Accelerated cover

When a particular benefit is paid in advance of the full sum insured, that benefit is said to be ‘accelerated’.  A common example is a funeral benefit on a life cover policy, where the funeral benefit is paid out immediately upon notification of death, while the remainder of the life cover will require receipt of the death certificate and possibly further assessment.


An event not intended by a person insured which causes bodily injury to the person insured.

Accident Benefit

This is a benefit which is payable as a result of an accident.

Agreed Value

A provision in an income protection policy where the amount paid out in the e

vent of total disability is based on the value agreed between the insured and insurer at the time the policy is written. The Agreed Value is normally 55% of income

Annual Premium

The total annualised dollar amount expected to be received by a life office, as payment for contracts of life insurance.


Specialist in risk analysis in relation to insurance. Their job is to analyse risks and to calculate pricing based on that analysist.


Anti-selection occurs when those people who represent a higher risk, and who may therefore be more aware of the benefit to them of having insurance, are able to obtain life insurance cover without disclosing all relevant information and therefore not having their risk priced appropriately.

The increase in claims, or increased costs involved with claim disputes if the insurer declines the claim, ultimately lead to an increase in premiums generally and creates a disincentive for low risk individuals to apply for insurance cover.


Life insurance policies are financial assets and assignment is the way that ownership of a policy can be transferred from one person to another.

Avoid the Policy

An insurer can cancel an insurance policy from its beginning if there has been a fraudulent claim, or there was material non-disclosure or mis-statement at the time the policy was taken out.



A broker is an intermediary appointed by a person seeking insurance to advise them on insurance matters and to arrange insurance cover for them.


Cash Value or Surrender Value

Some policies (the older, traditional policies) provide investment as well as insurance cover. As a result, they acquire a value that increases during the policy’s lifetime and the cash value is the amount that will be paid out if the policy is cancelled. Most insurance providers will grant loans to policyholders based on the cash value of their policy. The loan value is usually a proportion of the cash value.

Child's Policy

These policies provide benefits on the life of a child, but there is a limit on the death benefit and special conditions which must meet the requirements of the Life Insurance Act 1908. The policies are usually owned by the parent or guardian at first, but can be transferred to the child later when they are legally able to own their own policy.The benefit, aside from the insurance cover, is that the child will have the policy set up when they are younger and in better health and therefore at a cheaper rate than if they apply at a later age.


This is a request by the policy owner to the life insurance company for payment of money under the terms of the policy.In the event of a death claim, the claim will be made on behalf of the estate of the life insured, or the surviving owner of the policy.


The payment made by a product provider to an intermediary (agent or adviser) who arranges the sale of a product to a customer. In most cases there will be an initial amount followed by smaller annual amounts for continuing service to the customer. Commission is usually calculated as a percentage of the Annual Premium.Commission may be paid up-front when the policy is issued, or “as-earned”, being a percentage of each premium received by the provider, or upon renewal at each policy anniversary. Alternatively it may be calculated as a combination of these.

Copy Policy

A copy of a policy can be issued to replace an original which has been lost. If the original policy is found it will no longer be valid and cannot be accepted by the life office in the event of a claim.


This is the scope or amount of protection provided by an insurance policy.

CPI Indexation

This is where the sum insured increases each year by the Consumer Price Index (CPI) percentage in order to keep the benefit amount in line with the cost of living. The total premium will increase accordingly. Some insurance providers also offer a minimum percentage option. Depending on the insurance provider and insurance benefits CPI Indexation may be automatic, optional, or unavailable entirely.

Critical Illness Insurance

Usually known as either “Critical Illness”, “Trauma” insurance or “Living Insurance”, this benefit may be paid on diagnosis of one of a range of medical conditions or accidents specified in the policy. The usual conditions covered will include heart attack, cancer, stroke, coronary artery bypass surgery, and severe injuries resulting in paralysis, blindness, or severe burns. Underwriting considerations are generally similar to those for life insurance. This type of cover may be sold as a “stand-alone” benefit or accelerated from another benefit, generally life cover. It is similar in principle to Term Insurance except that it insures against a number of major traumatic illnesses rather than death, and provides payment of a lump sum if you experience any of these illnesses (not including death). Some policies (not all) may also include an additional death benefit.


Days of Grace

A period, usually twenty eight or thirty days, after a premium falls due, in which it may be paid before the policy will lapse.

Deferral Period

For a disability income policy this is the period between when the disability begins and when the policy commences paying a benefit, more commonly referred to as the wait period.

Disability Income/Income Protection/Income Replacement Insurance


This is a form of income replacement cover under which an income benefit is paid when a person is totally or partially unable to work due to an accident or a medical condition. After the initial waiting period, a benefit is usually paid until the individual is declared fit to return to work. Different underwriting considerations apply to disability insurance because there is a higher likelihood of disability than of early death. 

Like Term insurance, Disability Income Insurance has no surrender value.

Duty of Good Faith

A legal obligation on every person who enters into a contract of insurance is to act honestly and provide accurate information to the insurer.The insurer also has the responsibility to act honestly and provide accurate information in dealings with the insured. If any party does not act according to their duty, the contract can be avoided by the other party.



A means of recording on a policy document any variations to the policy’s standard terms at the time of issue or any alterations during the policy term.

Endowment Policy


A traditional life insurance contract designed to pay a lump sum after a specific term (on its “maturity”) or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness. Endowment policies can be cashed in early (or surrendered) and the holder then receives the surrender value which is determined by the insurer depending on how long the policy has been running and how much has been paid into it.


All the assets you own and anything you owe at the time of your death.

Ex-Gratia Payment

This is a goodwill payment made by an insurer where it has no liability to make such a payment under the contract.

Exclusion Clause

This is a provision in a policy stating that the policy does not cover a particular risk or pre-existing condition. For example, a life insurance policy may exclude cover for certain risks such as car racing or a disability policy may exclude a pre-existing back injury.

Expiry Date

This is the date that cover under an insurance contract comes to an end. 

Free Look Period

Most insurance companies allow a period (usually about 2 weeks) after a life insurance policy has been issued to allow the policyholder time to study the new policy and ensure it is what was wanted. If not, the policy can be cancelled and any premiums refunded.

Group Insurance

These are life policies which are owned individually by people who belong to a particular group. For example they may all work in the same industry or for the same employer. The premiums are paid in instalments by deductions from an employee’s salary or wages and forwarded by the employer to the life insurance company.

This is usually issued to an employer under a master contract for the benefit of employees.  In that case, the policy is owned by the employer who also pays the premiums and has an agreement with the employees regarding payment of benefits. The advantage of this form of cover is that it can sometimes be issued without the need for medical examinations.

Guaranteed Level Term Policy

A term insurance policy in which premiums are not programmed to increase with the age of the life insured during the term of the policy unless the policy owner changes the sum insured or the benefits under the policy, or the sum insured is increased by CPI indexation, again with the policy owner’s approval. As the premiums do not increase with age, they are generally averaged out over the life of the policy, so the premiums in the initial years are relatively more expensive than a Yearly Renewable Term policy, but can be relatively cheaper in the longer term.

Guaranteed Renewable

This is feature of some life policies that it places an obligation on the insurer to continue coverage for as long as premiums are paid by the insured.


A quote produced by an adviser for the benefit of their client, detailing the insurance benefits they are applying for, as well as forecasting potential future premium amounts. Forecast premiums are estimated where the benefits increase annually by CPI indexation, as the CPI rate cannot be known in advance.

Inception Date


The date a contract of insurance comes into force and an insurer goes on risk (i.e. the effective date). 


This is the automatic adjustment of a policy’s benefits so that they rise in accordance with the rate of inflation.

In Force

In force means that the policy is current and has not lapsed or matured.


This is an assessment of the risk to the life office of providing insurance on a particular life. Depending on the benefits being applied for, people applying for life insurance are assessed by the life office in regard to their health and family medical history, occupation and leisure activities, habits, place of residence, past insurance history, and financial position. Once assessed, using the information they have provided, and further information the insurer may have gathered on the applicant’s behalf, they can be assessed as either: 

Standard – in good health and acceptable. Sub-standard – a higher risk, possibly because of dangerous pursuits or poorer health. In these cases insurers cope with the extra risk by either charging additional premium, reducing benefits payable, or applying specific exclusions to the policy.

Insurable Interest

The person taking out a life policy is not necessarily the same person whose life is to be covered but should have some financial interest in the survival of that person, or be likely to suffer financial loss on that person’s death. This is called insurable interest. Although insurable interest is not now required by law, life insurance companies will still take a close look at policies applied for where insurable interest is not evident.

Insurer / Insurance Provider / Underwriter

This is the insurance company that has issued the insurance policy.

Insurance Contract

This is a formal contract between the insured and the insurer agreeing to the level of cover which is to be provided and the terms and conditions of the cover.  It is generally made up of three separate documents – the Policy Wording, the Policy Schedule/Summary and the Proposal, Application or Declaration.

Joint Life Policy

There are two alternative ways in which 2 people can be covered by 1 policy. 

First death:  The life insurance company will pay a death benefit when the first person dies and then the policy will finish. Survivor:  The life insurance company will pay a death benefit for both lives. Once the second person dies the policy will finish.

Key Person Insurance

This is insurance cover a business can take out to protect itself in case a vital member of staff dies, or becomes ill or injured and cannot work. 


A lapse occurs when the premiums on a policy have not been paid

.A lapsed policy can still be revived within a certain period of the lapse occurring, usually by paying the outstanding premiums, (possibly plus penalty interest) and supplying evidence of continued good health. 

Letters of Administration/Probate

These are legal documents from the court giving the Administrator or Executor the legal right to take control of assets in the deceased person’s name.


Level Premium Policy

A term insurance policy in which premiums are not programmed to increase with the age of the life insured during the term of the policy. Premiums may still increase for other reasons such as tax changes, CPI increases, or if the insurance provider increases its rates (if the premium is guaranteed – see Guaranteed Level Term Policy).  As the premiums do not increase with age, they are generally averaged out over the life of the policy, so the premiums in the initial years are relatively more expensive than a Yearly Renewable Term policy, but can be cheaper in the longer term


Life Insurance

A life insurance policy pays a benefit on the death of the life insured. That is the basic benefit but a life insurance policy may have additional benefits such as critical illness cover, in which case a benefit will be payable before the death of the person insured.


Life Insured

The life insured is the person who is covered by the insurance but that is not necessarily the same person as the policy owner, or the premium payer.



An extra amount added into the premium because of an additional risk to the life and/or health of the person insured, possibly due to a health problem, occupation, or dangerous pastime.



Material Fact or Matter

A fact, or matter, that would influence the judgement of a prudent underwriter in accepting or rejecting a proposal for insurance, and on what terms.

Memorandum of Transfer

This is the document used to show any change of ownership of a policy.


Mis-statement (Misrepresentation)

A statement made by the insured which is substantially incorrect and would have influenced the judgement of a prudent insurer in assessing the risk or setting the terms and conditions of cover.


Mortality Table

A listing by age of the probable death rates of a similar group of people based on actual past experience. The table shows the assumed number of people left alive at each subsequent age from a given age group.



Nominated Beneficiary

A person the policy owner has chosen to receive the benefits payable from a policy.


This is the failure to disclose material information to the life insurance company. Applicants for insurance have a legal duty to advise life companies of any material facts or matters that may affect the insurance company’s decision to accept the application for insurance, or setting the terms and conditions of cover. Failure to fully and accurately disclose all such material facts or matters could result in a future claim being declined or the whole policy being avoided, for “non-disclosure”.


Personal Statement

A person applying for life insurance will be required to complete a statement giving details of their personal medical history and that of their immediate family in order for the life insurance company to assess their health risk.

Personal Medical Attendant’s Report (PMAR)

When a person applying for life insurance discloses a health problem, the life company may request a medical report from their doctor to provide more detailed information on that problem.

Policy/Policy Document

This is the legal document setting out the terms and conditions of the insurance contract.

Policy Schedule/Policy Summary

This is the part of the policy document that has the specific details relating to the policy owner, and the life insured, e.g. name, address, type and level of cover and premium payable.

Policy Owner/Policyholder

The Policy Owner is the person or persons who own the policy whether it is on their life or another. If one person owns the policy they are called the sole owner.  If two or more persons own the policy they are called joint owners.

Policy Fee

This fee covers the administrative costs of issuing and maintaining the policy, spread over the life of the policy. It is a fixed dollar amount built into the total premium. While the policy fee is unrelated to the size of the policy, some insurance providers’ policy fees are built into the premium itself.

Pre-existing condition

This is any medical condition that an applicant has had before applying for insurance or has at the time of applying.


The amount paid by a Policy owner in return for a contract of life insurance.

Premium Holiday

This is a period when premiums do not need to be paid. It almost always requires the agreement of the insurance company but sometimes it is a benefit feature. Usually the client remains covered, unlike premium suspension when cover is also suspended.

Premium Suspension

This is a period when premiums do not need to be paid. Almost always this requires the agreement of the insurance company but sometimes it is a benefit feature. Unlike a premium holiday, the client’s benefits are also usually suspended. This means no claims will be payable while premiums are suspended and as such a premium suspension should be seen as a last resort.


This is another name for an application form for life insurance.


Rating Agency

Rating agencies are international companies that assess the financial strength and security of insurance companies and provide them with the ratings they must have in order to comply with the Insurance (Prudential Supervision) Act 2010


When an insurance policy lapses the policy owner may be able to recover the full benefits of the policy by paying the outstanding premium (premium debt) and complying with the health requirements, such as providing evidence that there has not been a change in health status.


This is a way that insurance companies commonly protect themselves against large or difficult risks by arranging for the risks to be shared with a reinsurance company, for a fee. The reinsurance company deals only with the life insurance company and not with individual policyholders who need not know that part or all of their policy has been reinsured.


This is an underwriter of reinsurance.


This is the process by which the insured and the insurer continue insurance from one risk period to another.

Replacement Policy

This is a life insurance policy which replaces an existing life insurance policy.  An insured person should carefully compare their existing policy and the proposed replacement policy and assess whether the replacement is in their best interests before making a decision.


Stepped Term Policy

A life insurance policy in which premiums are programmed to increase with the age of the life insured during the term of the policy. Premiums will be low at the start of the policy and will increase during the term, in steps of one or more years, as the risk increases with the age of the person insured. These policies are also sometimes called “Yearly Renewable Term”.

Sum Assured/Insured

The amount the life insurance company guarantees to pay out under the policy upon death, disablement, or when the policy matures.


TPD – Totally and Permanently Disabled

Total and Permanent Disablement cover provides a lump sum when an individual is considered to be so disabled as to be unlikely to ever be able to resume employment for which he or she was suited.

The definition of total and permanent disablement varies depending on the options selected by the policy owner and between the policies of different life insurance companies. The entitlement to a benefit will depend upon the definition of total and permanent disablement in a specific policy.


The term of a policy is the period of time for which the policy is intended to run. This can be until death, for a set number of years, or until a specified age.

Term Policy, Term Insurance, Temporary Insurance

Term insurance is a life insurance policy that never has a cash value but is paid out if the life assured dies before a specified age or date. See also Level Term Policy and Stepped Term Policy.


See ‘Critical Illness or Trauma Insurance’.



A situation where the level of cover is less than what is needed or appropriate.


This is the process in a life insurance company where applications for life insurance are assessed to calculate the risk associated with providing life insurance cover to the applicant. Underwriting lets the insurer set the right premium for each individual policy. In most cases, the underwriter will decide that the risk of claim is in line with the average and a standard assessment will be given.

Some applicants, however, have pre-existing impairments which cannot be covered and which are therefore excluded.

Other possibilities, if the underwriter decides that the risk of claim is higher than the population average, are that the policy may be:

·       accepted but with a higher premium rate;

·       accepted but with modified terms, such as a limited benefit period or limited payment term, or amount of cover;

·       accepted with a combination of the above options;

·       deferred for later consideration, possibly following further medical tests if not quantifiable at the time.

Utmost Good Faith

A legal principle that requires both an insurer and insured to act in good faith towards each other (Latin-Uberrimae Fidei)


Waiting Period (also Deferral Period’ and ‘Stand-down Period’)

This is sometimes known as the ‘stand-down period’. It is the period set out in some Accident and Disability policies before the benefit payments commence.  (See also ‘Deferral Period’).

Waiver of premium

This is an additional benefit available on some policies that will pay the policy premiums, usually while the life insured is disabled, but sometimes also on the death of a life assured.