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| protection:
terms definition |
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level cover
Under this plan the sum assured remains the same for the duration of the contract.
increasing cover
Indexing your sum assured allows you to maintain the real value of your life assurance protection as it increases automatically each year, regardless of your state of health at that time. Your contribution will increase each year to reflect the increased sum assured. If the sum assured is increasing by 5% the premium will increase by more than 5% to cover not only the increase in benefit but also the fact that you are one year older.
convertible cover
Under this plan the sum assured remains the same for the duration of the contract. An extra payment is made to allow the policy holder an option to convert the original policy (or part of it) to another type of policy - increasing term assurance, whole of life or endowment - without further medical evidence being required.
decreasing cover
Under this plan the sum assured is specified at the outset of the contract and decreases throughout its term.
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mortgage protection
Under this plan the sum assured is specified at the outset of the contract and cover decreases throughout the policy term. The decrease in sum assured will be broadly in line with the reducing mortgage debt.
reviewable cover
Under this plan the sum assured remains the same for the duration of the contract. Premiums are kept to a minimum as you rather than the insurance company are shouldering the risk of changes in mortality experience. The insurer has the right to review premiums based on claims history, which could mean premiums increase significantly at a review.
renewable cover
Under this plan the sum assured remains the same for the duration of the contract. For a higher premium you acquire the option of extending the original term of the policy, without having to provide medical evidence.
family income benefit
Family Income Benefit provides a replacement income in the event of your premature death that could be paid monthly, quarterly or annually. Protection is provided for a fixed term specified at outset. In the event of a claim benefits are payable for the remainder of that term, so in effect the potential benefits from the contract are reducing over time.
standard cover
Provides a sum assured from a premium that remains the same throughout life.
maximum cover
Provides the highest initial sum assured. The sum assured is guaranteed until the first plan review (usually in ten years). At that point, either the sum assured will reduce significantly or, if you wish to maintain the same level of cover, the premium will increase significantly to take into account your current age. No further medical evidence will be required unless you increase the cover.
indexation of benefits
Indexing your sum assured allows you to maintain the real value of your protection as it automatically increases each year, regardless of your state of health at that time. Your contribution will also increase each year to reflect the increase in the sum assured.
deferment period
Benefits can become payable after one month of an illness or accident preventing you from working, or you can select a deferment period of up to two years which will greatly reduce the cost of the insurance. If you are employed it is sensible to select a deferment period to coincide with when your employer will stop paying your salary.
types of cover
Guaranteed cover: under this plan the rate at which premiums are payable is guaranteed by the insurance company for as long as you maintain contributions. In the long term this can be an extremely valuable feature.
Reviewable cover: under this plan premiums are kept to a minimum as you, rather than the insurance company, are shouldering the risk of changes in morbidity experience. The insurer has the right to review premiums based on claims history, which could mean premiums increase significantly at a review. Reviews are normally carried out every five years but may vary from one insurer to another.
occupational class
Insurers divide jobs into groups according to the risk of injury or illness being caused by the occupation you follow. These groups are known as occupational classes. The premiums charged for a higher risk class of occupation will obviously be higher, but insurers may have very different scales of occupational class and depending on their claims experience may also have very different views about the occupational class they attribute to your job or the duties you perform.
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