III IC-28 key terms

A legally binding agreement in which one party (the insurer) promises to indemnify or pay a benefit to another (the insured) in exchange for a premium, contingent on a specified uncertain event.

The person or entity that owns an insurance policy and holds the contractual rights under it, including the right to receive benefits and to cancel coverage. May differ from the insured life.

The individual whose death, survival, or health condition triggers payment under a life or health insurance policy. The insured life need not be the policyholder or premium payer.

A person or entity named in a policy or designated under its terms to receive the death benefit proceeds when the insured life dies. The designation may be revocable or irrevocable.

The consideration paid by the policyholder to the insurer in exchange for assuming risk. It is calculated from expected claims, expenses, and a margin for profit and contingencies.

The sum payable to a beneficiary upon the death of the insured life, as defined by the policy. It may be a fixed amount, the accumulated fund, or a combination of both.

The stated amount of coverage selected at policy inception that forms the basis for calculating benefits and premiums. It may be adjusted by bonuses, riders, or indexation.

The legal and financial relationship a person must have with the insured life or property at inception, such that they would suffer a genuine loss from the event insured against.

The process by which an insurer assesses a proposed risk, classifies it according to expected claims cost, and decides whether to accept it and on what terms and pricing.

Grouping of applicants into categories with similar expected loss experience so that premiums reflect the cost of the risk. Factors may include age, sex, health, and occupation.

A statistical schedule showing the rate of death at each age for a defined population. Insurers use it to estimate expected claims and to price life insurance products.

A statistical schedule showing the incidence or prevalence of sickness, injury, or disability by age or duration. Used to price health, disability, and critical illness coverage.

The increased likelihood of loss arising from a person's dishonesty or changed behaviour once insured, such as deliberately causing a claim or neglecting to prevent loss.

The tendency for people with higher-than-average risk to seek or retain insurance more readily than lower-risk people, which can distort pricing if risks are not properly classified.

Coverage that pays the death benefit only if the insured dies within a specified period. It provides pure protection with no significant savings element and expires without value.

Permanent coverage that remains in force for the insured's entire lifetime, provided premiums are paid. It typically combines a death benefit with an accumulating cash value.

A contract that pays a stated sum on a fixed maturity date if the insured survives, or earlier on death. It blends protection with a guaranteed savings payout.

The savings or investment component that builds within certain permanent policies, representing the amount available on surrender or as a basis for policy loans.

The amount an insurer pays to a policyholder who terminates a policy with an accumulated fund before maturity or claim. It may be less than the premiums paid.

A contract that converts a lump sum or series of payments into a stream of income, often for life. It addresses the risk of outliving one's financial resources.

Insurance that pays a lump sum if the insured is diagnosed with a specified serious condition, such as cancer or stroke, meeting the policy's defined criteria.

An optional provision added to a base policy that extends, restricts, or modifies coverage, often at additional premium. Examples include waiver of premium or accident benefits.

Termination of a policy because required premiums were not paid within the grace period. Coverage ends and the policyholder generally loses the protection.

A specified period after a premium due date during which the policy remains in force even though payment is late. A claim during this period may be reduced by overdue premium.

A short period after policy issue during which the policyholder may cancel the contract and receive a refund of premiums paid, allowing review of the terms.

A consumer protection right allowing a buyer to withdraw from a newly purchased insurance contract within a set number of days without penalty, subject to the policy terms.

Failure by an applicant to reveal material facts relevant to the insurer's assessment of risk. If material, it may entitle the insurer to void the contract or adjust benefits.

A false or misleading statement made by an applicant or insurer during negotiations. A material misrepresentation can allow the affected party to rescind the contract.

A principle requiring both insurer and applicant to deal honestly and disclose all material facts relevant to the risk. Breach may affect the enforceability of the contract.

The principle that insurance should restore the insured to approximately the financial position held before the loss, rather than provide a profit from the event.

The insurer's right, after paying a claim, to take over the insured's legal right to recover the loss from the party responsible, preventing double recovery.

Insurance purchased by an insurer to transfer part of its assumed risk to another insurer, protecting against large individual claims or aggregation of losses.

The portion of risk an insurer keeps for its own account rather than ceding to a reinsurer. It reflects capital capacity and appetite for risk.

The ability of an insurer to meet its obligations as they fall due, measured by the adequacy of its capital and reserves relative to its liabilities and risks.

Liabilities set aside by an insurer to meet expected future claims and benefits on policies already in force, calculated using actuarial assumptions and regulatory rules.

The risk that people live longer than expected, increasing the cost of lifetime income products and pension obligations. It is the mirror image of mortality risk.

Controls and procedures insurers use to detect and prevent the use of policies to conceal or legitimise criminal proceeds, including customer due diligence and suspicious transaction reporting.

The process of identifying and verifying a client's identity and understanding their financial profile before and during a business relationship, as required by AML rules.

Checking customers, beneficiaries, and transactions against government watchlists and embargo lists to prevent dealing with prohibited persons or regimes.