Do you know the difference between a dual and joint life policy, or a decreasing policy compared to a level term policy? Or what it means to add a continuation option?
If not, below is our A – Z of key jargon used when talking about life insurance. If you feel that there is anything that we have left out, or that you require more information, we’d love to speak to you on: 01 845 0049, or please us our contact us page to leave a message.
Assigning Your Policy
A bank or mortgage lender will require you to sign over your policy to them, for the life of the mortgage. This will involve you presenting the lender with your original policy document and signing a Notice of Assignment which the bank will provide. They will also send a copy to the insurer to note on their files.
For a small additional cost, a continuation option is a very valuable benefit which allows you to extend your coverage under a new policy. You can use this option at any stage throughout your policy term, without having to provide any fresh evidence of health.
For a small additional cost, a continuation option is a very valuable benefit which allows you to extend your cover term or convert from reducing to level cover in the case of a mortgage protection policy.You can use this option at any stage throughout your policy term, without having to provide any fresh evidence of health.
The sum assured (cover amount) on this policy decreases each year for the life of the policy. This type of policy is only suited for mortgage protection purposes, where the loan is being paid off over time.
Dual Life Policy
This type of insurance policy covers two people, though independently. It is effectively like having two single policies where cover will pay benefits on a claim of both people insured.
This type of policy simply refers to any life insurance policy that is used for the purposes of replacing lost income on the death of a breadwinner, or financial loss resulting from a serious Illness.
Guaranteed Insurability Option
This is an automatic additional benefit, with most life insurance and serious illness cover policies. It allows you to increase coverage without underwriting in the event of specific life events, such as a new mortgage, or the birth of a child.
Joint Life Policy
This type of policy covers two people. Joint cover will pay benefits on the first death of either insured person.
This refers to your option to index or has set increases in your premiums and benefits over the term of your policy. This is commonly chosen on family protection policies, in order to protect the value of the policy benefits against the effects of inflation.
Letter of Product Suitability
Before you cover goes live, you will be sent a letter detailing the suitability of the product and insurer recommended to make sure that the policy best suits your needs.
This is an insurance policy with a set term, that does not decrease over the life of the policy. The sum assured stays level and it can be used for personal cover, interest only mortgages and for business protection purposes. If this type of policy is selected for a standard mortgage loan, any balance will be paid to your estate.
This may happen if a life company feels the client applying for cover has a medical history which creates a higher risk for them in taking on the cover. This is usually done as a percentage of the premium. e.g. 50% loading would mean half of the premium will be added on to your quoted premium at the outset.
The life company may require you to attend your GP or an appointed doctor, who will run a few standard tests such as blood pressure, cholesterol, height and weight depending on the amount of cover you are applying for or your medical history.
From time to time an insurer will require more detail on a medical condition you currently have or have had in the past. This questionnaire will ask a number of questions around the condition so the insurer can confirm any risk involved with giving cover.
Mortgage Protection insurance is an insurance policy used to cover the payment of your mortgage loan, in the event of death during the loan term. It can be taken out on a single or joint life basis and can also have optional serious illness cover included on the policy. The term most commonly refers to decreasing term assurance, as most mortgage loans decrease over-time. However, level cover policies used for interest only mortgages, are effectively mortgage protection policies also.
Depending on your age and the amount of cover you are applying for, the life company may not request any medical information if your proposal form has no medical issues noted on it.
These will need to be signed and dated by the lives assured if the premium is loaded or increased in any way and the client is agreeing to the increase in premium.
The life company may ask a nurse to call to you at a time and place that is convenient to do a quick medical. This is very standard and usually takes about 20 minutes to complete.
This is a private medical attendants report sent by the life company to your doctor; you don’t need to attend the doctor as it is completed from your file and sent straight back to the life company by your GP.
This is the application form that the life company will require you to complete to apply for your cover. If you have no medical issues, this should be the only paperwork needed to get you on cover.
Single Life Policy
This type of insurance policy covers one person.
When a company approves your policy and advises there is no change to the original premium quoted, you are being accepted at standard terms, which can also be known as ordinary rates.
Also known as the policy benefit/cover. This is the amount of money you could receive if you have a successful insurance claim.
This is a life cover only, or life and serious illness cover insurance policy. Term simple refers to the fact that the policy has a set initial end date i.e. a defined term.
A trust is a way of ensuring your life insurance policy sum assured goes to the people you want it to when you die. If the policy isn’t owned under trust it automatically becomes part of your estate. A trust is most commonly needed is the case of divorce or when a company wants to effect life assurance to buy back its company shares.
Whole of Life
As the name suggests this is a type of life policy with no set term. It runs for as long as the premiums are paid and is more expensive than term assurance as a result. As term assurance life cover can run to age 89 next birthday, it is most suited for inheritance tax payment purposes.