Ever felt confused by the wording of your insurance policy? With terms like “guaranteed assurability” it’s no surprise! We put common insurance terms in plain language, so everyone can understand.
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 policy books for funeral and life cover that have more details on your policy.
When death is a result of an unforeseen accident or event such as a car accident (as opposed to death from an illness which is known as a natural 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.
The person or persons, or trust, who will benefit from your policy and receive the claim pay out. Always name beneficiaries on your life and funeral policies because it means 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.
A Continuation Benefit allows you to add one or more members to a funeral policy.
Applies to funeral cover and allows you to add one or more members to a funeral policy so the policy doesn’t end when the principal member passes away.
When you take out life 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 there are major life changes such as you take up smoking, move to another country, travel for extended periods 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.
The date on which your policy starts, and your cover begins. This date becomes your policy anniversary in the following years.
Giving your insurer the information they need in order to assess your risk correctly and provide suitable cover. Disclosure is really important – it means you answer questions your insurer asks honestly and completely and don’t leave out information. Insurers also need to disclose what kind of cover they offer and their terms and conditions – you can find this in your policy document and policy book.
A clause in a policy that excludes cover for certain events and/or activities. For example, you may have had a recent heart attack when you apply for life cover and although your insurer is willing to give you cover, they exclude claims that are the result of a heart condition.
A great benefit that allows you to increase your sum assured by a specified amount or percentage within a certain time, without having to go through medical underwriting. Guaranteed assurability benefits can be taken up when a significant life event happens such as buying a house, getting married or having a child, or on your policy anniversary.
As the name suggests, this is something dangerous that may affect your risk and life cover. If you are thinking about taking up 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.
You have an insurable interest in someone if their death, illness or disablement 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 and the life assured – for example spouse, partner or parent. You cannot insure if there is no insurable interest.
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.
Information your insurer should have about you that can affect your risk. 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 are also material information.
This is death due to a natural cause such as a heart attack or illness such as pneumonia. An unnatural death is a result of a violent act or accident, such as gun fire or a car accident.
The time over which premiums are guaranteed to remain the same or increase by a set amount or percentage. If your policy has annual escalations your premium increase amounts will be specified upfront and won’t change.
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. For example, your policy may include disability and life cover and stipulate that if you become disabled the premium will be waived for six months.
The amount by which your policy increases annually, or on a specified date. You will find this in your policy schedule.
Certain funeral policies allow you to transport the remains of the deceased life assured from the place of death to the final funeral home closest to the burial place in 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.
When a lapsed policy is reinstated and put back in force.
Your life policy may pay out the sum assured before your death if you are suffering a terminal illness and have less than 12 months to live. This needs to be verified by the insurer’s medical officer.
The process of assessing your risk. Medical underwriting includes assessing the questionnaire you are asked to complete when taking out insurance, completing an HIV test, and any other blood test or medical examination.
The time between taking out an insurance policy and the benefits kicking in. 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.
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, we’re just a click or a phone call away.