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Ever felt confused by the wording of your insurance policy? With terms such as “guaranteed assurability” it’s no surprise! We put common insurance terms in plain language, so you can understand them.
Our list below covers most of the common insurance terms. We don’t have space to cover them all – so if you come across a term you’re not completely comfortable with take a look at our 1Life Insurance glossary, or our 1Life Insurance policy books for funeral and life cover terms and explanations.
Accidental death
When death is a result of a sudden and unforeseen event occurring at an identifiable place and time, which has a visible, violent or external cause. Death as a result of a car accident is an example of an accidental death. You’ll see this in policies where there is a waiting period before the full benefits begin and only death as a result of an accident is covered in the waiting period.
Beneficiary
The nominated person or persons, or institution who will benefit from your policy and receive the pay-out for a valid claim. Always name beneficiaries on your life and funeral policies because it means valid claims will be paid directly to the beneficiaries. If a beneficiary is not nominated the claim will be paid into the deceased estate, which needs to be finalised before your heirs receive any payment.
Continuation option
Applies to funeral cover and allows the main member to add one or more members to a funeral policy so that the policy doesn’t end when the main member passes away.
Continuity of cover
When you take out life and funeral insurance, your cover continues as long as you pay the premiums on time. If you don’t, the continuity of cover may be interrupted, or cover may fall away completely. The continuity of cover can also be interrupted if you don’t inform your insurer of any major life changes such as you start smoking, move to another country, travel for extended periods (more than 14 consecutive days) outside South Africa, change occupation or take up a hazardous pursuit. If these happen, tell your insurer and see if you can make arrangements to keep your cover in place.
Commencement date
The date on which your policy starts, and your cover begins. This date becomes your policy anniversary in the following years.
Disclosure by the life assured
Giving your insurer the information they need in order to assess your risk correctly and provide suitable cover at an appropriate price. Disclosure means that you answer all the questions your insurer asks honestly and completely and don’t leave out any information. If there is no disclosure of material information, such as you have a chronic condition, or that you are a smoker claims may be reduced or declined. Insurers also need to disclose what kind of cover they offer and their terms and conditions, which you will find in your policy documents.
Exclusion
A scenario in which the policy will not perform, and claims will not be paid. An exclusion effectively excludes cover for certain events and/or activities, such as death due to a heart condition. Any exclusions that apply to your policy will be stated on your policy documents.
Guaranteed assurability
A benefit on 1Life Pure Life Cover policies that allows you to increase your life cover by 25% of the original sum assured, up to a maximum of two times (double) the amount originally insured, on every third policy anniversary, subject to terms and conditions. No medical underwriting other than an HIV swab is required.
Hazardous pursuits
As the name suggests, these are dangerous activities that increase the risk of death or disability of the life assured. If you are thinking about taking up hazardous activities such as rock climbing, paragliding, scuba diving, or anything to do with speed, check if your cover will apply or if a claim as a result of death because of a hazardous pursuit will be excluded.
Insurable interest
You have an insurable interest in someone if their death, disability or illness would result in you suffering a financial loss. Insurance would replace some of this financial loss. For an insurable interest to exist, there needs to be a recognised relationship between the policyholder/owner/main member and the life assured at the time of the commencement of the policy, such as spouse, partner or parent. You cannot insure if there is no insurable interest.
Lapse
When a policy is no longer in force (it isn’t valid) and no claims will be paid. Policies lapse when premiums aren’t paid, so it is really important to keep your premiums up to date.
Material information
Information you share with your insurer that allows them to accurately assess your risk and determine if the policy can be accepted or not. For example, do you smoke, or have you had a serious health problem in the past, or are you currently undergoing treatment for a health condition? Do you engage in any dangerous pastimes? Your occupation, income and any other insurance policies you have had in the past or currently have are also material information.
Natural death
This is death due to natural causes such as disease or old age, rather than from an act of violence or injury. Heart attacks or illness such as pneumonia are examples of natural causes of death.
Premium guarantee period
The length of time for which the insurer guarantees premiums will not change, other than through compulsory annual premium escalations.
Premium waiver
This benefit allows for the premiums on a policy to be waived (not paid) for a certain amount of time without any interruption to the continuity of cover.
1Life Insurance funeral policies allow for a premium waiver of up to two years for additional members if the main member passes away and their funeral claim is paid out. Premiums do not have to be paid during the premium waiver period. At the end of the premium waiver period, the first spouse covered on the policy can exercise a continuation option to continue with the policy and premiums will be payable again.
Premium escalation
The amount by which your policy increases annually, or on a specified date. You will find this in your policy schedule.
Repatriation service
Certain funeral policies provide for the costs of transporting the remains of the deceased member from the place of death to the final funeral home closest to the burial place, within the borders of South Africa. What is covered varies but can include transport of the remains with a family member from the place of death to a funeral home, and assistance with legal requirements such as getting a death certificate etc.
Reinstatement
When a lapsed policy is reinstated and put back in force, subject to any terms and conditions the insurer imposes.
Terminal illness cover
Your life policy may pay out the sum assured before your death if you are suffering from a terminal illness and have a life expectancy under a certain timeframe. This needs to be verified by the insurer’s chief medical officer.
Underwriting
The process during which the insurer determines the level of cover it is prepared to offer, taking into consideration various financial limits based on age, gender, occupation, income and current life insurance, hazardous pursuits or hobbies, personal health status, family health history and insurable interest.
Waiting period
The period during which time a claim cannot be made on the policy and premiums are payable to the insurer. For example, you cannot claim a death benefit as a result of the suicide of the life assured for the first two years of a life policy.
The bottom line
While insurance terms might be unfamiliar to most people, once they’re explained in plain language, the concepts are quite simple. And remember, if you’re at all confused by any term, chat to your financial adviser or one of our skilled consultants who can help explain and ensure you understand your policy and cover.
Published on: 8 May 2018
Updated on: 6 March 2024
