So, maybe we’re guilty of using lingo that’s not user-friendly from time to time (oops, was that jargon?). Here’s some of those life insurance terms you may come across and our translation to help you out.
The legal contract you, the planholder, have with the life insurance company. You accept the terms and conditions, pay the premiums and you’re covered. Any payout depends on what type of plan you buy and any exclusions. We like to use the term ‘policy’ rather than plan– it sounds a bit friendlier.
One life, one plan. Take out a single life plan to provide for the people you treasure if you die or suffer a critical illness. You and your partner can each take out a single life plan – or you may opt for joint life cover. With single life you each have a separate plan, which can have advantages over joint life, for example if you separate.
Covers two people – so you and your spouse, or partner, are covered under one plan, with one premium. A joint life plan only pays out once, so if both of you die at the same time, your dependents only get one payout. If you each had a single life plan, there would be two payments.
The life insured is the person (or people) protected in the event of a critical illness or death: you, your partner or both.
A fancy word for payment. The amount you’re expected to pay regularly for the cover. So, a premium of £20 a month means you’ll need to pay £20 a month. Simple!
The process an insurer goes through to decide whether to offer you life insurance, looking at potential risks like your age and past medical history. Also helps work out how much you’ll pay for your insurance.
Waiver of premium cover
Many plans offer waiver of premium or payment cover, which means if you’re unable to work due to illness or injury, your payments will be made for you.
The person who receives the death benefit, or payout, when the life insured dies. You can name anyone as a beneficiary – a partner, child, or relative. You could even have your proceeds paid to a trust or your favourite charity. If your original beneficiary isn’t alive to receive the payout, you can name someone else as a beneficiary.
What the beneficiary needs to do to receive the payout under a plan. Insurance companies are used to dealing with life insurance claims so the process is usually pretty straightforward.