Need a little help defining some of those words in your insurance policy? Look no further for assistance.
Bonus - Relates to a with-profits policy. The amount of money added to the benefit payable under the policy. The amount is dependent upon the profits made by the insurance company. Added bonuses cannot be taken away.
Benefit - The money paid to the policyholder when a claim is made.
Bid Price - The selling price or cash-in value of your unit holdings.
Convertible Term Assurance - A term used in insurance policy that gives you the option to convert your current policy to a whole-life or endowment insurance policy, without having to take further medical examinations.
Critical Illness Insurance - A policy that pays out a lump sum on the diagnosis of life threatening illnesses indicated in the terms of the plan.
Decreasing Term – This is a form of term life insurance where the death benefit decreases each year as per your policy. Premiums remain level. This type of certificate is frequently sold as mortgage insurance. There is no surrender value for this policy.
Endowment Insurance – This is an insurance policy that pays a stated amount at the end of a specified period or upon the death of the insured if it occurs within that period.
Family Income Benefit - Term assurance which pays money to the life assured's dependents for a set period, rather than paying a lump sum.
Guaranteed Bond – This is defined as a bond in which principal and interest are guaranteed by an entity other than the issuer. Guaranteed Bonds can be income or growth.
Increasing Term - The cover and the amount you pay into the policy are increased by a specific percentage each year calculated on the original sum insured. Designed to increase your life cover as your earnings increase.
Maturity - It is an agreed date when an endowment policy ends and the proceeds, including any bonuses, are payable.
Offer Price - The price at which fund units are bought.
Premium - The amount of money paid into an insurance policy.
Renewable Term - Term Insurance that may be renewed for another term without evidence of insurability.
Single Premium Policy - Where a single lump sum is paid for an insurance policy.
Sum Insured - The amount of money that is guaranteed to be paid under an insurance policy, before any bonuses are added.
Terminal Bonus - This is an extra bonus determined when a death or maturity claim is paid. Terminal bonus is often only paid if the policy has been in-force for a minimum number of years at claim time. The amount is dependent upon the profits made by the insurance company.
Whole Life Insurance - Whole life insurance provides a death benefit for the policyholder as it builds up cash value. The policy remains in force for the lifetime of the insured, as long as premiums are paid according to the policy agreement. You can choose insurance that pays out on death a guaranteed sum only, the sum plus any bonuses that have been added, or the sum plus any additional value from the growth of the funds invested in.
Without Profits - When a policy reaches maturity or the policyholder dies, the amount paid out is the basic guaranteed sum only. You would not be entitled to any bonuses.