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Life insurance can feel tricky, especially when all the terms start to get confusing—right when you’re trying to make important financial decisions.
To simplify things, we’ve compiled a simple glossary of commonly misunderstood life insurance words for you. Our goal? To help you understand the basics of life insurance in Ireland and make the whole process feel smoother.
Accelerated Serious Illness Cover
If you add Accelerated Serious Illness cover to your mortgage protection or life insurance, the payout reduces your life cover amount. It offers a lump sum if you’re diagnosed with a serious illness listed in your policy.
For example, William took out a life insurance policy of €250,000 and added an Accelerated Serious Illness cover of €100,000. When he was diagnosed with a serious illness covered by the policy, he received the €100,000 payout. However, his life insurance cover was reduced to €150,000, as the serious illness payout is deducted from the total life cover.
Learn more by reading our Serious Illness Cover Guide.
Additional Specified Illness Cover or Standalone Specified Illness Cover
Standalone Serious Illness Cover provides a lump sum for a serious illness without affecting your life insurance cover. Unlike accelerated cover, it doesn’t reduce your life insurance benefit.
For example, James added Standalone Serious Illness cover of €100,000 to his €250,000 life insurance policy. When James was diagnosed with a serious illness covered by the policy, he received the €100,000 payout without affecting his €250,000 life insurance cover, which remains intact for his beneficiaries.
Learn more by reading our Serious Illness Cover Guide.
Beneficiaries
Beneficiaries are the individuals or entities (such as a charity) you choose to receive the payout from your life insurance policy. Some assume this always defaults to family members, but you can select anyone as a beneficiary.
Broker
A life insurance broker helps people find the right life insurance policy based on their needs and budget. They offer expert advice to make the process easier and ensure you get the best protection for you and your family.
Brokers compare policies from different insurance companies to find the best options and prices for their customers.
Learn more about the benefits of using a broker to get life insurance.
Cancer Cover
Cancer Cover provides a lump sum payment if you’re diagnosed with cancer and is a more affordable option than Serious Illness Cover.
It’s especially useful if Serious Illness Cover is out of reach, such as when you’ve been denied cover due to pre-existing conditions like heart issues or diabetes. Cancer Cover can be purchased on a single, joint, or dual life basis, either as a standalone policy or as an addition to your existing life insurance.
Children’s Cover
Children’s life insurance is often included in adult life insurance policies, providing a lump sum of up to €7,000 in the event of a child’s death. While you can’t buy separate life insurance for children under 18, some providers offer this cover for free as part of their policies.
If Serious Illness Cover is included, your children may also be covered for up to €25,000 or half of your serious illness benefit, whichever is lower. Claims can be made until they turn 18, or 25 if they are in full-time education. Availability and terms may vary between providers.
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Conversion Option
A conversion option allows you to extend your term life insurance policy without needing a medical exam. If your current policy expires and you develop a health issue, getting new cover can be difficult.
However, with a convertible term life insurance policy, you can extend your cover without having to provide further medical information or having to undertake a medical exam, ensuring continued protection regardless of your health status at the time of conversion.
Learn more about the Convertible Life Insurance.
Cooling-Off Period
A statutory period immediately after purchasing a life insurance policy during which the policyholder can cancel the contract without penalty. This period is usually 30 days.
While you’re entitled to a refund during the cooling-off period, insurers may deduct fees for administration costs. The amount depends on the insurance company, and details about cancellation charges can be found in your policy’s terms and conditions.
Cover
The total amount of money you wish to insure. For example, €200,000 of life insurance means your beneficiaries would receive this amount if you pass away during the policy term.
If you’re unsure about the right cover amount for your family, you can read our article on the topic or contact one of our financial advisors for guidance.
Critical Illness Cover
Critical illness cover or Specified Serious Illness Cover is a benefit that pays out a lump sum if you’re diagnosed with a serious illness covered by your policy, such as cancer or a heart attack.
It’s often misunderstood as the same as life insurance, but critical illness cover is a separate benefit that you can add to your policy.
Learn more by reading our Serious Illness Cover Guide.
Decreasing Term Assurance
A type of life insurance where the payout reduces over time, often used for mortgage protection, as the sum assured decreases alongside your mortgage balance.
For example, Sarah takes out a €200,000 mortgage with a 20-year term. She also gets mortgage protection with life cover starting at €200,000. Each year, as she pays down her mortgage, the outstanding balance decreases.
After 10 years, her mortgage balance is €100,000, and the life cover on her mortgage protection has also reduced to €100,000. This means if something happens to Sarah, the life cover will pay off the remaining balance of the mortgage, which decreases over time as she makes payments.
It’s advisable to have life insurance alongside your mortgage protection. While mortgage protection will pay off your mortgage if you pass away, life insurance provides an additional payout to your family.
This extra support can help cover other expenses like bills, maintaining their lifestyle, paying for education, or even contributing to your children’s first car or a mortgage deposit for their first home. This ensures your family is financially secure beyond just the mortgage.
Learn more about the differences between life insurance and mortgage protection.
Dual Life Insurance
Dual life insurance covers two people and pays out on both lives. After the first person passes away, the second person is still covered, and a second payout will be made when they pass away. This is often mistaken for joint life insurance, but it provides more extensive cover for both individuals.
Read our article on the differences between Dual and Joint life insurance to make informed decisions, or contact us for personalised guidance.
Joint Life Insurance
Joint life insurance covers two people; however, the policy pays out on either the first or second life assured’s death (depending on if the policy is set up on a joint life first death basis or a joint life second death basis). Many people confuse this with dual life insurance, which pays out for each life insured separately.
Read our article on the differences between Dual and Joint life insurance to make informed decisions, or contact us for personalised guidance.
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Exclusions
Exclusions, or restrictions, are situations that your insurance policy doesn’t cover. Every policy has standard exclusions, such as death due to suicide within the first year.
Additionally, your insurer may add specific exclusions based on individual circumstances. These exclusions limit cover for certain events or causes of death.
Guaranteed Insurability Option
The Guaranteed Insurability Option allows you to increase your life cover without providing further medical evidence, often due to major life events like getting married, having a child or increasing your mortgage.
This benefit lets you boost your cover even if your health has worsened since you first got the policy. However, not all insurers offer this option, and there are specific criteria and limits involved.
Read our article for more information or contact us for personalised guidance.
Indexation
An option to increase your cover in line with inflation, ensuring that your policy maintains its value as the cost of living rises.
Adding indexation to your policy comes with an extra cost, which varies depending on the life insurance provider.
Lapsed Policy
A policy that has been cancelled due to non-payment of premiums, meaning it no longer provides cover or holds any value.
Mortgage Protection
This type of life insurance is required by lenders when you take out a mortgage on your family home. A mortgage protection policy ensures that the remaining balance of your mortgage is paid off if you pass away.
PMA (Private Medical Attendant’s Report)
A report requested from your GP by the insurance provider as part of the underwriting process to assess your health. It is required only if you have pre-existing health conditions.
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Policyholder
The individual who legally owns the life insurance plan. This is typically the same person as the insured.
Premium
The amount you pay for your life insurance policy. Premiums can be paid monthly, or annually. Many people misunderstand this as the total cost of the insurance, but it’s the regular payment required to keep the policy active.
Section 72 Whole of Life
A specific type of whole-of-life insurance policy designed to cover inheritance tax liabilities. The payout from this policy is used to pay any inheritance taxes, ensuring that your beneficiaries do not have to sell off assets to cover the bill.
Sum Assured
The total amount of money your beneficiaries will receive if you pass away during the term of your policy.
Term Insurance
Term life insurance is a policy that covers you for a specific period, such as 10, 20, or 30 years. If you pass away during the term, your beneficiaries receive the payout. However, if the term expires and you’re still alive, the policy ends, and no money is returned.
Terminal Illness Benefit
A feature that provides an early payout if you are diagnosed with a terminal illness and expected to live for less than 12 months. It is often included as a standard benefit in life insurance policies.
Underwriting
Underwriting is the process your insurance provider goes through to assess how risky it would be to insure you. They look at factors like your age, health, lifestyle, and occupation.
Many people think of it as just filling out a form, but it’s actually a detailed assessment that helps determine the cost of your premiums and whether you’ll be approved for life insurance cover.
Waiver of Premium
This feature ensures that if you become unable to work due to illness or injury, your premiums will continue to be paid by the insurance provider. Some providers offer this benefit automatically and free of charge.
Whole of Life Insurance
Unlike term insurance,a Whole of Life policy covers you for your entire life, not just a set number of years. It guarantees a payout no matter when you die as long as you’ve kept up with your premium payments.
Get Life insurance With LowQuotes
At LowQuotes, we simplify the process of securing life insurance by helping you understand key terms and options. Our comprehensive glossary makes it easier to choose and manage the right life insurance policy for your needs.
Whether you’re starting a new policy or reviewing an existing one, our team of expert financial advisors is here to guide you every step of the way.
We also provide a wide variety of financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
