Understanding Long Term Insurance || A - B

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Accelerator (rider) benefits
Accelerator benefits typically accelerate (reduce) the death benefit and other benefits they are linked to. Any claim under such a benefit reduces the total of your life cover and renewable life cover under the policy by the amount of the claim. For example, if you have a death benefit of R1 000 000 and your insurer pays out R200 000 for a disability claim, the remaining death benefit would be R800 000. Accelerated benefits cost less than their equivalent non-accelerated benefits.

Accidental death
A policy add-on that pays out additional compensation — up to the full amount of the death benefit — if either the insured’s death is the result of an accident or he or she loses a limb because of an accident.

Age-rated Premiums
Where the insured chooses an age-rated premium pattern, their premiums will increase each year in line with the additional risk they present to the insurer as a result of the fact that they are older. Age-rated premiums are generally cheaper at the inception of the policy but, as the insured ages, premiums can become unaffordable. The benefit of this type of premium pattern is that it makes life cover affordable for younger people who would not otherwise be able to afford cover. However, when opting for this type of premium, be sure to consider your future affordability.

Annual benefit increase (ABI)
Your cover will increase by a certain percentage every year; this percentage is known as the annual benefit increase. Your annual benefit increase ensures that your cover stays relevant and up to date, either at 3% - 5%.

Annual premium increase / Annual contribution Increase (ACI)
Your premium will increase by a certain percentage every year, either at CPI + 3% or CPI + 5% or CPI only, this percentage is known as the annual premium increase. Your annual premium increase ensures that your premium stays in line with your annual benefit increase.

Attained age / Actual Age
The age of the insured person at a particular time. Attained age often comes into play for convertible term policies which allow conversion to permanent insurance such as whole life with no medical examination or medical questions. The new permanent insurance policy will be issued at the age the policyholder has attained at the time of the conversion.

Avocation
An avocation is a hobby or minor occupation, like skydiving, scuba diving, or snowboarding. Certain avocations are considered a higher risk and may result in higher rates when applying for life insurance. How much more you spend on life insurance is typically determined by how often you participate in the activity or how risky it is.

Beneficiary
The person named in the policy to receive the insurance proceeds at the death of the insured. Anyone can be named as a beneficiary.

Burial insurance / Funeral Insurance
Also called final expense life insurance, burial insurance covers the cost of your funeral and any other end-of-life expenses.

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