If your company offers group life benefits, you may wonder what the various terminology means — after all, it’s a bit different than health and dental insurance. We’re here to help! Here are some common terms you may run across when reviewing your life policy and what they mean.
Group life insurance
A type of life insurance that applies to a group of people, usually companies. Because it covers a group of people and the risk is spread out, it’s typically more affordable than an individual plan. Employers often provide base life insurance coverage to their employees at little to no cost.
Term life insurance
A life insurance policy that’s effective for a certain time period. If the policyholder passes away during this period, their beneficiary will receive a death benefit payment.
Primary Beneficiary
The person or people, often a spouse, who will receive the life insurance payout if the policyowner passes away.
Contingent beneficiary
The person or people, often children, who will receive the life insurance payout if the primary beneficiary has passed away.
Death benefit
The money paid to your beneficiary if you pass away.
Premium
You’re probably familiar with this one if you have a health, dental, or vision plan. A premium is the amount you’re required to pay your benefits company for life benefits, usually on a monthly basis. Your employer may cover some or all of this cost.
Riders
Extra benefits that can be added on to your policy (e.g., accidental death and dismemberment or waiver of premium).
Accelerated death benefit
A benefit that can be attached to life insurance policies that will pay out benefits early if the policyholder becomes terminally ill.
Accidental death and dismemberment
An additional benefit (rider) that helps employees pay for costs incurred from dismemberment (e.g., loss of a limb or bodily function such as eyesight) or death due to an accident.
Waiver of premium
A rider that states you do not have to pay the life insurance premium if you become seriously ill or disabled and cannot work.
Conversion option
An option that allows employees to convert their group life policy to a whole life policy within a certain time period after their group life plan is terminated.
