Insurance 101: Jargons & Terms, Defined

If you’ve ever struggled over figuring out how things work in insurance, don’t be afraid to ask for a helping hand from us. We know things can get complicated, especially with certain complex terms popping. To help you better understand and navigate the world of insurance, we’ve compiled a list of terms and their definitions:

Sum assured: Refer to “Coverage Amount”

Beneficiary: A person who will be getting the proceeds or the benefits from something (such as a life insurance policy)

Claimant: A person making a claim for a benefit

Coverage Amount: Also known as the coverage amount or sum assured, this is the pre-determined amount that is detailed in your policy and will be paid out to your beneficiary in the event of a claim.

Coverage Term: The duration of your insurance policy. 

Premium: The amount that you pay monthly, quarterly or annually for your insurance plan.

Lump Sum: A large, one-time payment from an insurance policy in the event of a claim.

Maturity: The date for when your insurance plan coverage matures/ comes to an end.

Maturity Benefit: The amount to be paid to the policyholder when their insurance policy matures

Maturity Booster: An additional amount to be paid to the policyholder at maturity, on top of the maturity value

Total & Permanent Disability: When a person suffers an irreversible sickness or injury that prevents them from working.

Policy: This is a legal document that details the contract between you and your insurance provider. It includes all the particulars of your insurance coverage as well as the terms and conditions that you have agreed to.

Death Benefit: This is the amount of money that will be paid to the policyholder’s next of kin after they pass away.

Riders: These are optional add-on plans that help expand the coverage of your basic insurance plan at an additional cost and premium. 

Waiver: If the policyholder is unable to pay their insurance premium due to total or permanent disability or other conditions as specified in the policy, the waiver clause ensures that insurance the policy is still in effect.

Investment-Linked: A policy that combines life protection and investment through the buying of funds units.

Account Value: This is the value gains from the investment returns. The life insurance company puts some of the money you pay as premiums into various types of investments, with the expectations that they'll gain in value.

Allocated Premium: An amount set aside from the premium paid, which is used to purchase units or invest in the investment-linked funds of your selection. 

Dividend Payment: An amount paid out to the policyholder, from the performance of the investment. Usually paid out annually. 

Critical illness: Life-threatening conditions and sicknesses that are defined in your policy contract. A lump sum payment will be issued should there be a claim.

Recovery Reward:If you are diagnosed with a disease, your insurance provider will give you a certain percentage of your coverage amount after the first 6 and 12 months as a reward for your recovery process.

Extended Recovery Income: An annual payment valued at a certain percentage of your coverage amount will be paid to you for the next 5 years to help you on your path to recovery.

Benefit Illustration: This is a year-by-year summary of the costs and benefits of an insurance plan that includes items such as policy premiums, death benefits, cash values, and other information that can affect your cost of buying insurance.