Accidental Death Benefit

This benefit provides an additional sum assured to be paid if death of the Insured is caused directly by accidental bodily injury.

Actuary

This is someone professionally trained in the mathematical and technical aspects of life insurance, pensions and related fields such as the calculation of premiums, reserves and other values.

Age

This could have two possible meanings depending on the Insurance company concerned. It can refer to the “Age Last Birthday” of the person whose life is being insured or it can be the “Age Next Birthday” if that date is the nearest date when the policy is being bought.

Agent

This is a sales and service representative of an Insurance Company whose acts are binding upon the company only to the extent specified in the agent’s contract or otherwise authorized.

Annuitant

This is someone who will be receiving a regular stream of income for their selected payment period. To learn more about the payment options: Annuity Maturity Options.

Annuity

A contract providing periodic payments during the lifetime of the annuitant, payments are often guaranteed for a minimum number of years.

Assignment

This is where the policy owner transfers all policy rights to another party which is called “Absolute Assignment”. Usually transacted for collateral purposes (security/ mortgage)

Beneficiary

This is the person named on the policy to whom the proceeds of the life insurance are payable at the time of death of the insured. Types of Beneficiaries are: See Irrevocable Beneficiary See Revocable Beneficiary

Broker

A term generally used to describe someone who places business with more than one company and who has no exclusive contract requiring that all his or her business first be offered to a single company.

Cash value/Cash surrender value

Your cash value is the amount of money your policy has after all applicable policy fees, charges and interest have been applied. This is sometimes used interchangeably with the words fund value.

Claims

A Claim is a request made for remittance of payment due to loss incurred and covered under the policy agreement.

Contract

The contract is more than the policy. It includes the application you completed and any other documents attached when the policy is handed over to you. After it has been issued, any amendments agreed to in writing by you and the company also become part of the contract.

Convertible Term Insurance

This is a Term policy which gives the policyholder the option to convert this plan to one of our permanent life products within a stipulated convertibility period.

Critical Illness

Critical Illness Insurance is a policy whereby a lump sum payment is made to the insured in the event that he/she is diagnosed with a critical illness as outlined in the policy contract.

Date of Issue

When the company accepts the risk and issues the policy.

Death Benefit

An amount payable when the Life Assured dies.

Decreasing Term Insurance

A type of term insurance in which the face amount decreases over the term of the policy.

Deferred Annuities

An annuity contract which provides for the postponement of the commencement of an annuity until after a specified period or until the annuitant attains a specified age.

Dismemberment Benefit

The amount payable is based on a scale of benefits, it is payable for loss by accident of arms, legs, hands, feet or eyesight. Usually combined with accidental death benefit.

Dividend

This is a payment each year (applicable to participating policies) of an amount which is based on the company’s experienced and expected costs and investment earnings. Policy dividends are not guaranteed and are at the discretion of the company.

Double Indemnity

This is a provision in a life insurance policy, subject to specified conditions and exclusions, under terms of which double the face amount of the accidental death/ dismemberment benefit is payable if the death or disability of the insured is the result of an accident (as defined in contract).

Effective Date

This is the date when the policy goes into effect, (also known as the commencement date). The Policy Contract only goes into effect when the first premium has been paid, once there has been no change in the insurability of the life insured since the time of the application and when the contract has been delivered to the applicant.

Endorsement

A provision changing specified terms of the insurance contract.

Endowment

A life insurance contract that pays the face amount on a specified future date (maturity date) if the life assured is alive or on death if that occurs sooner.

Evidence of Insurability

A statement of factual information requested by an insurance company to determine the acceptability of an application for insurance.

Face Amount

The amount stated on the front of a policy to be paid on the death of the life assured (also referred to as “sum assured”).

Grace Period

This period is usually 30 or 31 days after the premium due date. During this time an overdue premium may be paid without penalty and the policy remains in effect.

Group Annuity

A contract providing retirement annuity benefits to a group of persons under a master policy usually issued to an employer.

Group Life Insurance

This is insurance issued usually without medical examination on a group of people under a master contract. Usually issued to an employer for the benefit of its employees.

Health Insurance

This term has become accepted by the industry for all types of loss of time and medical expense insurance. It is also known as accident and health insurance, sickness and accident insurance etc.

Irrevocable Beneficiary

A beneficiary whose interest cannot be revoked without his or her written consent, because the insured has made the beneficiary designation without retaining the right to revoke or change the designation.

Immediate Annuity

An annuity contract in which you make one lump-sum payment at the start and this is converted into an ongoing, guaranteed stream of income for a specified period of time (as few as five years) or for a lifetime. To learn more about the payment options: Annuity Maturity Options

Incidents of Ownership

The rights to exercise any of the privileges in the policy such as: change of beneficiary, withdraw cash values, change mode and method of payment, assignment of policy etc.

Incontestability

This provision states that after the policy has been in force for a stipulated period (usually 2 or 3 years), the insurance company cannot contest or refuse payment of the claim because of false statements in the application, unless they are fraudulent.

Inspection Report

A report completed by a consumer-reporting agency on behalf of an insurance company. Used to evaluate information on an insurance application as well as potential areas of risk other than health or occupation.

Insurer

The life insurance company issuing the policy.

Intestate

One who dies leaving no will.

Irrevocable Trust

A trust that cannot be altered by the person who created the trust.

Joint and (Last) Survivor Life Annuity

An annuity providing periodic payments lasting as long as either one of the two named persons is still alive.

Key-Person (Key-man) Insurance

This is protection of a business firm against the financial loss caused by the death or disablement of an important member of a firm. A means of protecting a business from the adverse results of the loss of individuals possessing a special managerial or technical skill or experience.

Lapse

This is the termination of a policy when premiums have not been paid. The term is sometimes limited to a termination occurring before the policy has a cash or other non-forfeiture value.

Level Premium

A premium which does not change and remains the same throughout the premium-paying period. It exceeds the cost of protection in the earlier years and is less than the cost in later years. The excess paid in earlier years builds up a reserve, which is invested and helps keep the amount of the premium down.

Liabilities

An insurance company’s liabilities consist of its immediate or contingent policy obligations, unpaid claims, funds left under settlement options, assigned surplus and miscellaneous debts.

Life Insurance

Insurance in which the risk insured against is the death of a particular person called the insured, whose death is within a stated term, or whenever death occurs if the contract so provides. The insurance company agrees to pay a stated sum or income to the beneficiary.

Life Insured

A person on whose death or disability the insurance becomes payable.

Loan Value

An amount which can be borrowed by the policy owner dependent upon the cash value of the policy. In the event the policy either matures by death or as an endowment with the debt either partially or fully unpaid, then the amount borrowed plus any accrued interest is deducted from the face amount.

Maturity Date

Refers to the date that the policy agreement ends.

Misrepresentation

This is a false or misleading statement in an application for insurance and that induces an insurer to issue a policy it would not otherwise have issued.

Mis-statement of Age

If the age of the life insured has been mis-stated, the benefits will be increased or decreased to the level that the premiums paid would have bought at the correct age.

Mode of payment

This is the agreed upon payment intervals i.e. the payment frequency of premiums e.g. monthly, annually, etc.

Morbidity Rates

Using statistical records insurance companies have been able to develop a chart which indicates the rates of morbidity or incidence of sickness and accidents, by age, occurring among given groups of people.

Mortality Rates

Using statistical records insurance companies have been able to develop a chart that indicates with great accuracy the number of persons in a large group who are likely to die at each age.

Mortgage Life Insurance

This is insurance bought specifically to pay off the outstanding balance of a mortgage on the death of the life insured.

Network Hospitals

A list of associated hospitals and doctors that are connected to the health plans.

Non-Forfeiture Options

These are choices available to a policy owner who discontinues premium payments on a policy that has accumulated a cash value. Policy owner can usually take this value in cash; apply it to buy “Reduced paid-up Insurance”; or “Extended Term Insurance”; or use it as security for a loan against the policy to pay the premium or premiums due.

Non-Participating Life Insurance

Policy owners do not share in any surplus earnings distributed by the company. No “Policy Dividends” are payable.

Paid-Up Insurance

A policy on which no future payments are to be made, under which the company is held liable for the benefits provided under the terms of the contract.

Participating Life Insurance

Policy owners share in the surplus earnings distributed by the company through "Policy Dividends".

Permanent Life Insurance

Includes Whole Life Insurance and Endowment Insurance and also another name for cash value Life Insurance.

Policy

A printed document given to the policy owner by the Life Insurance Company, stating the terms of the life insurance contract.

Policy Anniversary

This is any anniversary of the policy date.

Policy Date

This date determines when you make your premium payments. If it is, say June 01st, then monthly premiums would be due on the first of every month thereafter. This date is also used to determine policy dividends.

Policy Dividend

Refund each year of an amount which is based on the Company’s experience, expected costs and investment earnings. Policy dividends are not guaranteed but depend on the mortality experience, investment earnings, expenses and other factors, and may be increased or decreased at the discretion of the company. Applies only to participating life insurance policies.

Policy Owner

The person who owns a Life Insurance Policy, usually the Life Insured but not always. (Also referred to as the "Insured" or "Policyholder" or simply the "Owner".

Premium

This is an amount paid, either in a lumpsum or more commonly, in monthly, quarterly, semi-annual or annual payments to a life insurance company to keep the policy in force.

Premium Notice

Notice of when premiums are due, sent out by the insurance company to clients.

Revocable Beneficiary

A beneficiary whose rights in a policy are subject to the insured’s reserved right to revoke or change the beneficiary designation and the right to surrender or make a loan/ withdrawal on the policy without the consent of the beneficiary.

Rated Policy

See Substandard Life Insurance

Reduced Paid-Up Insurance

Insurance for a reduced amount available as an option to the owner of a cash value life insurance policy who discontinues premium payments. It continues the coverage under the original policy for a reduced amount which depends on the cash value. (See Non-Forfeiture Options).

Reinstatement

This provision allows for a policy that has lapsed to be revived upon request, within a specified period (usually 3 years from the lapse date). The insurer will require evidence of insurability and all back premiums owed must be paid before reinstatement is granted. Another option available would be to Re-Date the policy.

Reinsurance

Companies place a limit on the amount of insurance they will risk on a single life and therefore, when issuing policies for larger amounts than their own limit, they reinsure the excess with some other company.

Renewable Term Insurance

The policy may be renewed when it expires without providing evidence of insurability. At each renewal date (usually every year or every 5 years) the premiums increase. There is usually a limit on the number of renewals, or else a limiting age, such as 65 or 70.

Rider

A benefit attached to a policy providing for extra amounts or types of coverage in addition to the basic policy benefit.

Substandard Life Insurance

Insurance issued at a higher than normal premium rate to applicants whose insurance risk is greater than normal.

Settlement Options

These are ways that the policy owner or beneficiary may choose to have the policy benefits paid, other than payments in one sum.

Single Premium Insurance

The entire premium is paid in one sum at the beginning of the policy.

Standard Risk

A person who, according to a company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

Suicide

If the Life Insured commits suicide within two (2) years of the date of issue of the policy, the amount paid will be a refund of premiums and not the face amount.

Sum Insured/Assured

See Face Amount.

Surrender

The cancelling or giving up a policy to the insurance company in return for the cash surrender value or other non-forfeiture values.

Term Insurance

Insurance protection during a limited number of years (unless it is renewable) but expiring without value if the insured survives the stated period.

Total Disability

This is usually defined as the inability to perform the duties of one’s usual occupation or perhaps to engage in any occupation for remuneration or profit.

Underwriting

This is classifying the insurance risk of the applicant. It involves evaluating the factors that affect the likelihood of death or sickness such as age, sex, health, occupation, hobbies, sports and lifestyle, so that an appropriate premium can be determined. Very few (about two in a hundred) applicants represent such high risks that they are not insurable.

Vesting

The right of an employee under a retirement plan to retain part or all of the annuities purchased by the employer’s contributions on the employee’s behalf, or, in some plans, to receive a cash payment of equivalent value, on termination of employment after certain qualifying conditions have been met.

Waiver of Premium

Most life insurance companies will add to their contracts for an additional payment, a clause which provides that, in event the insured becomes totally disabled the insurance policy will be continued in full force, even though the necessity of paying further premiums is waived by the company during the disability period.

Whole Life Insurance

This insurance provides protection for the lifetime of the person insured or whatever age is specified on the policy.

Will

A will is a written instrument executed in the form required by law, by which a person makes a disposition of personal assets and property, to take effect upon his or her death.