You should understand the following important terms as you learn about life insurance.

• Beneficiary: The recipient of benefits in the event of the death of the insured.
• Cash value: The total account value that is available to the policy owner while he or she is alive. Most policies have both guaranteed and nonguaranteed elements of the cash value. This means that some elements may be guaranteed, such as a minimum return each year, and other elements may be non-guaranteed, such as may vary with the instrument in which the cash value is invested. The cash value is reduced by any loans or applicable surrender charges.
• Face value: The basic benefit that is to be paid by the insurance company to the beneficiaries; the face value is due upon the death of the insured. Total benefits may be higher if there have been policy additions.
• Insured: The person whose life is covered by the insurance policy.
• Policy owner: The individual or business that pays for and owns the insurance policy.
• Premium: The payment for an insurance policy. Premiums may build cash value in certain insurance products; this cash value may be used to pay costs. Premiums can be paid monthly, quarterly, semiannually, or annually.

There are five important questions you should ask yourself about life insurance.