| Act of God |
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| An event arising out of natural causes with no human intervention or could not
have been prevented by reasonable care or foresight. Examples are floods,
lightning, and earthquakes.
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| Adjuster |
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| A person who carries on the business of investigating the cause and circumstances of a loss and ascertaining the quantum of loss.
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| Agent |
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| One who solicits, negotiates or effects contracts of insurance on behalf of an
insurance company.
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| Annuity |
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| A contract that provides for a stream of periodic income for a term dependent upon human life.
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| Assignment |
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| The transfer of ownership rights of a life insurance policy to another party.
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| Automatic premium loan |
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| A loan granted by a life insurance company to a policyholder using the cash value of the life policy to pay any premiums due at the end of the grace period of the same policy. The loan is automatic as allowed under one of the provisions in the life policy.
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| Average clause |
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Stipulates that an insurance company is only liable for such proportion of the loss as the sum insured bears to total value at risk. This clause is applicable to the insurance of a property.
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| Backdating |
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| The procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get a lower premium.
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| Betterment |
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| A situation where the condition of an insured item has become better following a repair or replacement.
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| Bodily injury liability |
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| Legal liability for causing physical injury or death to another.
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| Bonus |
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| This is the extra money paid with the final benefit for participating policies. However bonuses are not guaranteed and depend on the performance of the insurance fund.
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| Broker |
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| One who represents an insured in the solicitation, negotiation or procurement of contracts of insurance, and who may render services incidental to those functions.
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| Claim |
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Notification to an insurance company that payment of an amount is due under the terms of the policy.
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| Co-payment |
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A provision in a medical and health policy which requires the policyholder to bear the difference in room charges as well as other eligible benefits (usually 10% - 20%) described in the policy contract if the rate charged by the hospital is higher than the policyholder’s eligibility.
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| Commission |
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| Remuneration paid to an agent by an insurance company for his services.
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| Compensation |
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| A certain amount of money given as payment as determined accordingly in response to a claim made by the policyholder.
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| Contribution |
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| The monetary consideration payable once or periodically by a participant to a takaful operator for his participation in the takaful scheme.
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| Deductible |
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| The portion of an insured loss to be borne by the policyholder before he is entitled to recover from the insurance company. Also known as excess.
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| Disability |
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| A condition that affects to some degree a person's ability to carry on his normal pursuits. A disability may be partial or total, and temporary or permanent.
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| Disability benefit |
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| The benefit payable upon the disablement of the life insured under a disability income policy or a provision of some other policy such as life insurance or takaful family plan.
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| Dividend |
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| Money made available to policyholders based on an insurance company's earnings and monetary surplus.
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| Duty of disclosure |
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| E.g. ‘Full Disclosure of Material Fact’, refers to revealing all your relevant details in your insurance application to the insurance company. Failure to do so may render your policy invalid.
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| Endowment insurance |
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| A combination of protection and savings whereby the money will be paid at the end of a specific period upon your demise or if you suffer total and permanent disability.
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| Excess |
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| See deductible.
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| Exclusion |
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| A contractual provision that denies coverage for certain perils, persons, property, or locations.
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| Expiry |
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The termination of a term life Insurance policy at the end of its period of coverage.
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| Free look |
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| A period of time (usually 15 days) during which a policyholder may examine a newly issued individual life or health insurance, and surrender it in exchange for a full refund of premium less expenses incurred for the medical examination of the life policyholder, if not satisfied for any reason.
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| Grace period |
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A prescribed period, usually 30 days from the premium due date, during which an insurance contract is kept in force despite non-payment of premium. If premium is not paid within the grace period, the policy may lapse or be subject to reduced paid-up or automatic premium loan.
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| Group life insurance |
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| Life insurance covering a group of people under a master policy. The policy is issued usually without the requirements of medical examination on the lives assured. It is typically issued to an employer for the benefit of employees, or to members of an association.
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| Incontestable Clause |
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A clause in a life insurance policy providing that after a policy has been in effect for a given length of time (one or two years), the life insurance company shall not be able to contest the statements contained in the application unless fraud can be proven.
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| Indemnity |
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| Restoration of the claimant to the same financial position immediately before a loss by
payment, repair or replacement.
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| Insurable interest |
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| A basic principle of insurance that requires the person purchasing insurance to have an interest in the insured item or life insured in that the loss or damage to the item or life insured would result in a financial loss to the person.
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| Insurance company |
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| A company licensed under the Insurance Act 1996 to carry on life or general insurance business or both life and general insurance business.
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| Insured |
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| The person whose life or health is covered by a specific policy.
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| Investment-linked insurance |
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A life insurance policy where the policy value at any time varies according to the value of the underlying assets at the time.
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| Issue date |
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| Also known as “Effective Date”. The date that an insurance policy is approved.
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| Lapse |
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Termination of a policy because of failure to pay the premium. This generally happens because the policy has yet to develop any cash value.
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| Life insurance |
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An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured, or under other circumstances specified in the contract, such as total disability.
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| Maturity Date |
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The date at which a life insurance policy has completed its full term and the face amount becomes payable usually with the condition that the life insured survives to that date.
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| Maturity value |
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The amount payable to a living insured at the end of an endowment period or to the owner of a whole life policy if he lives past a certain age.
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| Medical and health insurance |
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Insurance which provides specified benefits to cover medical expenses incurred against risks of persons becoming totally or partially incapacitated or hospitalised as a result of sickness or infirmity.
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| Mortgage reducing term assurance |
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| A policy that covers the repayment of the outstanding loan in the event of untimely death, disability or critical illness of the borrower.
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| Multiple Insurance |
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| Coverage from two or more policies which duplicate coverage of certain
risks.
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| No-Claim-Discount (NCD) |
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| A reward scheme for the policyholder if no claim was made against the policy during the
preceding 12 months of policy. Different NCD rates are applicable for different
classes of vehicles. For a private car, the scale of NCD ranges from 25% to 55%
as provided in the policy.
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| Nomination |
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| The act of naming someone as the nominee of a life or personal accident policy.
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| Nominee |
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| A person or persons named in a life or personal accident policy to receive the benefits under the policy.
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| Non-participating policy |
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| A type of life insurance policy or annuity for which the policyholder does not receive dividends or bonus.
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| Over-insurance |
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| A term used to describe the condition that exists when a policyholder has purchased
coverage for more than the actual cash value or replacement cost of a subject
of insurance.
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| Paid-up policy |
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| A policy which does not require any future premium payments but which is not yet terminated by either death or maturity.
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| Participating policy |
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A policy which shares in the distributable surplus of a life insurance company by acquiring bonuses or dividends.
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| Payer benefit |
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| A rider or provision often found in juvenile policies under which premiums are waived if the person paying the premium, usually one of the parents, becomes disabled or dies while the child is still a minor.
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| Policy Loan |
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A loan made by an insurance company to a policy owner of a part or all of the cash value of the policy assigned as security for the loan.
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| Pre-existing condition |
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| A coverage limitation included in many medical and health policies which states that conditions or illnesses that exist before the effective date of a medical and health policy, for which the insured is still receiving treatment or shown symptoms will not be covered under the policy. It doesn’t matter whether or not the insured is aware of this condition.
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| Premiums |
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| The monetary consideration payable once or periodically by a policy owner to an insurance company in return for the insurance coverage provided.
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| Pro Rata Rate |
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| A rate charged for a period of coverage shorter than the normal period. An
example, if an insured had coverage for only one quarter of a year, his premium
would be only one quarter of the annual premium.
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| Qualifying/Waiting Period |
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| Most medical and health policies contain a waiting period for illness and disease, which means
that eligibility for benefits under the policy will only start, says 30 days as
the waiting period after the effective date of the policy.
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| Reduced paid-up |
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A paid-up policy with a lower value of sum assured compared with the initial sum assured purchased. A policyholder with a policy that has acquired a cash value can opt to stop paying future premiums and convert his/her policy to a reduced paid-up policy.
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| Reinstatement |
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| Revival of a policy that has lapsed within a period of time under certain conditions.
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| Rider |
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| An attachment to a policy that modifies its conditions by expanding benefits.
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| Scale of benefits |
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| The scale of benefits refers to the amount of compensation payable by an insurance company in the event of injury to or loss of limb, sight or hearing. It determines the proportion of compensation vis-à-vis the loss suffered.
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| Strata-titled property |
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| Properties such as apartments, condominiums, flats etc.
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| Surrender |
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| To give up a life policy. The insurance company pays the insured the cash value, if any, which the policy has built up if it is surrendered.
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| Surrender value |
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| The amount available in cash upon voluntary termination of a policy before it becomes payable on death or maturity. Also called cash value.
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| Tariff Rate |
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| A rate established by a rating organisation, which comes from the tables,
schedules and rules found in the tariff. For tariff rates products, all
policyholders pay the same standard premium if no loadings are involved.
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| Term insurance |
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Insurance payable only on death within a specified period.
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| Total loss |
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| A loss of sufficient size so that it can be said there is nothing left of value.
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| Twisting |
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| The act of, or attempt threat, which induces a policyholder, to drop an existing policy and take another. A policyholder is usually worse off when his/her policy is twisted.
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| Under-insurance |
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| A condition in which not enough insurance is purchased to cover the insurable value.
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| Utmost good faith |
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One of the basic principles of insurance that essentially requires the policyholder to disclose all the material facts to the insurance company when proposing for a policy. This is in view that the insurance company normally takes on the risk by relying on the information given by the policy owner in the proposal form.
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| Waiver |
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| A rider waiving (excluding) liability for a stated cause of injury or sickness or
a provision or rider agreeing to waive premium payments during a period of
disability of the insured.
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| Whole life insurance |
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| Life-long protection and premiums are paid throughout your life and the money including any bonuses will be paid when you pass away or suffer total and permanent disability.
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