Life Insurance Glossary
A guide to some life insurance terms that you may hear us talk about.
The Accident Compensation Corporation (ACC) supports New Zealanders who suffer a physical injury, and in some cases the mental trauma that comes with it. Its main role is to cover people’s treatment costs or lost income while they recover, with the goal of getting them back to work.
ACC does not cover illnesses or deaths due to natural causes, and the amount you can receive from ACC if you’re injured is also capped. That’s why it can be a good idea to protect yourself and your family with your own insurance, for things ACC doesn’t cover or to top up ACC payments.
Some insurance benefits can be structured in two ways: accelerated or stand alone.
An accelerated benefit is a payment that comes off the total sum of your life insurance if you make a claim. A Stand Alone benefit is just that – a benefit that sits on its own, and doesn’t reduce any other benefits you may have if you make a claim.
Accelerated benefits may reduce your overall life insurance cover, but they are a cheaper option for giving you cover in more circumstances. And you may be able to buy back the cover at a later date.
Accidental Death vs. alternatives
Accidental Death Insurance is specifically designed to pay out if you should die as a result of a sudden, unintended event that causes bodily injury. This makes it a bit different from Life Insurance, which also pays out in the event of death due to natural causes. Accidental Death Insurance is a lower-cost option, but offers limited protection.
An advancement is an early part payment made as soon as a claim is accepted, to help you or your loved ones meet urgent expenses.
A qualified insurance expert who can give you information on your options, suggest a package of cover that’s right for you, and manage your policies and claims on your behalf. If you’d like to talk to an adviser, we can put you in touch with one.
An insurance policy is made up of a collection of benefits, which are services or payments you’re entitled to under your policy. For example, Life Insurance’s main benefit is the lump sum payment if you pass away, but it also includes other benefits like advance payments for funeral costs or an early payment if you are diagnosed with a terminal illness.
Many Asteron Life policies also include optional benefits that you can choose to add to your cover.
There are different types of insurance to protect your business. Asteron Life offers a choice of cover to help keep your business running if you or a key member of staff become unable to work through illness or injury. You can use the monthly payment to cover day to day operating expenses, or things like hiring a temporary contractor to take the place of you or your employee.
If you make a claim for accelerated Trauma or accelerated TPD, the payments we make will be subtracted from your overall Life Insurance. A buy back lets you restore your Life Insurance policy cover back to what it was, 12 months after you make your accelerated Trauma or TPD claim.
For example, if you have $100,000 of life cover and make a claim for $20,000 accelerated Trauma benefit, your life cover would be reduced to $80,000. A buy back allows you to reinstate your cover to the full $100,000.
If your workplace provides an Employee Insurance package from Asteron Life, the continuation option lets you keep the insurance benefits you had if you leave the company. You take over the premium payments from your employer, but you won’t lose any of the insurance cover you had, and you won’t need to be underwritten again for that cover.
Cooling off periodSee 'Free Look'
When you apply for cover we’ll ask a number of questions about your work, lifestyle, habits, income and medical history. It’s important that you answer completely and honestly. Failing to disclose information, or providing false information, is called nondisclosure, and it can have a serious impact on your ability to claim. Read more about non-disclosure here.
A condition or event that is not covered by your insurance policy. Our policies contain general exclusions, but sometimes your cover will have exclusions applied due to your personal circumstances.
For example, if you have an existing knee injury your income protection may have an exclusion for loss of income due to knee injuries. Or if you’re a keen skydiver, your life insurance might include an exclusion for skydiving mishaps.
Although it might seem like a bad thing to have conditions excluded, sometimes it means that we are able to offer you cover for everything else, where another insurer might decline your application entirely. Read more about exclusions and our underwriting process here.
If you change your mind after purchasing insurance from Asteron Life, you have a 14 day cooling off period in which you can cancel your policy and receive a full refund.
Funeral payments are designed to cover the cost of a funeral, which can be thousands of dollars. Funeral costs normally need to be paid quickly, so funeral cover pays insurance money out quicker than a standard life insurance policy.
Some insurers offer separate funeral policies, but Asteron’s Life Insurance policy includes provisions for funeral costs. We will advance $15,000 of your life cover for funeral costs once a claim has been accepted.
Income Protection Insurance
If an illness or injury prevents you from working, your Income Protection Insurance pays you a proportion of your income as a monthly benefit.
If you suffer an illness or injury that means you can’t work for a long period, you may find that your Income Protection payment doesn’t keep up with your increased cost of living. Increasing Claim is an optional benefit you can add to your Income Protection policy, that ensures that your benefit will rise with inflation if you need to claim for income protection over a long period.
Inflation adjustment is an optional benefit on many of our policies. You can choose to have your cover increase a small amount over time (based on the Consumer Price Index), to keep up with inflation.
This can be a good option if you are planning to keep your cover for a long time. For example, you might take out a policy worth $100,000 in 1997, and make a claim in 2017. But the goods and services you could buy with your cover in 1997 would cost nearly $150,000 in 2017 (based on the Reserve Bank inflation calculator).
Inflation adjustments mean your $100,000 worth of cover would have increased slowly over time, so that when you made a claim you’d have closer to $150,000 worth of cover.
Kid’s Cover is an optional extra that allows you to insure your children as well as yourself.
If one of your children suffers one of the specified serious illnesses, we’ll pay a lump sum which can be used to cover funeral expenses, counselling and or time off work.
Life Insurance lets you provide for your family if you pass away or become terminally ill. It’s a single payment that your family can use to help look after themselves financially, whether that’s meeting funeral costs, paying off the mortgage or covering your income.
Some of our policies only cover named medical conditions. To make a claim, your illness must meet our definition of that condition. If we’re not sure, we will sometimes ask your doctor to provide detailed information, including test results, to decide whether your illness or injury matches the definition in your policy.
If illness or injury prevents you from working, mortgage protection cover is designed to cover your mortgage or rent payments – often your biggest expense. Asteron Life’s Mortgage and Living Cover can cover up to 115% of your monthly mortgage repayments, giving you a little extra for things like rates, insurance or home maintenance.
A nominated beneficiary is the person you’ve chosen to receive any money paid out from your Life Insurance.
For some policies, like income protection, you will receive the money, but if you pass away your insurance money will be paid to your estate unless you have chosen a nominated beneficiary.
Optional benefits are benefits that you can choose to add on to your insurance policy, generally for an additional premium.
For example, you can choose to add Kids Cover to any of our Personal Insurance products, so that we’ll pay a benefit if your child suffers from one of the specified serious illnesses.
In insurance, a policy owner is the person (or business, trust or other entity) that buys a policy.
A nominated beneficiary is the person who will receive the payment if a claim is made –– in the case of Trauma Insurance this might be the policy owner, but for Life Insurance the money will go to your estate unless you nominate a beneficiary.
Finally, the insured is the person whose life or health is covered by the policy. This isn’t always the policy owner. One example of that is our Kids Cover option, where the policy owner is the parent and the insured is their child.
Symptoms, illness or injuries you had before you took out your Asteron Life insurance policy.
It’s important to tell your adviser and insurer about any pre-existing conditions, because failing to disclose any relevant medical history (including treatment you might have had) could have serious consequences later. Sometimes your policy will cover your pre-existing conditions, and sometimes we might apply an exclusion.
Premiums are the weekly, fortnightly, monthly or annual payments you make to your insurer, in exchange for your cover.
See also - stepped vs level premiums
Recurring Claim is a benefit available on some types of income protection cover. If the same illness or injury recurs within a specific period (for example 12 months) and you are unable to work again, this benefit means you won’t need to make a separate claim each time because each recurrence is considered an extension of the first claim.
Stand down period
A stand down period is the length of time you must have held your policy before your cover will begin for certain conditions.
For example, most Asteron Life policies include a stand down period for cancer. If your symptoms and diagnosis occur within the stand down period, you may not be covered.
Stand down periods are designed to prevent fraudulent applications for cover (from customers who are already aware that they may be sick), because fraudulent claims can have an impact on the cost of insurance for other customers.
There are two types of premium: level and stepped.
A stepped premium starts lower but increases each year as you get older, while a level premium starts higher but won’t increase with age unless you increase your cover.
One of the benefits of a level premium is there are no surprises, making it easier to budget for your payments. You can opt for one or the other, or a combination of both.
Sum insured or cover amount
The maximum amount of money we’ll pay you or your beneficiaries in the event of a claim.
Asteron Life policies define a ‘terminal illness’ as an illness where, regardless of treatment, your life expectancy is 12 months or less.
If you have an Asteron Life Insurance policy, you could receive some or all of your claim payment early if you meet our definition for terminal illness.
Total and Permanent Disablement (TPD) Insurance helps you and your family adjust if an illness or injury means you will never be able to work again. It’s a single payment that can be used for major expenses like clearing debts or modifying your home.
Ordinarily, it’s only possible to claim once on your Trauma Insurance – for example, it would pay out for a cancer diagnosis but not for any future illness or injury. Trauma Reinstatement is an optional benefit that lets you take out a new Trauma Insurance policy 12 months after a claim, so your cover is available if you need it again in the future for a different illness or injury.
Trauma Insurance (also known as Critical Illness Insurance) is a lump sum payment that can help you cover the cost of medical and living expenses if you suffer from specific illnesses or injuries. It covers common illnesses like heart attacks and some cancers.
Asteron Life offers cover for 44 defined illnesses – see our product brochure for more information.
Underwriting is the process for assessing a customer’s application for insurance to determine the amount of risk a customer poses.
Asteron Life usually accepts straightforward applications on standard terms, but if a customer’s occupation, medical history or lifestyle presents more of a risk, then our underwriting team may apply special terms like exclusions, adjust the premiums, extend wait periods or the application may be deferred for a period of time.
The waiting period defines how many days you must wait, from the date of any illness, injury or disability, before your insurer will start to pay your claim.
Wait periods can apply to your whole policy, but our underwriters may also offer you an ‘extended wait period’ for certain pre-existing conditions or risks.
Most people choose waiting periods between 30 and 90 days but shorter and longer periods may also be available.
A longer waiting period means lower premiums, but it means you won’t be able to claim for shorter illnesses. It’s a good idea to make sure you’ll have enough money to live on during the waiting period of your cover, if you can’t work.
Workability cover is a type of income protection that Asteron Life offers. It focuses on supporting you to get back into work if you suffer an illness or injury, and also pays a monthly benefit while you’re off work. It can be a more cost effective option than standard income protection insurance.