| Accidental Death & Injury Benefit |
In the event that death, or injury results from accidental causes, this benefit makes provision for additional benefits to be paid, over and above the basic sum assured.
Many people buy this benefit, that pays an extra amount of money - sometimes as much as the life cover - if the life assured dies in an accident.
This benefit can also cover serious injury as the result of an accident. Where this happens the injuries must mean the loss of use of, the life insured's legs, arms, eyes and sometimes fingers. |
| Accident |
Where the death or injury is caused solely and directly, by violent, accidental, external & visible means. |
| Actuary |
A statistical expert who calculates insurance risks. He/She use mortality tables and predictions of future interest rates, to calculate the premium rates in our rate books. |
| Agent |
A representative of an insurer. He or she may be an independent contractor or an employee. |
| Amendment |
Any alteration or change to the original application for life assurance. Applicants must authorise all amendments by signing their name in full, next to each change/amendment |
| Ancillary benefit |
An extra benefit, attached to the basic policy |
| Annual inflation update |
This is a benefit that is designed to protect against the negative effects of inflation, in respect of the life cover, or savings/investment. This is achieved by having an annual increase (also called an update). Usually there is an option of a 5% or a 10% annual increase in premiums, on the policy anniversary. Depending on the type of policy, this translates into an increase in the sum assured, or the investment value of that policy. |
| Annuity |
A fixed sum of money paid at regular intervals (usually monthly) to the annuitant (I.e. the person owning the annuity) or his/her spouse. |
| Applicant |
The applicant is the owner of the policy at inception. (He/she might subsequently cede the policy to some other person, who then becomes the owner). |
| Automatic premium loan |
If a premium is not paid within the days of grace allowed, the premium will automatically be paid from the cash value - ( provided, of course, that the policy has a cash value) - i.e. when the policy has been in force long enough for there to be a surrender value, this will be used to keep the benefits going for as long as possible.
But, when the surrender value "runs out", the policy will lapse and all benefits will be lost to the policy owner. |
| Basic policy |
This is the "parent policy" to which additional benefits can be added. |
| Beneficiary |
A beneficiary nominated on a life assurance policy, is a third person who "might" get a benefit from the policy. The contract between the assurer and the policy owner does not give any rights to the third person. Should the policy owner still be alive at the end of the contract, i.e. at maturity, the policy owner, and he/she alone, is entitled to the proceeds When a third person is included as a beneficiary in a policy, the policy owner and the insurer agree with each other to pay the benefits of the policy to the third person, if the policy owner dies before the policy pays out. A policy owner can change the nominated beneficiary while he/she is alive, as and when he/she chooses. A beneficiary nomination on a life assurance policy is very important. When there is a difference between the conditions in a will and the nomination of a beneficiary on a life policy, the courts will say that the benefits must be paid to the nominated beneficiary. |
| Breakthrough point |
The point at which the Guaranteed Sum Assured is equal to the amount of Cash Value. |
| Broker |
An agent who is licensed to represent and sell the policies of one or more life assurance companies. |
| Capital disability |
If the life assured is totally and permanently disabled, the life cover to which this benefit is linked, pays as if the life assured had died. The benefit can be linked to the total sum assured or only part of it. Example: let us say that a person has a policy with a cover of 100,000, and linked capital disability of 75,000. If the life assured is totally and permanently disabled, 75,000 will be paid out; and the policy will continue with life cover of 25,000 |
| Cash value |
The cash value will be the value of the investment account of the policy. |
| Claimant |
The person who comes into the office to make a claim. This person must be entitled to this role. |
| Cedant |
Direct insurer, which passes on (cedes) shares of its insured risks to a reinsurer in exchange for a premium. |
| Cession |
A transfer of the Assured's interest or ownership to a third party. When you transfer the ownership, you cede the policy to somebody, the cessionary. You must remember that although the cessionary becomes the owner of the policy, you remain the life assured, i.e. the person who has to die, or live till maturity, before the proceeds become payable. A cession overrides the appointment of a beneficiary, so that if you die (or survive to maturity), and the cession is still in force, the cessionary is entitled to the proceeds of the policy. |
| Child |
A child by birth to the Insured, including a posthumous child, a stepchild, or an adopted child, providing that proof satisfactory to BLIL is submitted for the latter two categories. All unmarried children under the age 21 may be covered. Cover is extended to age 25 if the child is registered full time at a recognised educational institution and is still classified as a dependent. Mentally retarded as well as permanent and totally disabled children may be covered under this Benefit irrespective of their age. |
| Commencement date |
The date on which the cover commences. |
| Commission |
Is a fee paid to an agent for the agents services and is calculated as a percentage of the premium generated. |
| Compulsory Annuity |
An annuity purchased from the proceeds of a pension fund. This is compulsory because it is a statutory requirement that a certain portion of pension money be used to purchase an annuity. In Botswana, at least 2/3 of the pension fund should be applied to purchase an annuity. |
| Credit Life Insurance |
A single or recurring premium term life assurance policy taken out by borrowers. Its purpose is to cover payment of outstanding loan balances in the event of their dying , or on the happening of other specified events. |
| Dangerous Occupation or Pass-time |
There may be loading, where the assured has a job which is considered dangerous, e.g. working with explosives or in underground mining; or if the assured takes part in a dangerous sport, such as motor racing or sky diving. |
| Days of grace |
The period allowed, during which the assured may pay an overdue premium without the policy lapsing. |
| Death claim |
Obviously, if the assured dies, while the policy is in force, the company pays out the sum assured and the policy is terminated - this is called the death claim. |
| Debit order |
A written, signed authority, given by a policyholder to the assurance company, to deduct the premium amount from his/her bank account. |
| Disability |
A physical or mental condition that makes an insured person incapable of performing one or more duties of his/ her occupation. Such disability may be partial, temporary or total. |
| Dread disease |
Every life assurer has his own approach to dread disease benefits, but the following are generally considered to be the dread diseases:
- Heart attack
- Stroke
- Certain types of cancer
- Coronary artery disease requiring surgery
- Renal failure
- Major organ transplants
- Paraplegia
- Blindness
- AIDS
|
| Endorsement |
Any alteration, amendment or other condition affecting the clauses and conditions of a policy. All endorsements must be written on the policy document and be properly dated and signed by the assured, and by an authorised person of the assurer. |
| Exclusions |
Causes of death or injury which a company is not prepared to ensure at standard policy rates, if at all. Death or injury from these causes are therefore excluded in the policy conditions. |
| Ex Gratia Payments |
This occurs when the assurer is not legally obliged to pay a claim, but does so for commercial/moral obligations. |
| Funeral assurance |
A benefit that has become very popular, especially in the lower income markets. The benefit is an extra amount of money that is paid out as soon as the assured has died (so long as a death certificate can be produced). |
| Group Life Assurance |
Life assurance issued to a group of persons with related interests. |
| Guaranteed Sum Assured |
The amount that becomes payable in the event of a claim at either death or maturity. |
| Insurable interest |
This is the financial interest that the applicant has in the life to be assured. Obviously, a person has financial, and thus insurable interest in his own life. Other insurable interests are: Life of a spouse, life of a relative, life of a debtor, life of a partner, etc... |
| Lapse |
If the assured stops paying premiums before the policy has acquired a surrender value, the policy will be terminated, and no money paid out to him/her. |
| Life assured |
The person named in the policy on whose death the benefits will become payable. |
| Loading |
If there is something seriously wrong with an applicants health, it is possible that company will have to decline his/her application altogether. Very often, however, the company can compensate for the extra risk involved, by charging an extra premium (or loading). |
| Loan (Policy Loan) |
A loan made by a life insurance company from its general funds to a policyowner on the security of the cash value of a policy. Generally, loans may reduce the policy's death benefit and cash value. |
| Maturity date |
This is the date at the end of the policy term, when the policy matures. Risk benefits cease and investment benefits become available to the policyholder. |
| Medical requirements |
The medical evidence required by the underwriter to assess the risk involved in offering a policy and therefore the rates which must be applied. |
| Minimum premium |
The smallest premium an assurer will accept. |
| Misrepresentation |
The situation where the person selling the Life Assurance gives an untrue picture of the policy he/she is attempting to sell; usually by means of quoting larger benefits than the policy will actually have, or even quoting benefits which are not included - THIS WILL NOT BE TOLERATED. |
| Mortality tables |
Mortality tables have been built up by actuaries and statisticians over many years by collecting information on the number of people who have died at a certain age and in a certain year. This experience is used to work out how many people will probably die in any future year if the policy owners get to a particular age. These figures are used to calculate the risk the assurer takes, and also to calculate premiums. |
| Mortgage protection |
Assurance that decreases in amount periodically . it may either expire completely after a term of years or remain level thereafter at a reduced amount. |
| NTU (Not taken up) |
Where the policy is at the underwriting stage and there are outstanding requirements, after a period of 3 months, this policy will automatically go to NTU. |
| Paid-up option |
After the policy has passed the initial period; and provided the policy has a cash value; the policy can be made paid-up, for a reduced benefit, to be agreed upon at the time of conversion. |
| Persistency |
An internal measure of how ‘persistent’ the recurring premium policies are staying on the books of the company. Usually, if policies have been appropriately sold by agents and brokers , then the persistency would be high. |
| Policy document |
The document which describes in detail the contract between the Assurer and the Assured. |
| Policy anniversary |
The date of commencement of the assurance, and each anniversary thereof. |
| Policyholder |
The owner of the policy. Usually he/she is the person who takes out the policy, is responsible for paying the premiums, and is entitled to the benefits. He/she may appoint beneficiaries to whom the benefits will be paid, and he/she may cede the policy to a third party. The policyholder is not necessarily the "life assured". |
| Premium |
Payments to the insurance company to buy a policy and to keep it in force. |
| Premium due date |
The date on which the premium is payable. |
| Pure endowment |
An investment policy which has no life cover. |
| Reassurance |
An agreement whereby an assurance company transfers part or all of its risk of loss under assurance policies it writes by means of a separate contract or treaty with another assurance company or reassurer. |
| Recurring Premium |
A life assurance policy in which premiums are made at regular intervals e.g monthly or yearly. |
| Reinstatement |
When a lapsed policy is put back in force and benefits are reinstated. |
| Representative |
A person employed by a life assurance company, to sell policies for that company only. |
| Repudiate |
To refuse to admit liability to a claim. |
| Retirement annuity |
A policy designed specifically to provide a person with a pension on retirement. The contributions made, are tax deductible, although the pension itself is taxable. |
| Single premium policy |
A policy whereby one premium is paid at the commencement of the policy. The amount is considerably larger than policies receiving regular premiums. |
| Standard Risk |
Person who, according to an ‘insurance’ company’s underwriting standards , is entitled to insurance protection without extra rating or special restrictions. A standard risk will pay a higher premium than a preferred or super preferred risk, but a lower premium than a substandard risk for a given policy. |
| Stop order |
A method of paying premiums whereby a deduction is made from the policyholder's salary, by his/her employer, and paid directly to the assurer. |
| Sum assured |
The amount that becomes payable in the event of a claim, at either death or maturity. |
| Surrender Value |
The surrender value of a policy is that amount of money that a policy owner will receive out of the investment account if he/she decides to cancel the policy. Remember that the assurer incurs expenses when taking on a policy. Therefore, a policy will only have a surrender value if the life assurer has recovered all its costs from the cash value and there is still money left over to pay to the policy owner. |
| Term |
The period for which a policyholder agrees to pay premiums in return for which the assurer guarantees benefits. I.e. how long the policy will last. |
| Twisting |
A form of malpractice in selling life assurance where a salesman persuades a policyholder to terminate an existing policy with a Company, and buy another one. Obviously, as introducer of the new policy the salesman will thus earn fresh commission. As it is nearly always against the policyholder's interest to do so, this practice is heavily frowned upon. |
| Uberrima Fides |
Latin phrase for the principle of "utmost good faith", on which life assurance is based. Essentially, it means that for the assurance contract to be valid, both the assurance company and the applicant must be totally and completely honest in their dealings with each other. |
| Underwriter |
The person who assesses the risk for the Assurer, by examining and interpreting the medical evidence and information contained in the application. The premium that the proposer will be asked to pay will be linked to his/her age when the policy starts. As the risk of dying increases with the age of a person, the premium will also increase with age. Age is, however, not the only factor that affects a person's chances of dying. The chances of dying can also be affected by a person's state of health, his/her occupation, or even by any recreational pursuits that the person might follow. Premiums are based on the average (or standard) life. If the proposer has a higher chance of dying than an average person of the same age, the underwriter will have to change the premium (i.e. increase it), to allow for the higher risk. |
| Universal Life Insurance |
A flexible premium life insurance policy under which the policy owner may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rates, which may change from time to time. |
| Updates |
Primarily, this is a hedge against inflation. If a policyholder chooses to take an update, they usually have a choice of 5% or 10% (although this varies from country to country). The premium and benefits will then increase by this percentage every year. However, the premium increases are based on the compounded premium, and the benefit increases are based on the original benefit amount. |
| Waiver of premium |
If this benefit is included with the policy, and the life assured becomes totally and permanently disabled, premium payments will stop, and the policy will carry on free of charge. This benefit can also be added to a policy where someone other than the life assured pays the premiums. A special type of premium waiver benefit used - premium waiver on death. With this benefit, the premiums are paid by the Assurer if the premium payer dies before the end of the policy term. |
