the policy proceeds plus interest to pay the beneficiary a sum of money in a series of equal installments for as long as the proceeds plus interest last.
Also called the fixed payment option.
Fixed Period Option
A term life insurance settlement option under which the insurer pays the beneficiary the policy proceeds plus interest in a series of equal installments for a specified length of time.
Flat Amount Formula
A method of determining the retirement benefit for participants in a defined benefit pension plan. A flat amount formula provides the same periodic (e.g., monthly, annual) benefit amount, for example $500 per month, to each retiree.
Flat Extra Premium Method
A method for rating substandard risks used when the extra risk is considered to be constant. The underwriter assesses a specific extra premium for each $l,000 of insurance.
Contrast with extra-percentage tables method.
Flexible Benefit Plan
See cafeteria plan.
Fraudulent Claim
A type of claim that occurs when a claimant intentionally uses false information in an attempt to collect policy proceeds.
Fraudulent Misrepresentation
According to common law, a false statement that meets the following three criteria: (1) the party that makes the statement is aware that it is not true or disregards whether it is true; (2) the party that makes the statement does so to induce another party to enter into a contract; (3) the other party does enter into a contract as a result of the statement and suffers a loss because of the contract.
Free Examination Period
The period of time after delivery of a term life insurance policy during which the policyowner may review the policy and return it to the company for a full refund of the initial premium. Full coverage is in force during this period. Also called a ten-day free look.
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