Glossary of Terms
Language and Jargon Busters
We have created a glossary of terms to help you with the complicated language of the Insurance Profession.
The terms by which an insurer or lender agrees to accept an application for insurance or home lending
Cooling off period
(Also knows as Cancel from Inception or Free-look cancellation)
By law there is a 14 day “cooling off” period for insurance policies whereby the client can cancel and receive all premiums back.
Cover; Sum Insured
The amount of protection provided by an insurance policy
When an insurer or lender refuses to accept an application for its products or where a claim against an insurance policy is turned down by the insurer
When an insurer or lender delays acceptance of an application for insurance until a current risk reduces to an acceptable level or an unknown risk is able to be qualified.
A special condition that applies to an insurance policy e.g. an endorsement may state that a particular medical condition is not covered.
The amount of the total loss or cost the insured is responsible to pay out themselves before the insurance company takes liability for any additional losses or costs.
Anything that is not covered by the policy. There may be blanket exclusions that apply to all customers and specific exclusions that apply only to specific customers.
A contract is issued once the application has been accepted by the product provider and all requirements to complete the contract have been received.
A policy of insurance lapses when premiums remain unpaid for a predetermined period. A lapsed policy provides no coverage during the period it remains lapsed.
Life assured; Insured person
A person covered by a life insurance policy
Additional premium charged to an insured who presents a higher risk of claiming than the average insured. These can be expressed as a percentage e.g. +50% which means an additional 50% over and above the standard base rate.
Memorandum of Transfer
The legal form required to be completed which enables ownership of a contract to be assigned from one party to another.
Non standard terms
Where an insurer assesses the risks presented in an application as being higher than the average risk, they will make a counter offer to the applicant detailing the terms on which they are prepared to accept the increased risk. This may be in the form of exclusions, loadings or restrictions to cover. The contract cannot proceed until the applicant accepts the offered terms.
PMAR – Personal Medical Attendants Report
A report of an applicant’s complete medical history provided by the applicant’s normal attending physician at the insurer’s cost. Used for assessing the health risk of an applicant.
Policyholder; Policy owner
The individual or organisation to whom the proceeds of the policy will be paid and who has the right to make changes to the policy details subject to the insurance company’s normal processes
A physical defect, medical condition or disease that an applicant has suffered from or is suffering from at the date of an application for life or health insurance benefits.
The total amount payable to an insurer for an insurance policy
The new premium calculated each year for insured benefits
The assessment of the risk posed to an insurer or lender by the individual demographics of the applicant and / or the asset to be insured.