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The consumer's dictionary of terms is different today than it was 25 years ago. "Mutual" is a term infrequently heard; "life settlements" and their cousin "viaticals" are becoming both popular and controversial. The word "premium" has new meaning-for both agents and consumers. "Risk shifting" is just as likely to mean a shift to the policy owner as a shift away. So that this can be useful to the financial advisor or consumer, the following are a few key terms and their definitions.

•           Term life insurance: Life insurance policies sold for a specific duration. Premiums are generally guaranteed for that duration and then are subject to market pricing to renew beyond the original period of time.

•           Permanent life insurance: Policies sold for lifetime needs. Policies may have specified premiums, wherein the insurer guarantees the sufficiency of the policy, or indeterminate premiums, which require policy owners to manage the economics and the risk of maintaining the policy throughout the insured's lifetime.

•           Level premium: Generally refers to the initial period of a term life policy in which the premiums are both guaranteed and constant.

•           Indeterminate premium: A specific characteristic of Universal and Variable Universal life insurance policies in which the premium is estimated but not guaranteed. It is the policy owner's responsibility to manage policy payments to ensure the sufficiency of the policy.

•           Funding premium: The appropriate term to describe premiums for policies that are designed without fixed premiums. By adopting the modifier "funding;' policyholders won't fall into the understandable trap of believing that the premium quoted for Universal Life conveys the same assurance it won't change as that of its Whole Life cousin.

•           Cash value: The reserve created in permanent life insurance from the premium overpayment in early years of the amount the insurer needs to cover its death benefit liability. This reserve is important in later years when the annual cost of the liability is significantly greater than the premium. Indeterminate premium policies lapsed in the first 10-15 years may have a surrender charge, reducing the net cash value.

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