Insurance Glossary

Employee Benefits Glossary

Investment Glossary

Automatic Premium Loan
  • A provision in a traditional life insurance policy that allows utilisation of policy cash value to keep the policy in effect. When no premium is paid after the grace period, cash value in the policy will be borrowed (with interests) as a temporary means to pay for the premiums in default and thus keep the policy in effect. This will continue until either the cash value in the policy has been used up or the outstanding premium is paid.
  • A beneficiary of a life insurance policy is the designated person who will receive the insurance proceeds if the insured passes away.
Cooling-off Period
  • To protect customers’ interests, an applicant purchasing a long-term insurance policy is given a cooling-off period to review the terms and conditions of the policy after the purchase. During the cooling-off period, if the applicant changes his/her mind, he/she has the right to cancel the policy and get a refund of premium paid, subject to market value adjustment (if applicable).
Customer Protection Declaration Form
  • The intent of this form is to ensure an insurance intermediary has clearly explained to the applicant in detail that any consequences, real and potential disadvantages in replacing the existing insurance policy with a new policy.
  • It is the amount of expenses that must be borne by the policy owner before an insurer will cover any expenses.
Disability Income Insurance
  • An insurance policy that insures against the risk of loss of income due to disability.
  • Insurance company distributes its surplus in the form of dividends for the participating policies. It is non-guaranteed and determined by the insurance company from time to time.
  • A written provision that is attached to the original contract and supplement the original provisions.
  • It is common to have exclusions in an insurance policy which the insurance company would not be liable for the losses resulting from those specified events under the exclusions.
Grace Period
  • A period of time (grace period) for the policy remains in effect even after a premium is due.
Guaranteed Renewal
  • The insured is guaranteed to renew his/her policy to a specified age regardless of changes in the insured’s health or claims record.
Incontestability Provision
  • A provision in a life insurance policy stating that the insurer cannot contest the validity of the policy after it has been in effect for 2 years except for fraud and non-payment of the premiums.
Insurable Interest
  • An applicant purchasing an insurance must have an insurable interest in the insured item/person. A person is regarded as having an insurable interest in something/somebody when the loss or damage to the item/person concerned would cause that person to suffer a financial loss and/or other kinds of loss.
Level Premium
  • The level premium rate is based on the insured's attained age and remains unchanged until the end of the premium term.
  • Refer to the end of policy term, a policy is no longer in effect after maturity.
Misstatement of Age and Sex
  • A provision in a life insurance policy stating that if the insured’s age or sex is misstated, the benefits payable is the amount that the premium would have purchased at the correct age or sex.
Participating Policy
  • Life insurance plan that shares the company's profit by distributing dividends to the policy owners.
Pre-existing Condition
  • A physical or mental condition of an insured that exists before the issuance of the policy.
Reinstatement Provision
  • A provision in a life insurance policy that allows policy owner to restore a lapsed policy (usually due to non-payment of premiums) in effect if certain requirements are fulfilled.
Suicide Exclusion Clause
  • A provision in a life insurance policy stating that if the insured commits suicide within a specified period (usually 1 year from the policy effective date), the insurance company will only refund the premium paid without interest as the death proceeds.
  • Insurance underwriting is the process of evaluating the risk of the proposed insured. Underwriter assesses the proposed insured’s health and financial status to determine the insurable coverage and the corresponding premium rate for the proposed insured.
Waiting Period
  • Some or all insurance coverage will only begin after a specified period of time (waiting period) set forth in a policy.
Asset Class
  • The different types of assets available to investors. For example, equities, cash, fixed interest or property.