Agreed value
An income protection benefit calculated using an agreed income figure under the policy terms. Availability and rules vary between policies, particularly older and newer policies.
Advice Centre
Insurance glossary
Insurance can come with a lot of unfamiliar language. Explore plain-English explanations of common terms used in life, TPD, trauma and income protection policies.
Use the letters below to find a term. These explanations are a starting point; the precise meaning, conditions and benefits depend on the insurer and policy.
A
Application and underwriting
The process of applying for cover and the insurer assessing the information provided, which may include your health, occupation and lifestyle, before deciding whether and on what terms to offer cover.
B
Beneficiary
A person or entity that may receive a policy benefit. Who receives a payment depends on the policy ownership, any valid nomination and the applicable rules.
Benefit period
For income protection, the maximum period a monthly benefit may be payable for one eligible claim, subject to the policy terms and ongoing claim requirements.
C
Claim
A request for payment under an insurance policy after an event that may be covered. The insurer assesses the claim against the policy terms and supporting evidence.
Critical illness or trauma cover
Cover designed to pay a lump sum if you meet the policy definition for a specified serious illness or medical event. Covered conditions and definitions vary by policy. Explore trauma insurance.
E
Exclusion
A circumstance or event the policy does not cover. Exclusions may apply to a policy generally or be specific to an individual after underwriting.
I
Income protection
Insurance designed to pay a regular benefit if illness or injury prevents you from working and you meet the policy’s claim conditions. Explore income protection.
Indemnity value
An income protection benefit assessed using earnings under the policy’s claim rules, rather than simply a figure agreed when cover began. The calculation varies by policy.
Indexation
A feature that may increase the insured benefit over time, often to help account for inflation. The method, limits and effect on premiums depend on the policy.
L
Level premiums
Premiums generally calculated with more of the expected cost spread across earlier years. They can still change due to factors such as indexation, policy changes or insurer repricing.
Life insurance
Cover designed to pay a lump sum on death or, where included and the conditions are met, a terminal illness diagnosis. Explore life insurance.
P
Policy owner
The person or entity that owns and controls the policy. The owner may differ from the person whose life or health is insured.
Pre-existing condition
A health condition or symptom that existed before cover began. How it affects an application or claim depends on the information disclosed and the policy terms.
Premium
The amount paid to keep an insurance policy in force. Premiums can change over time according to the policy’s pricing structure and insurer decisions.
Product Disclosure Statement (PDS)
A document explaining a financial product’s key features, benefits, risks, costs and conditions. Read the relevant PDS and policy documents when considering cover.
S
Stepped premiums
Premiums generally recalculated as the insured person gets older. Other factors, including indexation and insurer repricing, may also affect the amount payable.
Sum insured
The stated amount of cover under a policy. The amount actually payable on a claim depends on the policy terms and the circumstances of the claim.
Superannuation ownership
Some insurance can be held through superannuation. The trustee owns the policy, and both the insurance terms and superannuation rules can affect when benefits are released.
T
Terminal illness benefit
A benefit that may allow an eligible life insurance payment before death if the policy’s terminal illness definition and other conditions are met.
Total and Permanent Disability (TPD)
Cover designed to pay a lump sum if illness or injury leaves you totally and permanently disabled under the policy definition. Definitions vary between policies. Explore TPD insurance.
U
Underwriting
The insurer’s assessment of an application before cover is offered. The outcome may include standard terms, an additional premium, an exclusion, a deferral or a declined application.
W
Waiting period
For income protection, the period you must meet the policy’s disability conditions before an eligible benefit becomes payable. The available periods and payment timing depend on the policy.
This glossary provides general information only. Insurance definitions, eligibility and claim conditions vary by insurer and policy. Refer to the relevant PDS and policy documents for the terms that apply to your cover.