Glossary and Definitions

Below you will find a glossary with some key terms to help you.

Please note that the below is a general list of definitions only and that different insurers may have different definitions for their individual policies. It is therefore important for you to refer to your relevant Product Disclosure Statement (PDS) for a more detailed definition.
If you have any further questions please contact us.

Accidental Death

Death as a result of an injury caused by accidental or violent means that occurs within 90 days of the accident and is not linked to the insured’s mental or physical health before the event.

Activities of Daily Living

1. Bathing and/or showering
2. Dressing and/or undressing
3. Eating and/or drinking
4. Being able to go to the bathroom in order to maintain a basic level of hygiene.
5. Getting in and out of your bed, chair or wheelchair or moving by walking, wheelchair or walking aid.

Beneficiary

The persons or entities nominated by the policy holder as entitled to receive the benefit.

Benefit Payment

The amount of money your policy will pay you if you make a successful claim.

Benefit Period

The maximum amount of time that your insurer will pay the income protection monthly benefit or business expenses benefit to you when on a claim. Generally you will have a number of benefit period options to choose from when applying for your policy.

BMI – Body Mass Index

Used to calculate whether or not you are in a healthy weight range. It is only an approximate measurement.
BMI Ratings:

  • Under 18.5: Underweight with possible malnourishment
  • 18.5 – 24.9: Healthy Weight Range
  • 25 – 29.9 – Unhealthy Weight Range
  • Over 30 – Very Unhealthy Weight Range

Buy Back Option

An option only available in a combined or linked policy, it allows you to re-purchase the portion of life cover that is reduced when either:

  • A full trauma claim is made; or
  • A full TPD claim is made

It is generally only available 12 months after the initial trauma or TPD claim but the policy option must be purchased at the time of your application.

Combined/Rider/Linked Policy

A policy type where by you have multiple types of cover linked together to form one policy with one premium. Generally a lump sum payment from one type of cover in a combined policy will reduce the lump sum benefit of the other types of cover in the combined policy.

Cooling off period

The period immediately following the purchase of an insurance policy in which you can cancel the policy with no financial penalty. The policy is cancelled from inception and all parties are brought back to inception as though the transaction never occurred.
A cooling off period is generally 28 – 30 days but may differ between companies.

CPI

The Consumer Price Index measures the quarterly change in price of ‘basket’ goods across Australia’s 6 capital cities. The goods are grouped into the following categories:

  • Food and non-alcoholic beverages
  • Alcohol and tobacco
  • Clothing and footwear
  • Housing
  • Furnishings, household equipment and services
  • Health
  • Transport
  • Communication
  • Recreation and culture
  • Education
  • Insurance and financial services

Duty of Disclosure

When you enter into a contract of insurance with an insurance company, under the Contracts Act of 1984 you have a duty of disclosure to disclose to your insurers every matter that you know or could reasonably be expected to know that is relevant to your life insurance companies decision whether or not to accept the risk of the insurance and on what terms.

Your duty of disclosure includes up until the period your policy goes in force.

Non Disclosure

If you do not comply with your duty of disclosure and the information you failed to disclose would have meant the insurer would not have entered into the contract on any terms, your insurer can terminate the contract within three years of entering into it.

Alternatively, if your lifei company is entitled to terminate your contract within three years, they can also elect to reduce your sum insured.

Fraudulent non disclosure can result in your policy being terminated at any time.

Exclusions

Insurers may not cover certain medical conditions or past times if they are deemed too great a risk, resulting in them being excluded from your policy.

Expiry Age

All policies have age specific expiry dates, such as life cover which may expire at age 99 or Income Protection which will generally expire between the ages of 65-70.

Expiry date

The date on which the policy or benefit period expires either due to the policy reaching the expiry age or due to the insured not paying their premium. The expiry age of the policy and the schedule of premium payments will generally be outlined in the policy.

Home Duties

Refers to the following duties if your sole occupation is to maintain the family home:

  • Cleaning of family home
  • Shopping for food for the family
  • Cooking meals for the family
  • Family laundry
  • Caring for dependent children

Immediate family member

Includes spouse, child, sibling, parent, father-in-law, mother-in-law or a person in a domestic living arrangement and who is financially interdependent.

Injury

Physical damage to your body caused directly by an accident which occurs while the policy is in force.

Interim Cover

Provides temporary cover while your application is being assessed or underwritten. It is generally only available once your insurer has received your fully completed application forms, including your payment details.

Interim Cover will generally end:

  • When your policy application is accepted and commences
  • On the 90th day after your interim cover commences
  • If your policy application is declined
  • If your policy terms are not accepted by you within the required time frame
  • If you withdrawal your insurance policy application

Level Premiums

A premium structure in which your premiums are averaged out over the course of your policy and do not increase with your age. Generally level premiums start off more expensive than stepped premiums but savings are made the longer you hold the policy for.

Policy Anniversary

The anniversary of the due date of the first premium shown in the policy schedule.

Policy Owner

The policy owner is the person who holds ultimate control over the policy. They are the only ones who can change the details of the policy:

  • Sum insured
  • Payment alterations
  • Cover types
  • Policy options
  • Beneficiaries
  • Policy cancellation

Policy Schedule

The document issued to you by your insurer which details the cover provided to you and forms part of your contract with your provider.

Pre-existing condition

A sickness or injury that occurred before the policy was in force and that:
1. Was diagnosed or investigated
2. Presented symptoms leading to a diagnosis

Premium

This is the fee for your policy. This may be a monthly, quarterly or annual fee.

SMSF

A Self Managed Superannuation Fund as defined by section 17A of the Superannuation Industry (Supervision) Act 1993 (CTH). It allows people to control their own superannuation investments for their retirement and is required to have 5 or less people as members.

Recurring injury or disability (To Age 65 Benefit Period): A recurring injury is one that re-occurs generally within 12 months of returning to work on a full time basis after receiving an income protection benefit, or 6 months for a 5 year benefit period.

Sickness

An illness or disease the insured suffers while the policy is in force.

Stepped Premiums

This is a premium structure in which your premiums increase with your age. Generally stepped premiums start off cheaper than level premiums and get more expensive as you age.

Sum Insured

The sum insured is the amount that is insured in the policy or the amount that will be paid out to the insured if a claim was made.

Terminal Illness

An illness, which in the opinion of a medical specialist is likely to result in death within 12 months, regardless of any treatment.

Underwriting

The process whereby a life insurance company assess your level of risk to them a the time of your policy application.

Waiting Period

The period of time during which you will not be paid. Generally a waiting period will not commence until you consult a registered doctor.

Published: January 8, 2013

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