Insurance Terms and Concepts
Insurance Terms and Concepts
Covered Parties—Individuals or entities protected by an insurance policy.
Benefit: The amount of money given to the policyholder in the event of a claim.
You can think of the bid price as the selling price or the value of your units in terms of cash.
"Bonus" means "with-profits policy" in this context. Amount added to the policy's payable benefit. How much the insurance company makes determines the amount. You can not take away extra bonuses.
You can avoid additional medical exams by purchasing a convertible term assurance policy, which allows you to upgrade your term insurance coverage to a whole life or endowment policy at any time.
The policyholder receives a lump sum payment in the event that they are diagnosed with a qualifying critical illness, as outlined in the policy's terms.
The death benefit on a decreasing term policy declines at a set rate every year, according to the policy's terms. Premiums have stayed the same. Mortgage insurance is a common use for this sort of certificate. For this policy, there is zero surrender value.
A type of permanent life insurance, endowment policies pay out a set amount either at the conclusion of a set term or, if the insured dies within that term, at the end of the given time.
Term assurance that distributes funds to the dependents of the life assured over a predetermined length of time as opposed to a single, large payment is known as a family income benefit.
An interest and principal payment on a guaranteed bond are backed by a third party rather than the issuer. The bonds might be either income or growth bonds.
Coverage and premium payments are enhanced annually by a predetermined percentage based on the initial sum insured under an increasing term policy. Developed to allow you to augment your life insurance coverage in proportion to your income level.
Bond for Investment—Includes both investment and life insurance. Your money, typically in one large payment, goes into the with-profits or unit-linked funds (Life Funds) of the insurance company or investment bond. The unit-linked single premium bond and the guaranteed bond are two examples of the many bond kinds. A fixed-rate investment option where your selected Life Funds may be invested; not to be confused with a bond issued by a corporation or the government.
Life Fund—Unit linked investment funds are often what this term refers to. Companies that specialize in life insurance or pensions manage these money. People who have life insurance coverage can invest these funds. The fund's assets are split between multiple divisions. Units are distributed to investors in a Life Fund based on the amount they invest.
The maturity date is the predetermined end date on which the proceeds, including bonuses, of an endowment policy are due.
The policyholders of a life insurance firm that shares in the earnings own the business, making it a mutual.
Units of the fund can be purchased at a price known as the offer price.
Amount paid into an insurance policy; also known as the premium.
One example of a proprietary business is a life insurance firm that distributes its earnings to stockholders.
In order to guarantee a tax-free payout, a qualifying policy must be established for at least 10 years and meet specific policy requirements.
Term insurance that can be renewed for another term without proof of insurability is called renewable term insurance.
Where an insurance policy is purchased with a single, large payment.
The sum insured is the total amount that an insurance policy promises to pay out, minus any bonuses.
Value at Surrender—Not all life insurance policies have this provision. How much money an insurance policyholder gets when they cancel their policy
Term insurance primarily serves to safeguard policyholders. In order for a life insurance policy to pay out, the insured must pass away within the policy's term, which is typically a set number of years. There will be no payment due if you live past the period. The general public views this as the most affordable policy option.
Bonus calculated at the time of death or maturity payout—also known as the terminal bonus. In most cases, the policy must have been in existence for a certain number of years prior to the claim in order to receive the terminal bonus. How much the insurance company makes determines the amount.
One name for a unitised profit fund is a unit-linked profit fund, however it goes by more names than that. A special kind of life fund that may put its money into stocks, bonds, real estate, and other assets both domestically and abroad. 'Units' are what you purchase when you put money into this fund via an insurance policy. An annual bonus can be proclaimed in two ways: either more units are given to you or the price of each unit is increased daily. The value of the underlying investments is not reflected in the unit price because bonuses have been added.
Unit-Linked may also be known as Unitized. You can invest part of your insurance premium in a fund by purchasing "units" if your coverage is unit-linked. Your policy's face value upon maturity will be proportional to the appreciation of the fund into which it was invested. Typically, it is used to describe savings and protection plans like investment bonds, whole life insurance, and endowment policies.
An insurance policy that allows you to invest a single lump amount across multiple life funds is called a unit-linked single premium bond.
Insurance that grows in value over time and pays out a death benefit to the policyholder is known as whole life insurance. As long as the insured continues to pay premiums as agreed upon, the insurance will continue to cover them throughout their lives. Insurance payouts can be based on a certain amount alone, on the principal plus any bonuses paid, or on the principal plus any rise in the value of the invested money.
When a policy matures or the policyholder passes away, the payout is the basic guaranteed amount only; there are no profits. Bonuses would not be due to you.
Financially Beneficial-Regarding insurance plans that offer both financial security and investment opportunities. The policyholder is eligible to receive a portion of the insurance company's earnings. Typically, reversionary bonuses are distributed annually to reflect the investment development of the with profit fund's assets, and premiums are invested in this fund. An additional terminal bonus could be added to the fund value at death or maturity.
One type of insurance coverage is the With Profits Bond, which invests your lump payment in a Unitised With Profits Fund. This fund is part of the Life Funds division.
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