Life Insurance Glossary

Life Insurance Glossary

Accidental Injury Benefit
Some life insurance policies will provide an additional lump sum for specified accidental injuries such as paralysis or broken bones. 
 
Accidental Death Cover
This policy only pays claims if you die as a result of an accident. Find out more about accidental death insurance.
 
Agreed Value Policy
The benefit amount you would receive in the event of claim is agreed to when applying for an income protection policy. During the initial application process you will provide financial evidence to establish this amount. This is particularly useful for people with varying salaries, e.g. self-employed people and you can read more on our agreed value section. (See also Indemnity Value Policy)
 
Benefit Payment
The benefit amount your insurance pays, either as a lump sum, or a regular instalment.
 
Benefit Period
A feature of an income protection policy; the benefit period is the period of time for which you will receive benefit payments and is agreed upon at the time of application. For further information see our benefit period page.
 
Broker (life insurance broker)
Authorised by the Australian Securities and Investments Commission to provide advice and sell financial products, including life insurance products.
 
Claim
To apply for funds because an event you have experienced qualifies you to receive a benefit payment based on the terms of your insurance policy.
 
Cooling off period
A short period immediately after you have purchased a policy, during which you can cancel the policy without any penalty or loss of premium (usually 28 days).
 
Cover Amount
The amount of money you will receive should you make a claim.
 
Critical Illness
This is another term for ‘Trauma Insurance’.
Death Benefit
The amount of money a life insurance policy is set to pay the nominated beneficiaries in the event of the death of the life insured.
 
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 to ensure you know exactly what you are covered for before your policy commences.
 
Exclusions
Some policies exclude certain events or conditions, e.g. life insurance will usually have a suicide exclusion for the first 12 or 13 months of the policy.  These exclusions will be advised at the time of application.
 
Expiry Ages
Some policies expire when you reach a specified age, for life insurance this is usually age 99.
 
Funeral Expense or Advanced funeral benefit
Most life insurance policies provide an advanced payment from the sum you are insured for to help cover funeral expenses.
 
Future insurability or Guaranteed Future Insurability
Some policies include this benefit option, which allows you to increase your level of insurance cover without having to complete another application. Typically the increase is tied to a personal event or business event, e.g. at the birth of a child you can apply to increase cover without medical requirements.
 
Income Protection
Insurance that provides a regular monthly payment to replace up to 75% of your income in the event that you are unable to work for extended period of time due to illness or injury. To learn more, please refer to income protection information page.
 
Increasing Claims
An optional feature that can be important when considering income protection insurance. 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 monthly benefit payment would not increase and may affect your standard of living.
 
Increasing Cover wih Inflation
All life insurance policies have a feature that automatically increases the benefit amount and premiums with inflation. (See also inflation protection).
 
Indemnity Style Policy
The benefit amount you would receive on an income protection policy is determined at the time of claim. This means that in the event of a claim you must verify your current income (rather than during the application process). If your income has reduced since you applied for cover, your claim will be paid on the reduced amount. Further information is available on our indemnity income protection page. (See also Agreed Value Policy)
 
Inflation protection
See ‘Increasing with inflation’.
 
Insurance benefit
See ‘benefit payment’.
 
Interim Cover
As soon as an application for insurance is lodged, interim cover will be put in place. With Life Insurance this will mean accidental death cover is in place while the application is underwritten.
 
Life insurance
Both a class of products and a type of product - see Types of Life Insurance and the Term Life Insurance sections.
 
Life insured
The person insured under the policy.
 
Product Disclosure Statement (PDS)
The 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). Please ensure that you read this document carefully before buying insurance.
 
Plan Exclusions
See ‘exclusions’.
 
Policy
An insurance contract with the insurer, provided to the policy owner.
 
Policy Owner
Owner of an insurance policy.
 
Premium
A monthly, quarterly, or annual fee paid to the insurer and used to keep your insurance policy in force (current).
 
Premium Waiver
In certain circumstances an insurer may waive future premium payments whilst a claim is being paid.
 
Terminal Illnes 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 amount in the event that you become totally and permanently disable and cannot return to work again. . For additional information please see our total and permanent disablement.
 
TPD Insurance
An abbreviation of Total and Permanent Disability insurance.
 
Trauma Insurance
Insurance which covers specific medical events, see the trauma insurance section.
 
Upgrade Guarantee
This is a feature of some life insurance policies, which automatically updates your existing policy with new features or benefits offered after your policy was established.
 
Waiting Period
The period of time you must be unable to work due to sickness or injury before your income protection benefit payments begin. For example, with a 30 day waiting period, you would have to be unable to work for 31 days before being eligible to receive any benefits.  . It is important to note that payments are made in arrears. For additional information please see our waiting period page.
 

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