Life Insurance Jargon: Explained

Death Benefit Payment

This is the sum of money paid out by the insurer if you die.

Premium 

The payment that you make to the insurance company to keep your life insurance policy active. For life insurance, you usually pay this monthly.

Coverage amount 

The amount of money paid out to your ‘beneficiaries’ if you die.

Beneficiaries 

Your ‘beneficiaries’ are the individuals, organisations, or entities that you choose to receive the ‘death benefit payment.’ You can choose multiple beneficiaries. You can also specify the percentage or amount each one will receive.

Underwriting 

The process where the insurance company evaluates your risk as a potential ‘insured.’ They decide if you can be insured and how much you need to pay. They assess factors such as your age, health history, medical conditions, and lifestyle choices.

Dependants 

The people who rely on you financially. Examples may include a spouse, children, or any other family member who depends on your income to cover living expenses. It may be useful to consider the needs of your dependents when deciding to take out life insurance.

Trusts 

A trust is a legal arrangement which allows you to transfer the management of your life insurance policy to a ‘trustee.’ Both you and the trustee enter an agreement that states the rules of the trust and how you would like your payout to be paid when you pass away.

Trustees 

‘Trustees’ are the individuals or entities that handle your life insurance policy if you opt to transfer these responsibilities to a ‘trust.’

Policyholders 

A ‘policyholder’ is the person that has bought a life insurance policy. They handle paying the premiums.

Insured

Anyone who is covered under the insurance policy. There can be more than one person insured on a policy, for example Joint Life Insurance.

Insurer 

The ‘insurer,’ also known as the insurance company, supplies the life insurance policy.