Insurance, explained
A dictionary of key life insurance terms, simplified.
Accidental death benefit
An optional provision on a life insurance policy that pays out if the life insured dies due to an accident within 30 days.
Additional benefit
Optional covers that can be added to a policy for free or for an additional charge, depending on the type of policy purchased. Some examples are critical illness, permanent and total disability and hospitalisation cover.
Additional life cover
An increase in the life cover amount on a joint life policy due to changing financial protection needs of the lives insured. It is paid out on the death of the first life insured of the joint life policy.
Aeroplane cover
A free benefit that pays out a lumpsum amount if the life insured dies due to an aeroplane crash.
Assets under management
Assets under management (AUM) is the total market value of the investments that a financial institution manages on behalf of their clients.
Additional Voluntary Contribution
AVC (Additional Voluntary Contribution) is the contribution that you voluntarily add to your plan in addition to the mandatory contribution from the employer to build your savings
AEI (Automatic Exchange of Information)
A global tax standard that governs how certain authorities exchange information with one another.
AMC (Annual Management Charge)
The charge deducted for managing your account.
Beneficiary
The person or entity who will receive a claim amount if the life insured passes away, becomes seriously ill or permanently disabled, depending on what conditions they are covered for within the policy.
Benefit
The claim amount that an insurer would pay to the beneficiary/ies upon the death of the life insured or to the life insured if s/he suffers from a condition covered under the policy, such as critical illness or permanent and total disability.
Cancer cover benefit
The cover amount an insurer will pay out if the life insured is diagnosed with or undergoes a medical procedure to treat cancer.
Critical illness cover
The amount an insurer pays out to the life insured if s/he is diagnosed with a serious illness or undergoes a medical procedure to treat such a condition, depending on what conditions s/he is covered for.
Contribution
The sum of money paid into your plan.
Dismemberment benefit
A provision where an insurer will pay out if the life insured suffers loss of limbs or loss of senses such as eyesight or hearing, due to an accident.
Death in service
When an individual dies while still in employment.
Deed of Participation
A legal document that sets out the terms of participating within a certain plan.
Defined contribution plan
A type of savings plan into which contributions are paid regularly. Individual accounts are set up for members and their benefits are ultimately based on contributions paid, plus/minus any investment growth/loss, less any fees.
DEWS
The DIFC/Dubai Employee Workplace Savings Plan.
Disinvestment
The process of selling your investments in exchange for money.
EOSB (End of Service Benefits)
A provision under certain laws for benefits that an individual may be entitled to receive into a regulated plan while in employment and withdraw upon the termination of employment – sometimes also called End of Service Gratuity (EOSG).
EOSG (End of Service Gratuity)
A provision under certain laws for benefits that an individual may be entitled to receive from their employer upon termination of employment – sometimes also called End of Service Benefits (EOSB).
Family income benefit
A regular cash amount the insurer pays out upon the death of the life insured over a specific period to his/her family members.
Fixed term income benefit
A regular payment made by an insurer to the beneficiary/ies over a fixed period of time after the death of the life insured.
Free look period
The timeframe after an insurance policy has been issued during which the policyholder can terminate the policy without any charges or penalty. This interval is usually 30 working days.
Funeral coverage
An immediate, advance payment of up to USD7,500 paid out from the death claim proceeds to the beneficiaries upon the death of the life insured. This payment is designed to cover any immediate funeral costs or repatriation expenses.
Fund
A unitised portfolio of investments managed by an asset manager.
Hospitalisation benefit
The amount an insurer will pay to the life insured if s/he gets admitted to a hospital for a surgical procedure or for certain medical treatments.
Life insured
The person who is covered against health risks such as death or critical illness under a life insurance policy and receives benefit payments if such a condition occurs.
Lifetime insurance
An insurance plan where the insurer pays the cover amount to the beneficiaries upon the death of the life insured, regardless of when this might happen, provided all the premiums were paid. This is also called Whole of life insurance.
Length of service
The amount of time you have worked for your company.
Mandatory Contribution
The amount of money required to be added to your plan in line with relevant laws and regulations.
Member
An individual enrolled into a plan.
Permanent and total disability benefit
The cover an insurer will pay if the life insured is diagnosed with a permanent and total disability and is unable to work in his/her area of expertise due to this disability.
Premium
The payment/s due on an insurance policy over a fixed or flexible term. The amount depends on the type and amount of cover, age and any existing medical conditions.
Policyholder
The person who owns an insurance policy, pays the insurance premiums and under whom the policy is registered.
Surrender
The amount an insurer will pay if the policyholder decides to terminate the policy before the maturity date. The rate will depend on the policy value and any applicable surrender charges.
Switching funds
The transferring of an investment amount from one fund into another based on the policyholder’s investment preference.
Shariah compliant fund
Funds governed by the requirements of Shariah law and the principles of the Islam.
Tenure of employment
The amount of time you have worked for your company.
Trustee
The legal owner of the assets held by a trust and is responsible for managing those assets and carrying out the purposes of the trust.
UBO (Ultimate Beneficial Owner)
The person(s) who ultimately own or exercise significant management or control over your company.
Vanishing premium
An option to pay regular premiums on a whole of life insurance policy over a fixed period of time.
Valuation
The market value of your investments at a specific point in time.
Vesting
The point in time when you get full ownership or control. This may be on a gradual/sliding scale based on certain factors.
Withdrawal
Taking some (partial withdrawal) or all (full withdrawal) of your money out of your plan.