Life Insurance Dictionary
- CLU. See Chartered Life Underwriter.
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- Cash Surrender Value. The amount of cash due an insured who surrenders Cash Value Life Insurance. Such surrender, with consequent termination of all insurance benefits, is sometimes called "cashing out" or "cashing in" a policy. See also Nonforfeiture Values.
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- Chartered Life Underwriter (CLU). A designation granted by the American College of Life Underwriters upon successful completion of a series of examinations.
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- Common Accident. An accident in which two or more persons are injured.
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- Common Disaster. A situation in which the insured and the beneficiary appear to die simultaneously with no clear evidence of who died first.
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- Common Disaster Clause. A clause sometimes added to a Life Insurance policy that provides a means for the insurer to distribute the proceeds of the policy in the event of a common disaster.
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- Conditional Binding Receipt. This is the more exact terminology for what is often called a binding receipt. It provides that if a premium accompanies an application, the coverage will be in force from the date of application or medical examination, if any, whichever is later, provided the insurer would have issued the coverage on the basis of the facts revealed on the application, medical examination and other usual sources of underwriting information. A Life and Health Insurance policy without a conditional binding receipt is not effective until it is delivered to the insured and the premium is paid.
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- Contestable Clause. A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested.
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- Contingent Beneficiary. A person(s) named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.
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- Conversion Privilege. This is the right of an individual to convert a Group Health or Life policy to an individual policy should the individual cease to be a member of the group. Usually this can be done without a physical examination.
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- Convertible. A policy that may be changed to another form by contractual provision and without evidence of insurability. Most Term policies are convertible into permanent insurance.
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- Corridor.
- In Universal Life insurance, it is necessary to maintain a certain level of pure insurance protection in excess of the accumulation value in order to qualify as life insurance for income tax purposes. This portion of the pure insurance protection is called a "corridor."
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- Cost of Insurance. The amount a policy owner pays to an insurer, minus what he or she gets back from the insurer. This expression is used when determining the true cost of permanent forms of Life Insurance to a policy owner. It considers the fact that premiums are paid in but also that an actual cash value is being built up, which is the portion that the insured will get back from the insurance.
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- Cost-of-Living Rider. Designed to adjust policy benefits in relation to the change in the economic climate. The majority of such riders are tied to changes in the Consumer Price Index (CPI). The amount of insurance may be automatically increased, without evidence of insurability, at predetermined periods for a maximum amount.
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- Credit Life Insurance. A group life insurance contract whereby a creditor is protected in the event of death of the insured prior to the indebtedness being paid in full.
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- Cross Purchase. A form of Business Insurance in which each party to a mutual agreement (usually to buy out a disabled or deceased co-owner) insures each of the other parties.
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- Crude Death (or Mortality) Rate. The ratio of total deaths to total population during any given period. See also Mortality Rate.
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- Death Benefit. The amount stated in a policy contract as payable upon the death of the person whose life is being insured.
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- Decreasing Term. A form of Life Insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term.
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- Delayed Payment Clause. In Life Insurance, a clause deferring payment to the beneficiary for a specified period after the death of the insured with proceeds to be paid to contingent beneficiaries or the estate if the primary beneficiary does not survive the delay. It is used as one method of handling common-disaster situations, such as the death of the insured and the death of the primary beneficiary occurring in the same accident. The clause usually states that the beneficiary has to survive the death of the insured by a certain period of time in order to collect.
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- Delivery. The actual placing of a Life Insurance policy in the hands of an insured.
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- Disability Benefit. The benefit payable under a Disability Income policy or a provision of some other policy, such as a Life Insurance contract.
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- Dividend Accumulation. One of the options in a Life Insurance policy which allows the policyholder to leave any premium dividends with the insurer to accumulate at compound interest.
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- Dividend Additions. An option whereby the insured can leave dividends with the insurer, and each dividend is used to buy a single premium life insurance policy for whatever amount it will purchase. Also called Paid-Up Additions.
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- Dividend Option. Alternative ways in which insureds under participating Life Insurance policies may elect to receive their policyholder dividends.
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- Double Indemnity. Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances. For example, a Life Insurance contract may provide for twice the basic benefit if death is due to accident.
