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Life insurance terms you should know

It’s natural to want to find the best life insurance policy for your personal situation. But when looking in to the details of life cover, you might come across words or phrases you’re not 100% sure you understand.

Here we explain the meaning of some common insurance terms, to help you weigh up your life insurance options and make an informed decision.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Arrears

A policy is considered to be in 'arrears' if the customer has missed one or more regular payments.


Accidental Death Benefit

Is cover put in place to give you some financial protection in case of accidental death.


B

Beneficiary or Beneficiaries

The person or the people named by the policyholder as the recipients of the money paid out by the life insurance policy on their death.


C

Critical illness cover

Critical illness cover pays out a lump sum should you be diagnosed with a specified serious illness during the term of the policy.


Cash benefit

The value of a life insurance policy and the cash payout if death or other specified event occurs while the policy is in force. Also referred to as cover, lump sum, cash sum, cash benefit, sum assured and payout.


Claim

A request made to the insurance provider for the cash benefit of a life insurance policy to be paid out.


D

Decreasing term insurance (also mortgage protection insurance)

A type of life insurance typically used to cover a significant debt such as a mortgage. As the debt goes down so does the policy’s cover amount. See also Level term insurance.


Declined risk

When an insurance provider refuses to accept a life insurance application because the person’s circumstances did not meet certain criteria.


Dependent

Someone who is reliant on the insured person for support.


E

Existing medical condition (also pre-existing medical condition)

An illness or chronic health issue a person was suffering from before they applied for life insurance. Not disclosing medical issues when applying for life insurance can result in the policy being deemed invalid.


Estate

A person’s net worth at the time of their death. In other words, everything they owned such as property, possessions, savings and life insurance less what they owed, such as a mortgage or loan.


G

Guaranteed premiums

The cost of insurance (the premium) remains the same throughout the policy term so you always know how much you’re paying. See also Inflation.


Guaranteed insurability option

A feature that lets you increase the value of your life cover without having to provide any further medical evidence to the insurance provider.


I

In force

The status of a life insurance policy when premiums are being paid when required and full cover is in place.


Inflation

Over time, the cost of the goods and services we buy goes up and, as a result of this, how much we can buy with our money goes down. This is the effect of inflation. For example with level term life insurance, the cash payout is a set amount that never changes, so over time inflation will reduce how much it will buy.


L

Life insured

The named person on whose death the policy will pay out.


Level term insurance

With level term life insurance both the cash benefit and the premium remain the same throughout the life of the policy. See also Decreasing term insurance.


Lapsed

The status of a policy when premiums have not been paid when required, so the policy is no longer in force. See also In force.


M

Monthly premium

The amount of money specified in the policy schedule, which must be paid each month during the policy term. See also Policy schedule and Term.


N

Non-disclosure

When an applicant does not tell the life insurance provider something that may affect their decision on whether to provide cover or what the cost of providing cover should be.


P

Policy

The contract between the person whose life is insured and the company providing the life insurance.


Policy schedule

An important document that sets out the cover provided under the policy. It confirms the policyholder’s details, the type of cover, the term and any limits or exclusions that apply.


Policy end date

The day on which a life insurance term ends and cover stops. See also Term.


S

Smoker rates

A higher rate that is applied to anyone the insurance provider classes as a smoker - typically someone who has used tobacco products within the previous 12 months.


T

Term

The length of time a life insurance policy will cover the insured person for. Also referred to as the Policy Term.


Term life insurance

Life insurance that covers the insured person for a specified period of time. If the insured person dies during this time, the policy will pay out.


Terminal illness cover

Terminal illness cover pays out a lump sum should you be diagnosed with a terminal illness during the term of the policy.


U

Underwriter

A person who calculates the likelihood of a person making a claim based on the health and lifestyle criteria they provide when they apply.


Underwrite

Assessing a life insurance application to decide the cover amount and premium to be paid. See also Declined risk.


W

Waiver of premium

A feature that can be added to a life insurance policy at an additional cost. It pays your premiums when you are incapacitated due to illness or injury and, as a result, are unable to work.

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, pet insurance, car insurance, home insurance, ISAs and Will writing services.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority but are registered providers with the Funeral Planning Authority.

Who provides the Funeral Plans?

The funeral services are arranged by a funeral director selected by Golden Charter Ltd. Golden Charter Ltd are not required to be authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority in relation to funeral plans but are registered providers with the Funeral Planning Authority.

If you choose to pay for your funeral in one go, with a single payment, you will have a contract with Golden Charter. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

If you choose to pay for your funeral with a life insurance policy, the policy will be provided by Phoenix Life Limited, trading as SunLife. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.