Glossary of Terms


14 Day Free Look Period

A 2 week period whereby you may cancel your policy and obtain a refund of the full premium paid less medical expenses incurred (if any). Starts from the date that you receive your policy. For Investment-linked products, you are liable to pay for the investment loss (if any). This is meant as a safety net to buyers in the case they make an erroneous decision. Every policy in Singapore has a 14 day free look period.

Accelerated Payout

Upon meeting of certain conditions (usually applicable for critical illness), the insurer pays out the full sum assured due.

Acturial / Acturacy

Application of statistics and mathematics to evaluate present and future risk. In life insurance context, the acturial will determine the premium tables for the underwriters.

See Also UNDERWRITING.

Age Nearest Birthday

Age of the Insured on his/her nearest birthday. Possible to be higher than the actual age of the person.

See Also AGE NEXT BIRTHDAY.

Age Next Birthday

Age of the Insured on his/her oncoming birthday.It will always be higher than the actual age of the person.

See Also AGE NEAREST BIRTHDAY.

Beneficiary

Person who receives the financial payout of the policy if the Life Insured dies (or fulfils the payout clause of the policy).

Benefit Illustration

A document containing all policy benefits & charges, both of guaranteed & non-guaranteed in nature. The Benefit Illustration (BI) typically shows the premiums to be paid, the coverage amounts, the death benefits and surrender value associated with the plan. Mainly contains financial related information of the policy involved. It is usually presented together with the Product Summary. Together, they are called BIPS (in short).

See Also PRODUCT SUMMARY.

Bonus

Additional monetary benefits declared by the insurer for the policy, based on the insurer's life fund performance. There are different types of bonuses applicable.

Conditional Interim Cover Certificate

Free accident cover provided by the Insurance Company when a policy application is under processing (underwriting). The CICC is active once the first premium is recevied by the Insurance company.

Coupons / Payout

Regular payments from the insurance policy. Mostly applicable on Endowment Plans.

Critical Illness

Also known as dread disease. A pre-defined a list of diseases or conditions (usually 30 and above) by the insurer that will be claimable upon diagnosis.

See Also ACCELERATED PAYOUT.

Death

When a person ceases to live. In Singapore, the death certificate will be sufficient proof of the demise.

Death Benefit

The insurance payment upon Insured's death to his/her beneficiaries. This is the amount of money due to the policy owner if the person covered under the plan dies (or contracts Terminal Illness, or is Totally and Permanently Disabled).

Deductibles

Also known as excess. It is the amount that the Policyholder must pay out of their own pocket before the insurer makes any payment. Commonly applied to hospitalization plans.

See Also EXCESS.

Disability

Usually defined as the Insured's inability to perform any job. However, disability may be defined differently especially for Eldershield, whereby disability is stated as inability to perforrm certain number of tasks.

Distribution Cost

The cost of the insurer that is attributed to the commissions and other cost of its distribution channels such as agents and brokers. This is paid by the policy holder out of the policy premium.

Excess

Also know as deductible. It is the amount that the Policyholder must pay out of their own pocket before the insurer makes any payment. Commonly applied to hospitalization plans

See Also DEDUCTIBLES.

Exclusion

Terms in the insurance plan that restrict the scope of the policy. For example, suicide is often excluded within first year of policy.

Financial Advisor

Also known as financial consultant, agent or broker. He/she will advise the client on the client's financial and insurance needs and sells the appropriate product to the client. Their formal name : Financial Adviser Representatives.

Financial Needs Analysis

The process that your Financial Advisor understands your financial needs, situation, goals, risk appetite, etc so as to formulate solutions for you.

Guaranteed vs Non-Guaranteed Returns

Guaranteed Returns refer to the portion of the policy which returns are well, guaranteed. The Non guaranteed portions refer to the indicative or possible returns that the policy might provide in the future. Non guaranteed projections are only for illustration and do not necessarily reflect the true or actual returns of the policy.

Independent Financial Advisor (IFA)

A Financial Advisor who can sell products from various insurance companies.

Investment Return

The yields from the investment portion of the policy.

Maturity

At the point when an Insurance Policy comes to its end. Some plans have a set maturity period (like Term and Endowment Plans).

Par Plan

Short for Participating Plans. The insurer takes a portion of your premium to invest and you partake in the profits/loss if any. Participating policies are those that provides both guaranteed and non-guaranteed benefits whereas non-participating ones only provides a guaranteed benefit.

Personal Accident

An Insurance policy that covers one against accidental death or injury.

Policy Issue / Reinstatement

To revive a previously terminated policy. Usually subjected to underwriting.

Policy Holder

The person who owns the policy. He is responsible for the premium payments. Also known as the Policy Owner.

Policy Loan

When one's policy has cash value, one is able to take a loan out of his/her policy in the time of need. Usually subjected to an unfavourable rate of interest.

See Also SURRENDER VALUE, PREMIUM HOLIDAY.

Policy Owner

See POLICY HOLDER.

Preexisting Condition

The medical conditions that one already has before policy inception (start of the insurance policy).

Premium

The amount of money you need to pay to enjoy coverage by a certain plan. Think of it as the price of insurance. It can be usually be paid annually, bi annually or on a monthly basis depending on the plan.

Premium Holiday

When one's policy has cash value, one may use the value to offset (pay) the premium. The act of using the policy's own cash value to offset the premiums due is called a premium holiday - the policy owner takes a holiday from paying the premium, so to speak.

See Also SURRENDER VALUE, POLICY LOAN.

Product Summary

An overview of the terms and conditions of the insurance policy. Usually comes together with the Benefit Illustration.

See Also BENEFIT ILLUSTRATION.

Proposal Form

The fact-finding document that the Insurer requires one to answer with honesty so to facilitate underwriting. A dishonest answer may result in cancellation of insurance.

See Also UNDERWRITING.

Reversionary Bonus

The additional bonus added to the guaranteed benefit of the policy. It is usually declared annually and once declared, becomes part of the guaranteed portion of the policy to be paid out upon maturity.

Riders

Addtional benefits attached to the main plan to make it more comprehensive. Some benefits are only available through riders.

Sum Assured

The agreed amount of money between Insured and Insurers that is payable upon the occurance of the covered events. Also known as cover.

Surrender Value

The money that Insured will receive upon early termination of policy, if any. This is the amount of money that you get back should you wish to stop (surrender) the plan. The amount is usually lower than the premium you have paid thus far, unless the plan has been on going for a long time. Certain types of insurance have no surrender value (eg Term Plans, Shield Plans).

Terminal Bonus

Bonus that is paid at policy maturity or upon death, TPD or Terminal illness of the Life Insured. It is a one time bonus which is determined annually by the Insurance company. Generally speaking, the longer the policy has been in force, the greater the Terminal Bonus.

Terminal Illness

When a doctor diagnoses that one has less than 1 year to live. It is different from critical illness which must be pre-defined.

TPD: Total Permenant Disability

Lasting inability of a person to perform any work.

Wavier of premium benefit

Clause that allows one to continue his/her policy without further payment of the premium. It is activated on certain condition, i.e disability, contact of critical illness etc. It is usually only available for purchase as a rider.

See Also RIDER.

Underwriting

The process of accepting risk and guaranteeing payment for insured event. The company or person who underwrites is often referred as underwriters. Underwriters determine and decide if the Insurance company is willing to accept the risk of insuring a person.