Fifteen terms that will make any life insurance quote and policy document readable. Each one gets a plain-language sentence – and where a deeper explanation is worth having, a link leads to the detailed article. For the complete, A-to-Z collection, see Glossary A-Z.
In short:
- These 15 terms cover most of the vocabulary in quotes and policy documents.
- Every term gets one sentence – links lead to articles for deeper detail.
- Bookmark it: quick help while you're reading through a quote.
The parties to the policy and its basic figures
- Policyholder: who takes out the policy, pays the premium, and administers it – details.
- Insured: the person whose life the policy covers; their details determine the premium.
- Beneficiary: the person the insurer pays the benefit to – why naming one matters.
- Sum assured: the amount set out in the policy that the insurer pays when the insured event occurs.
- Premium: the price of protection; a function of age, health, the amount, the term and any riders.
- Term: the period the protection runs for – how to choose.
Terms around signing up and underwriting
- Health declaration: the basic document of underwriting; its questions must be answered accurately and honestly.
- Duty of disclosure: the obligation to truthfully disclose material circumstances – breaching it may release the insurer from its obligation to pay: honestly, about what's at stake.
- Underwriting: the insurer's process for assessing and pricing the risk it takes on – how it works.
- Loading: an increased premium due to higher-than-average risk – not a decline: what you can do.
Terms about the life of the policy
- Waiting period: the period after taking out the policy during which the benefit may be limited – typically set out in the policy terms.
- Exclusion: situations listed in the policy terms that cover doesn't extend to – details.
- Indexation: an annual increase in the premium and the amount to keep pace with value – whether to accept it.
- Premium waiver: a rider under which, in defined cases, the insurer takes over paying the premium – how it works.
- Release from obligation to pay: when the insurer does not perform for a reason set out in the policy terms and the law – the most common reason is a breach of the duty of disclosure.
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This article is for information purposes only; it contains general information and does not constitute an offer or insurance advice. The exact content of insurance contracts is defined by the insurers' terms and conditions in force.
