SuperValu Life Insurance Glossary
Accelerated Specified Illness Cover - This is an optional benefit where you can add specified illness cover to your Life Insurance /Mortgage Protection policy. Any specified illness claim will reduce the amount of life insurance or mortgage protection cover in place by the amount of the claim. Moreover, if it is taken out with a mortgage protection policy – the monies won’t go to you but to your lender to reduce your mortgage.
Accidental Death Benefit - This is a temporary automatic benefit available while you are in the process of taking out life cover. It will pay a set death benefit amount if you die as a result of an accident while applying for cover. Availability of this benefit depends on the type of cover being taken out.
Beneficiary - This is the person who benefits when you die and your life insurance policy pays out. This person is called a “beneficiary” and typically is the partner or children of the deceased.
Cover – Simply the amount in monetary terms that you wish to have insurance in place for e.g. €100,000 of life insurance for 10 years means your life is covered for €100,000 for that period.
Children’s Life cover –Children’s life cover is included with certain life insurance policies at no extra cost. It ranges from €5,000 to €7,000 and this sum is paid out on the death of a child typically up to age 21. Cover naturally you never want to have to use.
Convertible Term - Convertible Term Life Insurance is where your life insurance has what is called a ‘Conversion Option’. This allows you to extend your cover beyond the term at any time before the expiry of your existing policy without medical underwriting. In short, you can set up a new policy without having to supply any medical information. It is typically a bit more expensive but worth it as one’s health tends to get worse as we get older, sadly.
Shareholder Protection - As its name implies it is cover that is only relevant to companies owned by shareholders as it can provide the funds to help the surviving shareholders to buy back the shares of a shareholder on his or her death. A legally binding agreement is drawn up, and one or more life cover policies are put in place. This helps to ensure a company can continue its operations with minimal disruption while also helping to insure the deceased ‘s next of kin are financially protected.
Decreasing term life insurance – All mortgage protection policies are decreasing term as your life cover reduces over the term of the policy and hits zero at maturity but your premiums stay the same throughout the term of the policy. It is typically the cheapest form of life insurance.
Deferred Period – The deferred period is the period of time from when a person has become unable to work until the time that the benefit begins to be paid. An employee must be out of work due to illness or injury for their chose deferred period before any claim payment will be made. This applies particularly to Income Protection cover.
Dual Life Cover – unlike a joint life cover scenario where there is only one pay out, with dual life cover there can be two pay outs as each life is covered individually.
Guaranteed Insurability - This option allows you to increase your life cover or specified illness cover by a certain amount, without the need to provide any medical information, at certain key life event moments e.g. moving house, getting married or having or adopting a child. Availability of this optional benefit depends on the type of cover being taken out.
Income Protection – as that Ronseal ad says, ’it does exactly what it says on the tin’ i.e. this is life insurance that can cover up to 75% of your yearly earnings if you are employed but cant work due to illness or injury. It kicks in after your selected deferred period - 13, 26 or 52 weeks. You pay a higher premium the shorter the deferred period.
Indexation - Indexation is an optional benefit that allows you to increase your life cover each year to help keep in line with inflation. Very handy to have when inflation is galloping ahead - usually your cover will increase by c. 5% every year. The payments you make may increase by more than this to reflect the increase of your age and the cost of increased cover.
Insured – The person(s) whose life is covered by the relevant policy.
Joint Life Cover –This is simply a plan where two people are covered. If one of the people insured on the plan dies, the surviving partner will receive the payment. However, if it is a ‘last survivor’ policy, the payment is made to the named beneficiary. The payment is paid only to a beneficiary if the plan is set up in trust that names a beneficiary, trusts are usually set up at inception of the policy. For Mortgage Protection plans, the claim proceeds are paid to the lender.
Keyperson Cover - Having Keyperson cover in place on the lives of key employees can give a company peace of mind. It is simply life insurance taken out by a company on the life of one or more employees who they view as being vital to the company’s continuing success and viability. It is cover many of us feel like triggering when the boss is giving us a headache!
Level Term Life Cover - Level Term Life Cover cover is where your life insurance cover does not change over the term of the policy nor does the cost of your cover (i.e. the premiums) change.
Life Insurance – Cover that pays a lump sum to the plan’s beneficiary on death of the insured person.
Mortgage Protection – this is a life insurance plan that helps pay off your mortgage if you die or become seriously ill. Anyone taking out a mortgage needs to have mortgage protection, but you don’t have to buy it from your lender. The level of cover reduces over the term of your plan as your outstanding loan balance reduces. Any payout goes to your lender to help repay your mortgage.
Partnership Insurance - Partnership Insurance pays out liquid capital on the death of a partner, compensating the family of the deceased partner and allowing the other partner to maintain full control of the firm.
Partial Payments – Under specified illness cover, a provider will allow partial payments to the policyholder if they are diagnosed with an illness where partial payments are part of the cover attaching to that illness.
Pension Term Cover – This is term life insurance that is structured to take account of the tax relief available under pensions legislation. It is available to the self-employed or people working in non- pensionable employment. It is very cost effective however, you cannot assign it to a financial institution. If you claim full tax relief, at your marginal tax rate, on all premiums paid into this policy, you may pay as much as 40% less than a regular life insurance policy under current tax legislation.
PMA (Private Medical Attendant’s Report) - Another term from a different era that people find confusing as it is simply a report that the life company underwriting you, request from your doctor to ascertain how healthy you are. Only a small percentage of people will have health conditions that require the life company to request a PMA from their doctor.
Premium – The amount you pay each month for your cover be it life insurance, specified illness etc. Most premiums are paid monthly but some people prefer to pay annually.
Section 72 Whole of Life Policy - This is a Revenue approved, whole of life insurance policy where the proceeds are tax-free if used to pay an inheritance tax bill. By designating a whole of life policy as a Section 72 policy – it enables people to plan for the payment of inheritance tax efficiently and in advance. Certain criteria must be met for a plan to qualify for and maintain Section 72 status.
Specified Illness cover – This cover can also be called serious illness cover. Specified illness cover pays a cash lump sum if you are diagnosed as suffering any illness from a specific list of illnesses that the relevant life company covers.
Standalone Specified illness – This is simply where the specified illness policy is established on its own with no life cover attached.
Taxation – A word close to all our hearts and one we prefer to see teamed with the word zero or nil. In certain circumstances, life insurance policy claims are paid tax free. There is also tax relief available on premium payments into pension, term life cover and income protection policies. In all cases make sure and take independent tax advice before commencing any of these types of cover so you know exactly where you stand vis a vis the Revenue.
Terminal Illness – This is where the life company will pay out the sum insured under the policy if the insured has been diagnosed with a terminal illness. It is a standard benefit amongst all the life insurance companies.
Whole of Life Cover – Yes you guessed it! there is no policy term here as cover is for the whole of your life, provided you keep up with your premium payments.
