Life Insurance Glossary

Glossary.png

Adviser (financial adviser)  

Authorised by the Australian Securities and Investments Commission to provide advice and sell financial products, including life insurance products.

Agreed Value Policy  

The payment you would receive in the event of claim on an Income Protection Insurance policy is agreed at a set amount (you provide financial evidence during the application). This is particularly useful for people with varying salaries, e.g. self-employed people.

Benefit Payment

The amount of money your insurance product pays, either as a lump sum, or a regular installment.

Benefit Period

Feature of Income Protection Insurance, and is the period over which the insurance pays you in the event of a longer term claim, e.g. a 5 year benefit would mean you would continue to receive payments for 5 years in the event you were unable to work for that period.

Claim

To apply for funds because an event you have experienced qualifies you to receive a benefit payment.

Cooling off period

A short period immediately after you have purchased a policy, during which you can cancel the policy without any financial penalty (usually 28 days).

Cover Amount

The amount of money you will receive should you make a claim.

Death Benefit

The amount of money a Life Insurance policy is set to pay your nominated beneficiaries in the event of your death.

Duty of Disclosure

Your duty to provide complete and honest answers to all the questions the insurer asks you when you apply for a life insurance product.

Exclusions

Some policies exclude certain events or conditions, e.g. Life Insurance will have a suicide exclusion for the first 13 months.

Expiry Ages

Some policies expire when you reach a specified age, for Life Insurance this is usually age 99.

Future insurability

Permits you in increase your amount of insurance cover in the future without any medical requirements. Typically the increase is tied to personal events, e.g. at the birth of a child you can increase cover without medical requirements.

Income Protection

Insurance that provides a regular monthly payment to you in the event of a claim, additional resources can be found at the income protection page

Increasing Claims

An optional and crucial feature of Income Protection Insurance policies. In the event of a claim the amount you receive each year is increased in line with inflation. Without this feature during a long term claim your income would not increase and affect your standard of living.

Increasing Cover with Inflation

All life insurance policies have a feature that automatically increases the benefit payment with inflation.

Indemnity Style Policy

With Income Protection Insurance this means in the event of a claim you must prove your income (rather than during the application).

Insurance benefit

Same as ‘benefit payment’.

Interim Cover

As soon as an application for insurance is lodged interim cover will be in place. With Life Insurance this will mean accidental death cover is in place while the application is underwritten.

Life insured

The person insured under the policy.

Product Disclosure Statement (PDS)

Law requires insurers to include all the terms and conditions of the insurance product in a single document, known as the product disclosure statement (PDS). Always read this document carefully before buying insurance.

Policy

The insurance contract with the insurer, provided to the policy owner.

Policy Owner

Owner of an insurance policy.

Premium

The monthly, quarterly, or annual fee for the insurance policy.

Premium Waiver

In the event of a claim the premiums on the policy are not payable.

Terminal Illness Benefit

A feature of Life Insurance policies, if you are diagnosed with a terminal illness and have less than 12 months to live you can claim on your Life Insurance policy.

Total and Permanent Disablement

Insurance that pays a lump sum in the event that you are unable to work and likely to never return to work again. Additional information on total and permanent disablement.

TPD Insurance

This is simply an abbreviation of Total and Permanent Disablement Insurance.

Trauma Insurance

Insurance for specific medical events, see the trauma insurance section

Upgrade Guarantee

This is a feature of some life insurance policies, that automatically updates the policy with new features or benefits incorporated after the policy was established.

Waiting Period

For Income Protection Insurance this is how long you must be unable to work due to sickness or injury before the Income Protection Insurance payments begin (e.g. with a 30 day waiting period, you would have to be unable to work for 31 days before being able to receive any benefits).