Glossary of Insurance Terms

Annuities: Annuities are a way for you to plan for income needs in the future by depositing funds now and possibly continue to contribute to the account until a specific income level or goal is reached. There are basically, two types of annuities:

  • Immediate Annuity: An immediate annuity, sometimes called a single premium insurance annuity (SPIA), allows the client to make one contribution and begin to take distributions immediately from the account.
  • Differed Annuity: A differed annuity has two basic phases, an accumulation phase and a distribution phase. In an accumulation phase the hold will make contributions to the account over time as they build up a balance to support the second phase of distributions. In a differed annuity, interest can be calculated at a variable rate or a fixed rate. Both rates will be based on market conditions at the time of purchase, but the variable rate will fluctuate with the market.

Disability Insurance: Disability Insurance will replace a portion of your income if you become sick or disabled and no longer able to work at your current occupation.

Multi-Benefit Insurance: A single premium insurance product that provides protection and benefits for the following life events; home health care needs, nursing home care, adult day care, assisted living care or even hospice care. These products differ from traditional life insurance and long term care products because they offer 100% liquidity and full, original principle protections that one will never have less than what they originally put in to the product. Depending on the type of product used, there can even be tax-free withdrawals made for the above described life events. There is also a tax free death benefit with these products as well.

Long Term Care Insurance (LTC): Long term care insurance was developed to cover some of the care services that are not normally covered by traditional health insurance or Medicare. These services typically cover assistance with activities in normal daily living. The insurance can also cover in home care or a nursing home.

Accidental Death and Dismemberment Insurance (AD&D): Accidental death and dismemberment insurance will pay additional benefits if the cause of death is from a non-work related activity. A portion of the policy can be paid out if an appendage or sight is lost because of an accident.

Instant Insurance: Is a term life insurance product that has few qualification requirements and can typically be approved immediately.

Full Underwritten Term Life Insurance: Term life insurance is generally used as a low cost alternative to permanent life insurance. The cost of insurance is cost effective for a certain period of time. The two most popular choices are 10 and 20 year level term. After those times are over, the premiums increase dramatically making the cost for the insurance too expensive at which time most policies are cancelled. If the insured passes away while the policy is in force, the death benefit applied for will be paid to the insured's beneficiaries.

Term Life with Return of Premium: Like term life insurance this is a fixed premium for a fixed time period that is payable upon death. However, the premiums paid on this policy are returned at the expiration of the term if the death benefit has not been paid.

Permanent Life: Unlike term life insurance, permanent life insurance can provide a death benefit beyond a specific term. There are several options for a permanent life insurance policy:

  • Whole Life: The premiums remain constant and the policy builds cash value based on the dividends paid by the insurance company.
  • Limited Payment Whole Life: The premiums are paid for a specific time period or until specific age, but you are insured for the rest of your life.
  • Single Premium Whole Life: This policy is paid after one initial premium and protects you for life.
  • Modified Premium Whole Life: This policy provides cash value that can be accessed tax free for various events.
  • Universal Life Insurance: This policy lets you vary your premium and adjust the death benefit as your needs change.
  • Variable Universal Life Insurance: These policies have a portion of the premium invested in mutual funds that can be equity funds or bond funds. The cash value of the policy is subject to the market performance of the mutual funds in the policy, which are chosen by the insured based on their individual risk tolerance.

Disclosures:

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  • Insurance products:
    Not FDIC-insured Not insured by any federal government agency Not a deposit No bank guarantee
    Insurance services are provided by Commerce Insurance Services, Inc., an insurance agency, and subsidiary of Commerce Bank. Policies are not available in all states. Certain restrictions apply.