Life Insurance Glossary
We’ve compiled a list of key Life Insurance words, terms and definitions.
This is defined as a death which occurs directly as a result of an injury caused by sudden, external and visible means. The actual death of the Life insured must occur within 365 days of the accident to qualify for this benefit.
This is a person who has been authorised by ASIC (Australian Securities and Investment Commission) to provide financial advice to clients and to sell financial products, which includes Life Insurance and related covers, such as Income Protection, Trauma, and TPD.
This applies to Income Protection Insurance where the benefit payments in the event of a claim are the amount agreed at the time of the cover starting. The monthly benefit is generally based on the average of the insureds income in the immediate 2 financial years before the cover starts.
This refers to one of the available definitions of disablement under Total and Permanent Disablement (TPD) cover. The Any Occupation full definition of TPD considers the inability of the client to ever again engage in any gainful employment for which they are reasonably qualified by education, training and experience.
This is a person or persons who are nominated by the Life insured to receive the claim payment in the event of the death of the Life insured.
This is the actual payment of the proceeds under the cover in the event of a claim. These proceeds can be paid to the nominated beneficiaries or to the Estate of the deceased in the event of a Death claim, or to the Life insured in the event of a TPD, Trauma or Income Protection claim.
Business Expenses Insurance
Business Expenses Insurance is an important benefit for self-employed clients. This cover provides an ongoing monthly payment of up to $25,000 to meet the payment of the expenses of running and maintaining a business in the event that the owner is disabled due to a serious illness or injury. These monthly payments can help cover the costs of the key business expenses such as rent, electricity, water, gas, and the salaries and superannuation of non income-producing staff. Business Expenses Insurance is generally taken out in partnership with Income Protection Insurance.
This is the income generated by the business of the Life insured. There are two components – Gross income and Net income. The Net income is determined after all the incurred business expenses have been deducted from the Gross income. These figures are generally accounted for each financial year.
Certificate of Insurance
This is a document which details the Life Insurance cover. These include the type of cover, the amount of the benefits, and also any specific exclusions, plus the premium payable (either monthly or on an annual basis).
This is the process of applying for a benefit payment under the Life Insurance due to an event occurring which meets the definition under the cover. This can be due to the Death or Disablement of the Life insured, or where Trauma cover applies, in the event of a critical illness occurrence such as a heart attack, cancer or stroke first occurring during the period of the cover.
This is the timeframe after the cover has been activated within which the policy owner can cancel their Life Insurance and any premium paid will be refunded. This timeframe can vary from 21 days to 30 days with different Life insurers. These details are available in the Product Disclosure Statement.
Critical Illness Insurance (Trauma Insurance)
This is an insurance cover which provides a lump sum payment when one of the listed medical conditions under the particular cover occurs. This cover is also known as Trauma or Recovery Insurance. NobleOak’s Trauma Insurance cover pays up to $2 million on diagnosis of one of the 38 listed medical conditions.
This is the benefit paid to the nominated beneficiary or beneficiaries, or to the Estate under a Life Insurance cover in the event of the Life insured dying.
Domestic Duties Disability definition
This is a specific disablement definition under Total and Permanent Disablement (TPD) cover which is applicable to non-income earners (Home Duties) and also those people who are working less than 15 hours per week at the time of a TPD claim arising.
Duty of Disclosure
All potential Life Insurance clients (people taking out cover) are required under the Benefit Fund Rules and at law to provide all pertinent and relevant information requested by the Life insurer at the time of Application for cover. The Duty of Disclosure is signed and acknowledged by each new client at the completion of the Application process, to confirm the accuracy of the details provided.
Duty of Utmost Good Faith
This is the legal doctrine which governs both parties’ obligation to a contract. For the Life insured this relates to the accuracy of the information provided by them at the time of Application and for the Life Office, acting with fairness and utmost transparency in their dealings with the Life insured in the event of a claim arising under the contract.
These are conditions which limit an entitlement to claim under the Life Insurance cover.
NobleOak Life Cover for instance only has an Industry-standard suicide exclusion which is effective for the first 13 months of any new cover. Other exclusions may be applied by the NobleOak Underwriters at the time of Application which are specific to the individual client circumstances. These may relate to health or pastimes. We would recommend that you review the Product Disclosure Statement relating to the various covers so you can check the standard exclusions applicable under the different contracts.
All Life Insurance contracts have an expiry age. The cover cannot be renewed past this age. This expiry age varies across the different types of Life Insurance. For example, NobleOak’s Life Cover is usually renewable until the age of 99 (depending upon the product), and NobleOak’s TPD Insurance is renewable up until the age of 75. We would recommend that you review the Product Disclosure Statement relating to the various covers, so you can check the expiry ages applicable under the different covers.
Financial Services Guide
This is a document which contains information relative to the obligations of the Adviser and also the services offered by the Life insurer. This includes details about remuneration and also dispute resolution procedures.
Funeral Advance / Funeral Expenses benefit
This involves a payment of $15,000 to the beneficiaries immediately on notification of the death of a Life insured to assist with funeral costs. This payment is a ‘built in’ feature under NobleOak’s Life Cover and is paid on proof of death. We would recommend that you review the Product Disclosure Statement for further information.
Income Protection Insurance
Income Protection Insurance is designed to pay a monthly amount of up to 75% of your pre-disability income if you are temporarily severely sick or badly injured and you are unable to work. The maximum monthly payment period is dependent on the Benefit Period which was nominated at the time of Application and under NobleOak’s product, this can be either two years or until age 65.
This relates to automatic annual increases in the benefits under the cover in accordance with Consumer Price Index increases.
This relates to circumstances arising which meet the definition for a claim to be considered under the cover. For example, under Life Cover the insured event would be the death of the Life insured.
Interim Accident cover
This cover is automatically provided to the Life insured while the Application is under assessment. It is applicable for up to 90 days after receipt of the completed NobleOak Application and subject to a maximum payment of either the sum insured applied for, or $1 million under a Death cover application, and $500,000 under a TPD or Trauma Application. For Income Protection, the payment is capped at 24 months benefit payments to a maximum total of $200,000.
This is insurance cover which pays out the sum insured under the contract on the death of the Life insured. It is also known as Death Cover or Term Life Insurance.
Life Insurance Code of Practice
This is a voluntary code which sets out the minimum standards of behaviour to be followed by Life insurers when dealing with their members/policy holders.
This relates to the person insured under the Life Cover.
Listed medical condition
This relates to Trauma Insurance and with NobleOak’s contract to one of the listed 38 medical conditions detailed within the PDS.
My Protection Plan
This is NobleOak’s comprehensive Life Insurance product which is available through NobleOak’s alliance partners and financial advisers.
Nursing Care benefit
This is a benefit available under an Income Protection disability contract and to which the Life insured is entitled if they are confined to bed as a result of being totally disabled and they require the full-time care of a registered nurse for more than 3 consecutive days during the waiting period.
This is one of the standard definitions of disablement under TPD Insurance. This relates to the Life insured’s inability to return to work specifically in their Own Occupation, i.e. the occupation they were engaged in immediately prior to becoming disabled. This definition is distinct to the other more common ‘Any Occupation’ definition applicable under TPD Insurance.
Partial Disablement benefit
This benefit is applicable under Income Protection Insurance and is effective when the Life insured returns to work in a reduced capacity after a period of absence from work (minimum 14 days) due to sickness or injury.
This is the contract of Life Insurance between the Life insured and the Life Insurance company.
Policy holder / Policy owner
This is the listed person who owns the Life Insurance. They are responsible for the ongoing payment of premiums and will be the recipient of any benefits paid under the contract in the event of a claim. (This is most commonly the same person as the Life insured.)
Pre-existing condition clauses
This includes any medical condition which was apparent before the Life Insurance cover commencement date. This includes any diagnosed condition, or a suspected condition, or a symptom(s) for which the Life insured intended to or did seek medical assistance or advice. These clauses preclude the Life insured from being paid a claim if it occurs as a direct result of the pre-existing condition.
NobleOak’s cover is fully underwritten none of our contracts include these types of clauses.
This is the fee payable (either monthly or annually) to secure and then maintain the Life Insurance cover.
Premium Life Direct Insurance
This is NobleOak’s comprehensive Life Insurance product which is available directly through NobleOak.
This is a feature which is ‘built in’ to Income Protection Insurance. It is applicable when the Life insured is receiving benefit payments under their Income Protection or Business Expenses Insurance and the regular premiums are waived for the period that the Life insured is in receipt of claim payments.
Product Disclosure Statement (PDS)
This is the document prepared by the Life Insurance office which details all the terms and conditions of their Life Insurance covers.
Recurring Disablement benefit
This is a benefit under Income Protection Insurance. After the Life insured has been on claim in receipt of Total Disablement or Partial Disablement benefit payments, and they suffer a recurrence of the same or related sickness or injury within 6 months of returning to work, the waiting period does not recommence and they will receive further monthly benefits immediately. The claim will be treated as a continuation of the original claim.
Rehabilitation Expenses benefit
This is a benefit available under Income Protection Insurance. While on claim if the Life insured’s Medical Practitioner recommends a rehabilitation program, special equipment or modifications to the Life insured’s workplace to allow return to gainful employment, then these expenses may be reimbursed.
Self Managed Superannuation Fund (SMSF)
This is an increasingly popular facility which is being accessed by many Australians who wish to have greater control over their superannuation arrangements. The SMSF is generally run for the Members and the members are also usually the trustees of the fund. Unlike many traditional superannuation funds where basic Life Insurance is included, the trustees of an SMSF will need to arrange their own Life Insurance independently.
Special Acceptance Terms
These involve any adjustments made to the standard premiums and also the requirement of exclusions or other limitations specific to an individual client’s circumstances. These are imposed by the Underwriters after they have assessed all the medical, financial, pastimes and lifestyle details at the time of Application. NobleOak will advise and explain these terms prior to the cover being finalised and only after the agreement with the Life insured.
Specific Sicknesses and Injuries benefit
Another benefit available under Income Protection Insurance. If the Life insured suffers one of the 38 medical conditions (as listed for Trauma Insurance within the NobleOak PDS), then they will be entitled to receive up to 6 months benefits as a lump sum, regardless of whether or not they were Totally Disabled or return to work.
A benefit available under Income Protection Insurance and involves the payment of a benefit to the Life insured’s partner if they are required to stop work to care for the Life insured during a period of Total Disablement.
Term Life Insurance
This is another title for Death Cover and is not very commonly used these days.
Terminal Illness benefit
This is a ‘built in’ benefit under Life Cover. It is payable if the Life insured becomes terminally ill, and includes a payment equivalent to the sum insured under the cover, up to a maximum of $3 million for the NobleOak terminal illness benefit. The Life insured must be diagnosed as being terminally ill by two medical practitioners (including one who is a specialist in the area related to the illness or injury being suffered) and both must certify that the condition is likely to result in death within 12 months of their certification.
Total and Permanent Disablement Insurance (TPD Insurance)
TPD Insurance is designed to pay a lump sum in the event of the Life insured never again being able to engage in any gainful employment for which they are reasonably qualified by education, training and experience. NobleOak’s TPD benefit provides cover up to $3 million. The actual amount of cover accepted is shown in the certificate of membership.
Totally Disabled/ Total Disablement
This means that due to sickness or injury, you are unable to perform one or more duties of your occupation that are important or essential in producing income and you are not working and, you are also following the advice of a medical practitioner.
Total Disablement benefits
Relates to the monthly benefit payments under Income Protection Insurance cover to replace lost income.
Trauma Insurance provides a lump sum payment when one of the above mentioned listed medical conditions is diagnosed. This type of Life Insurance is also known as Critical Illness or Recovery Insurance cover. NobleOak’s Trauma Insurance pays up to $2 million on the diagnosis of one of the 38 listed medical conditions. The actual amount of cover accepted is shown in the certificate of membership.
Trauma Insurance benefit
This is the lump sum payment (up to $2 million with NobleOak) provided under a Trauma Insurance cover when the Life insured is diagnosed with one of the listed trauma events. This is also known as Critical Illness and Recovery Cover. The actual amount of cover accepted is shown in the Certificate of Membership.
Trauma Insurance medical conditions
Here are some of the medical conditions included under NobleOak’s Trauma Insurance, the complete list of medical conditions is available through our PDS.
- Coronary Artery Angioplasty
- Coronary Artery Bypass Surgery
- Heart Attack
- Other Serious Coronary Artery Disease
- Accidental HIV infection
- Alzheimer’s Disease /Irreversible Organic Disorder
- Aplastic Anaemia
- Bacterial Meningitis
- Chronic liver disease
This is the time period chosen at the time of application for Income Protection Insurance and is the amount of time the Life insured must be unable to work before becoming eligible to receive the Income Protection Insurance benefit payments.
This is a term commonly used to explain a scenario where a client has insufficient cover in place to meet their overall financial needs. For example, the amount of Life Cover or TPD Insurance may not be enough to pay out the home mortgage and other debts, and also cover the costs of future schooling and household expenses in the event of the death or serious illness or injury of the primary breadwinner.
Premium Life Direct: Legal Statements
*Average saving on Life Cover
The savings quoted are the average savings when comparing NobleOak’s premiums for its Term Life cover under NobleOak’s Premium Life Direct to the average cost of Term Life insurance products offered by other Life Insurance companies, including products available directly from the insurer (24 products from 12 insurers included in this comparison) and those available for purchase through a financial adviser or broker (10 products from 10 insurers included in this comparison). The premiums are based on a non-smoking Australian resident with a Life Insurance sum insured of $500,000 at 5 year age bands from age 30 to 65 for advised products and 30 to 50 for direct products. In many cases the saving for an individual is higher than the 20% average saving quoted. Life Insurance rates for insurers, including NobleOak, may change in the future and this could change the outcome. The premium comparison was undertaken in March 2018 based on published premium rates. If you wish to see the comparison table please click here.
~Funeral Advance Benefit
NobleOak will quickly advance $15,000 of the agreed Life insurance cover amount to assist with funeral expenses, upon satisfying evidence of age and death.
2017 client survey by Pureprofile.