IFMP Life Insurance Agents Certification (LIAC), Pakistan 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 during the policy's life.

The amount the insurer promises to pay on the happening of the insured event, fixed at the start of the policy and stated on the policy schedule.

The person who owns the insurance contract, pays the premium and holds the legal right to exercise policy options, even where the life insured is someone else.

The individual whose death or survival triggers payment under the policy; the insurer assesses this person's health and habits before accepting the risk.

The person or persons named in the policy to receive the death benefit, whose details the policyholder may change during the policy term.

The policyholder's written instruction naming who should receive policy proceeds, made under the relevant insurance law and recorded by the insurer.

A financial or legal relationship that means a person suffers genuine loss if the life insured dies, required at inception for a valid life policy.

The amount the policyholder pays, monthly, quarterly, half-yearly or annually, in return for the insurer's promise of cover under the contract.

An extra period, commonly one month after a due premium date, during which cover continues even though the premium has not yet been paid.

The state of a policy when premiums stop and the grace period expires without payment, so cover ends unless the policy has acquired a surrender or paid-up value.

Restoring a lapsed policy to full force by paying overdue premiums with interest and providing fresh evidence of health acceptable to the insurer.

The cash amount a policyholder receives if a policy with accumulated value is voluntarily terminated before maturity or death, as set out in the policy terms.

A reduced sum assured granted when a policyholder stops paying premiums but leaves the accumulated value with the insurer instead of surrendering the policy.

The amount payable to the policyholder when an endowment or money-back policy reaches the end of its agreed term with the life insured still alive.

The sum paid to the nominated beneficiary when the insurer receives proof that the life insured has died, usually the sum assured plus any declared bonuses.

Pure protection cover that pays only on death within a fixed period and builds no cash value, so it usually costs the least per unit of cover.

Cover that remains in force for the whole of the life insured's lifetime and pays the death benefit whenever death occurs, often with premiums payable for life or a limited period.

A policy that pays the sum assured on death within the term, or on survival to the end of the term, combining protection with a savings element.

A policy that returns a percentage of the sum assured at intervals during the term and pays the balance on death or at maturity.

A contract in which the insurer pays a regular income, for a fixed period or for life, in return for a lump sum or series of payments from the customer.

An optional add-on attached to a base policy, such as accident or critical illness cover, that pays an extra benefit for an additional premium.

The application document in which the proposer gives details of the life to be insured, health, occupation and habits, forming the basis of the contract.

The principle requiring both proposer and insurer to disclose all material facts honestly, so that the insurer can judge and price the risk fairly.

Any information that would influence a prudent insurer's decision to accept a risk or the premium and terms it would set.

Failure by the proposer to reveal a material fact, whether deliberately or by oversight, which may entitle the insurer to avoid the policy or reduce a claim.

The insurer's process of assessing a proposal's risk, using health, age, occupation and family history, to decide whether to accept it and on what terms.

A specific risk or circumstance listed in the policy for which the insurer will not pay, such as suicide within a stated initial period or war risks.

A formal request by the beneficiary or policyholder for payment of the policy benefit, supported by documents such as the death certificate and policy papers.

The legal transfer of a policyholder's rights under a policy to another person or institution, either absolutely or by way of security for a loan.

A short window after receiving the policy documents in which the policyholder may cancel the contract and receive a refund, subject to stated deductions.

A person licensed by the regulator to solicit and negotiate life insurance contracts on behalf of one or more insurers and to service policyholders.

The regulatory process of testing, certifying and registering an individual before they may lawfully sell insurance, with renewal and continuing education conditions.

The remuneration an insurer pays an agent, usually a percentage of the first-year and renewal premiums collected on policies the agent has sold.

The agent's duty to verify a client's identity, address and source of funds before submitting a proposal, helping prevent fraud and money laundering.

Laws and procedures requiring insurers and agents to detect, report and avoid handling the proceeds of crime, including suspicious premium payment patterns.

The standards of honesty, confidentiality, fair dealing and client suitability that a licensed agent must follow, breach of which can lead to disciplinary action.

Selling a policy by giving misleading information, hiding exclusions or pressing a product that does not suit the client's needs, which is a disciplinary offence.

The agent's assessment that a recommended product matches the client's needs, income, dependants and time horizon, recorded and explained before sale.

The government body that supervises insurers and agents, issues licences, sets solvency and conduct rules, and can penalise breaches of insurance law.