Life Insurance Glossary
Here is a glossary of the jargon you may encounter when dealing with life insurance.
- Beneficiary
- A person who benefits from the proceeds of a life insurance policy.
- Claim
- Is made by the person who suffers from a critical or terminal illness or on behalf of the person who dies.
- Cover
- Another word for policy.
- Exclusions
- A stipulation that the policy will not cover for i.e. an activity, event or illness.
- Life Insured
- The person on whose life the policy is taken out.
- Policy Holder
- Is a person (or people) who has entered into a life insurance contract with a provider
- Premium
- The monthly/annual amount you pay to the provider for cover.
- Rating / Loading
- If the provider decides that you are higher risk, premiums may be increased to reflect this.
- Reversionary Bonus
- A bonus added to the sum assured (or basic sum assured) of a with-profits life insurance policy taken out of a provider’s surplus profits, usually on an annual basis.
- Sum Assured
- The amount of cover you with the policy to provide in the event of a claim.
- Term
- The period of time you want the policy to provide protection.
- Terminal Bonus
- An additional bonus paid to reflect the overall performance of a with-profits life insurance policy at maturity or prior to the death of the life assured. See ‘reversionary bonus’.
- Trust
- An arrangement which allows one or more people (the trustess) to safeguard and administer the payout of a life insurance claim and pass it on to the beneficiaries.
- Underwriting
- The policy provider checks each application to decide if the risk of providing cover is in line with the premium the policyholder will pay.
