Insurance Glossary
39 plain-language definitions for common Canadian insurance terms — no jargon, no sales language.
Highlighted letters have terms.
A
Advisor
A licensed professional who provides insurance advice to clients. In the life insurance context, an advisor may also be called an agent, broker, or financial advisor, depending on their licence and the organization they represent. Advisors in Canada are regulated by provincial insurance regulators.
Agent
An insurance professional who sells insurance products, typically on behalf of one or more insurance companies. In life insurance, agents may be employed directly by a carrier (captive agent) or work independently through an MGA or brokerage.
B
Beneficiary
The person or entity designated to receive the death benefit from a life insurance policy when the insured person dies. A policyholder can name one or more beneficiaries and specify the percentage each receives.
Broker
An insurance professional who represents the interests of the client rather than a specific insurance company. Life insurance brokers typically have access to products from multiple carriers and are regulated by provincial insurance regulators.
Brokerage
An organization that employs or contracts with licensed insurance brokers or agents. Brokerages distribute insurance products to consumers, often working with multiple carriers. In the Registry, brokerages are a distinct organizational type.
C
Carrier
An insurance company that underwrites and issues insurance policies. In the Registry, carriers (also called insurers) are the legal entities that assume insurance risk. Canadian life insurance carriers are federally or provincially regulated.
Cash Value
A savings component within certain permanent life insurance policies (such as whole life and universal life) that accumulates over time on a tax-deferred basis. The policyholder may be able to borrow against or withdraw from the cash value.
Conversion
A provision in many term life insurance policies that allows the policyholder to convert the policy to permanent life insurance without undergoing a new medical assessment. Conversion rights typically expire at a specified age or date.
D
Death Benefit
The amount of money an insurance company pays to the beneficiary when the insured person dies while the policy is in force. In most Canadian policies, the death benefit is paid tax-free to the beneficiary.
Distributor
An organization or individual that distributes insurance products to consumers or advisors. In the life insurance industry, distributors include MGAs, brokerages, and in some contexts individual advisors. The Registry tracks distribution relationships between MGAs and carriers.
E
Exclusion
A condition or circumstance under which the insurer will not pay a claim. Common exclusions in Canadian life insurance include death by suicide within the first two years of the policy, death resulting from fraud or misrepresentation, and certain high-risk activities.
F
Face Amount
The amount of insurance coverage stated in a life insurance policy — the death benefit that will be paid to the beneficiary upon the insured's death, assuming no outstanding loans. Also called the face value or sum insured.
G
Grace Period
A period — typically 30 days — after a missed premium payment during which a policy remains in force. If the overdue premium is paid within the grace period, the policy continues without interruption. If not, the policy may lapse.
I
Illustration
A document provided by an insurance company that shows how a policy is projected to perform over time — including premium amounts, death benefit, cash value projections, and dividends (for participating policies). Illustrations are projections, not guarantees.
Incontestability
A provision that prevents the insurer from voiding or contesting a policy after it has been in force for a specified period — typically two years — even if the application contained a misrepresentation, provided the misrepresentation was not fraudulent.
Insurability
A person's eligibility to obtain life insurance coverage based on their health, lifestyle, occupation, and other risk factors assessed during underwriting. A person may be declined coverage or offered coverage at a higher premium if their insurability is assessed as above-standard risk.
Insured
The person whose life is covered by a life insurance policy. Upon the insured's death, the death benefit is paid to the beneficiary. The insured and the policyholder may be the same person or different people.
Insurer
The insurance company that issues a policy and assumes the insurance risk. In Canada, insurers offering life insurance must be licensed by provincial regulators and, for federally regulated companies, by OSFI.
L
Lapse
The termination of a life insurance policy due to non-payment of premiums. A lapsed policy provides no coverage. Some policies include a reinstatement provision that allows the policyholder to restore coverage within a defined period.
M
Managing General Agent (MGA)
An organization that acts as an intermediary between insurance carriers and insurance advisors or brokers. MGAs typically recruit and support advisors, administer policies, and have delegated authority from carriers to underwrite and issue policies. In the Registry, MGAs are a distinct organizational type.
Medical Underwriting
The process by which an insurer assesses an applicant's health history, medical records, and physical condition to determine insurability and the appropriate premium. Some policies are issued without medical underwriting (non-medical), typically with lower coverage limits or higher premiums.
N
Non-Participating Policy
A life insurance policy that does not participate in the insurer's divisible surplus and therefore does not pay dividends. Non-participating policies typically have fixed, guaranteed premiums and benefits, making them more predictable but without the potential for dividend income.
P
Participating Policy
A life insurance policy that entitles the policyholder to share in the insurer's divisible surplus in the form of policyholder dividends. Dividends are not guaranteed but can be used to reduce premiums, purchase additional coverage, or accumulate at interest.
Permanent Life Insurance
A category of life insurance that provides coverage for the insured's entire lifetime, as long as premiums are paid. Common types include whole life and universal life insurance. Many permanent policies accumulate a cash value component.
Policy
The formal contract between the insurer (insurance company) and the policyholder. It sets out the terms and conditions of coverage, including the premium amount, death benefit, exclusions, and the rights and obligations of both parties.
Policy Lapse
See Lapse. A policy that has lapsed due to non-payment of premiums provides no coverage. Reinstatement may be possible within a defined period if outstanding premiums and interest are paid and evidence of insurability is provided.
Policyholder
The person or entity that owns a life insurance policy and is responsible for paying premiums. The policyholder has the right to change beneficiaries, make policy loans, and surrender the policy. The policyholder and the insured may be the same or different people.
R
Reinsurer
An insurance company that provides insurance to other insurance companies (carriers), allowing carriers to manage their risk exposure. Reinsurers are not typically visible to individual policyholders. Canada has a regulated reinsurance market.
Regulator
A government body responsible for supervising the insurance industry. In Canada, federally incorporated insurers are regulated by the Office of the Superintendent of Financial Institutions (OSFI), while provincial regulators oversee licensing and market conduct in their provinces.
Renewal
The process by which a term life insurance policy continues after the end of its initial term, usually at a higher premium that reflects the insured's new, older age. Many Canadian term policies are guaranteed renewable without medical evidence, but at a higher cost.
Replacement
The act of lapsing, surrendering, or converting an existing life insurance policy and purchasing a new one. Replacement may or may not be in the policyholder's best interest; it typically requires disclosure and is regulated in Canada.
Rider
An optional addition to a standard life insurance policy that provides additional benefits or modifies the terms of coverage. Common Canadian riders include disability waiver of premium, accidental death benefit, and critical illness coverage.
S
Suicide Exclusion
A provision in most life insurance policies that excludes the payment of the death benefit if the insured dies by suicide within a specified period — typically two years — after the policy is issued. After this period, the exclusion no longer applies.
Surrender Value
The amount a policyholder receives when they voluntarily cancel a permanent life insurance policy. The surrender value is typically the policy's cash value less any outstanding loans and surrender charges. Term policies generally have no surrender value.
T
Term Life Insurance
A type of life insurance that provides coverage for a defined period — commonly 10, 20, or 30 years. If the insured dies during the term, the death benefit is paid to the beneficiary. If the term expires and the insured is still living, the policy ends with no payout (unless renewed or converted).
U
Underwriting
The process by which an insurance company assesses the risk of insuring an applicant and determines whether to offer coverage, and at what premium. Underwriting typically involves review of the applicant's health history, lifestyle, age, and other risk factors.
Universal Life Insurance
A type of permanent life insurance that combines a death benefit with a flexible savings component. Policyholders can often adjust premium payments and death benefits within certain limits. The cash value grows based on a credited interest rate.
W
Whole Life Insurance
A type of permanent life insurance that provides lifelong coverage with fixed premiums and a guaranteed death benefit. Whole life policies typically accumulate a cash value component that grows at a guaranteed rate.
📋 Educational definitions only
These definitions provide general educational context about common insurance terms. They are not legal definitions, and the precise meaning of any term in a given insurance policy is defined by that policy's contract language. When in doubt about a specific term in your policy, consult the policy document or your insurance advisor.
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