Genesage Life Insurance offers this Glossary of Terms to help you understand our income protection and life insurance products.
Refer to this page as you read the information on our website and contact us if you have additional questions.
Acceptance: when a life insurance company accepts an application for cover. Acceptance may occur instantly or after one or two weeks.
Accident, Sickness, and Unemployment: also called mortgage payment protection insurance (MPPI). This insurance provides replacement income in the event of sickness, an accident, or unemployment. Income is designed to cover mortgage payments and additional regular outgoings and may be provided for up to 12 months.
Convertible Term Life Insurance: level term life insurance featuring a built-in option to convert this policy into a whole of life policy or other cover at a later date.
Critical Illness Cover: pays a lump sum benefit upon diagnosis of a qualifying critical illness during the policy term.
Decreasing Term Life Insurance: life insurance that decreases by a fixed rate annually. It is not designed to match the balance of a mortgage, which decreases more slowly during the initial years.
Family Income Benefit Life Insurance: life insurance that provides a regular income benefit until the policy term ends rather than providing a lump sum payment.
Diabetes Life Insurance: specialized life insurance for individuals diagnosed with diabetes. This cover is typically difficult to find and tends to be more expensive than other types of life cover.
Group Life Insurance: life insurance obtained by a group of people, typically those who work for the same employer. A group life policy usually features more lenient underwriting limits.
Guaranteed Premium: a premium that remains the same for the policy term.
HIV Life Insurance: life insurance for individuals diagnosed with HIV. Some providers require applicants to be on Highly Active Antiretroviral Therapy (HAART) in order to qualify.
Income Protection Insurance: cover that provides replacement income due to ill health that prevents the policyholder from working. Income continues until the policyholder returns to work, dies, retires, or the policy term ends.
Increasing Term Insurance: life insurance that increases annually without requiring a medical. Consumers requiring life cover that increases in line with inflation or income increases select this type of life insurance.
Indexation: increasing policy benefits and premiums annually in line with inflation.
Insurable Interest: when one party has a dependent and/or close financial relationship with another. Insurable interest exists between spouses, between director shareholders in a close company, by a company on a key person, and by anyone who is a financial dependent of another person.
Keyperson Life Insurance: life insurance for a keyperson, who is an individual within an organization who contributes considerably to the market position of the organization. One example is a sales director who uses business contacts to personally contribute to significant company turnover. If illness prevented this individual from working or if this person died, the company would have trouble finding an immediate replacement, resulting in financial losses. This insurance is available to companies of all sizes.
Lapse: when nonpayment of premiums causes a policy to end.
Level Term Life Insurance: pays a fixed lump sum if the policyholder dies during the policy term.
Life of Another: making a life insurance application to assure someone other than you. The insurance provider will require proof of an insurable interest in the life assured.
Mortgage Protection Life Insurance: life insurance cover in which the lump sum benefit reduces in accordance with the outstanding balance of a mortgage over time. This cover pays a lump sum if the policyholder dies during the term of the policy.
Renewable Term Life Insurance: short-term life cover that can be renewed every five to ten years without medical underwriting
Reviewable Premium: a premium subject to review, typically after the initial ten years of the policy and every subsequent five-year period. If the policy has a low value, the premium may need to be increased to meet the additional cost of life assurance cover due to the older age of the assured. A guaranteed option may be built into this policy, permitting an increase in the assured sum without additional health evidence. A guaranteed option typically applies to a mortgage increase, marriage, and childbirth.
Settlor: an individual who establishes assets under a trust. The settlor is responsible for agreeing to the trust deed provisions, appointing trustees, and specifying trust beneficiaries.
Terminal Illness Benefit: a benefit that allows a policyholder to claim the proceeds of a life insurance policy early upon diagnosis of less than 12 months to live. Life cover may include this benefit at no additional charge.
Total and Permanent Disability (TPD): covers medical conditions and illnesses not listed in a critical illness policy when there is not a long-term prospect of recovery. Most critical illness and term life policies offer TPD for no additional charge.
Trust: established when an individual wants proceeds from a life insurance policy to be paid to dependents in a straightforward process upon his or her death. The proceeds are paid to trustees who pass them to beneficiaries according to the trust deed terms. A trust is often used when a life assurance policy is taken to provide protection to family, partners, or shareholders or for inheritance tax funding.
Establishing a life assurance policy under a trust has multiple advantages. Subject to specific conditions, the proceeds are excluded from the estate of the deceased, avoiding inheritance tax. A Grant of Representation is not required for trust funds to be paid to trustees. This enables the insurance company to pay the proceeds within several days of receiving the death certificate.
A flexible power of appointment trust is the trust most commonly use for a life assurance policy. It provides the settlor with power to appoint new trustees and change beneficial interest during his or her lifetime. Before establishing a trust, seek advice from a professional because this arrangement is complex.
Trustees: individuals or a corporate body appointed by a trust settlor to administer the trust according to its conditions and terms. Trustees are legal owners of the assets in a trust but hold these in trust for the benefit of trust beneficiaries.
Waiver of Premium: for an additional charge, this will cover the cost of premiums during a period of ill health.
Whole of Life: life insurance that is open-ended. It is available as an investment element or a guaranteed rate, non-investment product that is typically more expensive.
Will: a legal declaration designating one or more people to manage your estate and providing for transfer of property upon your death. A will can be drafted by a solicitor or created online.