III IC-02 key terms

A contract in which an insurer pays a stated sum to a named beneficiary when the insured person dies, in exchange for premiums paid by the policyholder.

The person who owns the insurance contract, pays the premiums, and holds the rights granted by the policy, such as naming beneficiaries or surrendering the contract.

The person whose life is covered by the policy. The death benefit becomes payable when this person dies, provided the contract is in force.

The person or entity named in the policy to receive the death benefit. A primary beneficiary is first in line; a contingent beneficiary receives the proceeds if the primary is unavailable.

The amount the insurer pays to the beneficiary when the insured dies. It may be a fixed face amount or include additional amounts such as riders or accumulated dividends.

The base sum insured stated on the policy's schedule page. It is the starting point for calculating the death benefit and often the cash value.

The money a policyholder pays, usually monthly, quarterly, or annually, to keep coverage in force. It reflects mortality risk, expenses, interest assumptions, and the chosen payment mode.

The statistical frequency of death within a defined group over a period, usually expressed per thousand lives. Insurers use mortality tables to price life products.

The frequency of illness or injury in a population over a period. It is central to pricing health and disability cover rather than pure death cover.

The insurer's process of assessing an applicant's risk from health, occupation, lifestyle, and financial information, then deciding whether to accept, rate, or decline the application.

Coverage for a set number of years with no significant savings element. It pays only if the insured dies during the term, and it usually costs less than permanent cover.

Permanent cover that lasts for the insured's entire lifetime, provided premiums are paid. It builds cash value and normally pays a death benefit whenever death occurs.

A contract that pays a stated sum if the insured dies within a set period, or pays the same sum at the end of the period if the insured survives.

The savings portion that builds inside permanent policies. The owner may borrow against it, withdraw it, or receive it on surrender, subject to policy terms.

The amount the insurer pays if the owner cancels a permanent policy and gives up its coverage. It is usually lower than the accumulated cash value in early years.

The minimum benefit a permanent policy must provide if premiums stop, such as reduced paid-up cover, extended term cover, or a cash surrender amount.

Money the owner borrows from the insurer using the policy's cash value as security. Interest accrues, and unpaid loans reduce the death benefit or cash value.

An attachment that adds, limits, or modifies benefits in the base policy, such as a waiver of premium, accidental death, or critical illness benefit.

A rider that suspends premium payments while the insured is totally disabled, keeping the policy and its benefits in force during that period.

A rider that pays an extra amount, often equal to the face amount, if the insured dies from an accident as defined in the policy.

A risk or circumstance the policy does not cover, such as death by suicide within a stated period or death from an excluded cause. Exclusions narrow the insurer's promise.

A provision limiting payment if the insured dies by suicide within a set period after the policy starts. After that period, the full death benefit normally applies.

A window, commonly two years, during which the insurer may deny a claim or rescind the policy if the application contained material misrepresentation or concealment.

A short period after a premium due date, often one month, during which the policy stays in force. If the insured dies, any unpaid premium is deducted from the benefit.

The termination of coverage because required premiums were not paid within the grace period and no nonforfeiture option kept the policy alive.

Restoring a lapsed policy to full force, usually by paying overdue premiums with interest and providing evidence of insurability within a stated time limit.

A short period after policy delivery during which the owner may cancel for any reason and receive a refund of premiums paid, less any amounts already withdrawn.

The principle that both parties must disclose material facts honestly. The applicant must not conceal relevant health or lifestyle information, and the insurer must explain the contract clearly.

Information that would influence an insurer's decision to accept a risk or set its terms. Concealing or misstating such facts can allow the insurer to avoid the contract.

A financial or legal relationship that means a person would suffer real loss from another's death. It must exist when the policy is taken out.

A beneficiary the policyholder may change without that person's consent. Most policies default to revocable status unless the owner requests otherwise.

A beneficiary whose rights cannot be altered or removed without their written consent. The owner generally cannot take loans or surrender the policy without that consent.

A contract that converts a lump sum into a stream of payments, often for life. It addresses the risk of outliving one's savings rather than the risk of dying early.

Cover that replaces part of a person's earnings when illness or injury prevents work. It uses morbidity data and typically pays a percentage of prior income.

A policy feature allowing the owner to continue term cover for another period without new evidence of health, usually at a higher premium based on attained age.

The amount an endowment or similar contract pays when it reaches the end of its stated term while the insured is still alive.

The page of the contract that records the specific details: insured's name, face amount, premium, riders, beneficiaries, and effective dates.