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.
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.
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.
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.
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.
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.
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.
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.
A unitised portfolio of investments managed by an asset manager.
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.
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.
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.
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.
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.
The person who owns an insurance policy, pays the insurance premiums and under whom the policy is registered.
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.
The transferring of an investment amount from one fund into another based on the policyholder’s investment preference.
An option to pay regular premiums on a whole of life insurance policy over a fixed period of time.
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