Insurance and annuity paperwork is full of terms that aren’t part of everyday conversation. Here’s a quick-reference glossary covering the ones that come up most often. Use Ctrl/Cmd+F to jump straight to a word.

Annuitant

The person whose life expectancy is used to calculate annuity payments, and whose life determines how long lifetime payments continue. Often the same person as the contract owner, but not always.

Beneficiary

The person, people, or entity named to receive a death benefit or remaining account value when the insured or annuitant passes away.

Cash Value

The savings-like component that builds inside a permanent life insurance policy over time, which the policyholder may be able to borrow against or withdraw, separate from the death benefit.

Death Benefit

The amount paid to beneficiaries when the insured person dies, assuming the policy is active and in good standing.

Estate

The total of everything a person owns at death (property, accounts, and other assets) before debts and distributions are settled.

Face Amount

The base death benefit stated in a life insurance policy, before any adjustments like additional riders or accumulated cash value that might increase the actual payout.

Living Benefits

Optional riders that let a policyholder access a portion of the death benefit while still alive, typically in cases of chronic, critical, or terminal illness.

MEC (Modified Endowment Contract)

A life insurance policy that’s been funded too quickly relative to IRS limits, causing it to lose some of its favorable tax treatment on withdrawals and loans. Once a policy is classified as a MEC, it generally can’t be reversed.

Premium

The amount you pay, on a set schedule, to keep an insurance policy or annuity contract in force.

Probate

The court-supervised legal process of validating a will, paying debts, and distributing a deceased person’s assets that don’t otherwise pass automatically to a beneficiary.

Rider

An optional add-on to a base insurance or annuity contract that provides an extra benefit, such as an income rider on an annuity or a living benefits rider on a life insurance policy, usually for an additional cost.

Surrender Charge

A fee charged for withdrawing more than an allowed amount from an annuity (or, in some cases, a permanent life insurance policy) during an early surrender period, typically declining over several years.

Underwriting

The process an insurance company uses to evaluate risk (through health history, exams, and lifestyle factors) and decide whether to offer coverage and at what price.

This glossary is educational and general in nature. It isn’t personalized financial, tax, or legal advice.