Glossary of Insurance Terms

Risk Benefits

Risk benefit refers to the sum assured payable under this policy in the event of contingencies such as death or disability as defined in this policy.

Single Premium Policy

A policy whereby one premium is paid at the commencement of the policy. The amount is considerably larger than policies receiving regular premiums.

Standard Risk

Person who, according to an insurance company’s underwriting standards , is entitled to insurance protection without extra rating or special restrictions.

Stop Order

A method of paying premiums whereby a deduction is made from the premium payer's salary, by his/her employer, and paid directly to the insurer.

Sum Assured

The amount that becomes payable in the event of a claim.

Surrender Value

The surrender value of a policy is that amount of money that a policy owner will receive out of the investment account if he/she decides to cancel the policy.

Surrender

To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder is paid the cash value on surrender

Switching

A form of malpractice in selling life assurance where a salesman persuades a policyholder to terminate an existing policy with a company, and buy another one. As an introducer of the new policy, the salesman will thus earn fresh commission. As it is nearly always
against the policyholder's interest to do so, this practice is heavily frowned upon 

Term

The period for which a policyholder agrees to pay premiums in return for which the assurer guarantees benefits; i.e. how long the policy will last.

Terrorism

Terrorism means the use or threatened use of force or violence against person or property, or the commission of an act dangerous to human life or property, or the commission
of an act that interferes with or disrupts an electronic or communication system, undertaken by any person or group, whether or not acting on behalf of or in any connection with any organisation, government, power, authority or military force, when the intent is to intimidate, coerce or harm a government, the civilian population or any segment thereof, or to disrupt any segment of the economy.

Uberrima Fides

Latin phrase for the principle of "utmost good faith" on which life insurance is based. Essentially, it means that for the insurance contract to be valid, both the insurance company and the applicant must be totally and completely honest in their dealings with each other.

Underwriter

The person who assesses the risk for the insurer, by examining and interpreting the medical evidence and information contained in the application to determine the terms that should be offered the applicant.

Waiting Period

A period of time set forth in a policy which must pass before some or all coverages begin.

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