Glossary

Illustration
A document used to show a life insurance policy's guaranteed and (non-guaranteed) future values, including cash values and death benefits, based on certain assumptions. An illustration is an example of how the policy could perform in a given set of circumstances. It can provide you with valuable information about a policy's potential. However, it is neither an estimate or guarantee of future results and should not be construed as a prediction of policy performance.

Immediate Annuity
An annuity that provides for the first payment to the annuitant to begin at the first premium payment interval (which may be the next month, quarter, etc.). This can be contrasted with a deferred annuity, whereby benefits are to begin at a future date.

Impaired Risk
In life insurance underwriting, an impaired risk is an individual who has an unfavorable health condition or history or other factor that makes him or her an above-average risk for coverage. This person may be asked to pay a higher premium, accept a reduced amount of coverage or be declined altogether for insurance.

Incidents of Ownership
In life insurance, the right to exercise any of the privileges of policy ownership, including the right to change beneficiaries, withdraw cash values, take policy loans, make assignment, etc.) Incidents of ownership can be major estate planning factors for policyowners who wish to transfer policy ownership from themselves to another person or a trust, thereby removing the policies from their estates. If any incidents of ownership remain with the original owner, policy proceeds may be included in the person's estate at death.

Income Amount
The scheduled amount of an income payment, as provided under the terms of the annuity policy.

Income (Salary) Continuation
A business concept which allows a retired employee (or owner-employee) to continue receiving income for a period of time after retiring or leaving the company. Many income continuation agreements include a provision to pay a death benefit so that, in the event of the employee's premature death, a beneficiary will receive continued benefits or a lump sum payment. Life insurance can be used to help provide the benefit.

Income-Earning Ability
This is your ability to generate an income; it can be a factor in helping determine the amount of life insurance you need.

Incontestable Clause
A policy provision stating that the insurer cannot challenge the validity of your policy after it has been in force for a certain period of time, generally two years. (See also "Contestable" and "Contestable Period.")

Indemnify
To compensate for loss. In life insurance, the insurer agrees to pay the beneficiaries a specified sum (death benefit) to indemnify them for the financial loss resulting from the death of the insured.

Individual Insurance
Coverage purchased on an individual basis, rather than group coverage.

Inforce
Existing insurance policies.

Inspection
The independent checking on facts about an insurance applicant.

Inspection Report
A summary statement about an insurance applicant's occupation, health, residence, manner of living and general financial status, provided by an independent investigating agency.

Insurability
The circumstances under which an insurance company can issue a policy on an applicant for insurance.

Insurable Interest
The principle requiring that no policy will be issued unless the policy owner and beneficiaries would be in a position to suffer a financial loss at the death of the insured. For example, an insurable interest can be based on personal relationship (one spouse is always presumed to have an insurable interest in the other) or business relationship (as in one partner on the life of another or a lender on the life of the borrower).

Insurance
A legal contract between you and the insurer that transfers a specified covered risk to the insurer in exchange for a premium (also known as consideration). The details of coverage are specified within the policy itself.

Insured
The name of the person or persons covered by the insurance of the policy.

Insurer
The insurance company.

Interest-Sensitive Life Insurance
Life insurance in which the cash values can be affected by changes in interest rates.

Intestate
Dying without a will. Your will helps you enable you to dispose of your estate pretty much as you see fit. However, if you die intestate, your estate will be distributed according to the intestacy laws of your state.

IRA
There are a variety of Individual Retirement Accounts (IRAs), including traditional IRAs, Roth IRAs, and Education IRAs, each with different features, deductibility provisions, and potential tax advantages. Certain withdrawals, including withdrawals from traditional and Roth IRAs prior to age 59 1/2, may incur an additional 10% penalty tax. For more information, consult with your tax professional.

Irrevocable Beneficiary
A beneficiary designation that cannot be changed without the consent of the beneficiary. This is sometimes used in business insurance or divorce situations.

Irrevocable Trust
A trust that cannot be changed or canceled by the grantor. An irrevocable trust can be used for estate planning purposes.

Issue
In insurance, the company's decision to accept the application and "issue" the policy.

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