Confused by insurance jargon?
The financial services industry is fond of using jargon, and the insurance industry is not an exception. We’ve put together a list of common terms used in insurance and explain them and help you get started with your personal finance journey today!
This is the person who is nominated by the Policy Holder to the insurer to receive the benefits of the insurance policy. This nomination is usually made for insurance policies which Benefits are paid in the event of the death of a Policy Holder who is also the Life Assured of the same policy.
In an insurance policy, the identification and description of when and how the sum assured or cash value will be paid out.
Note that for life insurance plans that are Participating Plans/Investment-Linked plans, a portion of the total illustrated cash values for them is not guaranteed.
- Entry Date/Policy Date
The date when the insurance policy starts.
- Insured Event
An event for which a Benefit in an insurance policy becomes payable. Examples include death, total and permanent disability and accident.
- Investment-Linked Plan (or ILP)
An ILP is a life insurance plan which provides a combination of protection and investment. Premiums buy life insurance protection and investment units in professionally managed investment-linked fund(s).
- Life Assured
The person who is the subject of the insurance coverage in a life or health insurance policy.
- Maturity date
The end date of a life insurance policy when all Premiums payable have been paid.
‘Underwriting’ is the process that insurers use to assess the suitability of an applicant of an insurance plan. Depending on the type of insurance plan and the value of the Premium or Sum Assured, insurers may ask for information relating to the Policy Holder/Life Assured’s financial circumstances and health.
For a life insurance plan to be ‘underwritten’ by an insurer, this means that the insurer will be responsible for the obligations, including claims of the insurance policy towards the Policy Holder.
- Participating Policy
This is a particular type of life insurance policy that participates or share in the profits of the insurer’s participating fund. Apart from guaranteed benefits, the policy also provide non-guaranteed benefits.
The Sum Assured is guaranteed. This is paid when the policy matures, when you pass on or when you become totally and permanently disabled (if this benefit is provided) during the policy period.
The non-guaranteed benefits may include bonuses and cash dividends. They depend on how the participating fund’s investments are performing, how many claims are made on the fund and the expenses incurred by the fund.
- Policy Holder/Policy Owner
The person named in an insurance policy as the person contracting with the insurance company. Also the person authorised to transact on the insurance policy.
The amount of money that the Policy Holder is expected to pay to the insurance company as part of his contractual obligations to ensure that the insurance policy continues to be in effect.
- Proposal Form
The form used to apply for an insurance policy.
- Sum Assured
The sum of money paid by the insurer when an insured event such as death or total permanent disability occurs. Also known as ‘face amount’, ‘principal sum’, or ‘sum insured’.
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