Benefit Illustration: This illustrates the benefits of the plan, both guaranteed and non-guaranteed, and the costs and charges associated with the policy you are purchasing, including distribution costs, which take into account the commission the insurer will pay to your insurance adviser, and the charges for insurance coverage.

Cash Value / Surrender Value: The amount of money the policyholder will receive if he surrenders his life insurance policy that has a savings feature.

Claim: A demand made by the insured, or the insured's estate, for payment of the benefits as provided by the policy.

Co-Insurance: Co-insurance is the amount which is not covered by the policy and which you need to pay after the deductible (see below) is met. It is usually expressed as a percentage of the expenses.

Commission: Fee paid to the distributor as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer and the marketing methods.

Coverage: The scope of protection provided under an insurance policy. In life insurance, living and death benefits are listed. In non-life insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification.

Critical Illness Insurance: Critical illness plans will pay out a lump sum when you die or are diagnosed with a major illness. The illnesses that are covered vary, but usually include heart attack, stroke, coronary artery bypass, major cancers and kidney failure.

Death Benefit: The amount of benefit that will be paid in the event of the death of a covered person.

Deductible: The minimum amount that you would need to pay (for a hospital/medical bill) when you make a claim. It applies to the claimable amount rather than the incurred hospital bill. You only need to pay the deductible once in a policy year.

Dependants’ Protection Scheme: DPS is an opt-out term insurance which covers CPF members up to 60 years old for a maximum sum assured of $46,000. The coverage is worldwide. The benefit will be paid out if the insured member dies or is unable to work because of a permanent disability.

Disability: Physical or mental condition that prevents a person from performing one or more occupational duties temporarily (short-term), long-term, or totally (total disability).

Disability Benefit: A feature added to some life insurance policies providing for the waiver of premium, and sometimes payment of monthly income, if you become totally and permanently disabled.

Disability Income Insurance: This is an income-protection product as it helps to replace part of your income if you become totally or partially disabled and cannot work as a result of an accident or sickness, depending on certain conditions.

ElderShield: ElderShield is an affordable severe disability insurance scheme that provides insurance coverage to Singaporeans who require long-term care. It provides basic financial protection and help defray out-of-pocket expenses in the event of severe disabilities. ElderShield policyholders pay a small regular premium to be protected against the cost of long term care. It will provide lifelong coverage once all the premiums are fully paid.

Forfeiture: A loss of money or privileges due to a breach of contract, which serves as compensation for resulting losses.

Free Look: You are allowed to review your policy within 14 days after receiving the contract. If you are unhappy with the policy, you can cancel it and get back your premium, less any medical fees incurred in assessing your application.

Grace Period: The length of time (usually 31 days) after a premium is due and unpaid during which the policy, including all riders, remains in force. If a premium is paid during the grace period, the premium is considered to have been paid on time.

Indemnity: Restoration to the victim of a loss by payment, repair or replacement.

Investment-Linked Insurance: Your premiums buy life-insurance protection and investment units in a managed fund. The price of your units depends on how the investments in the fund perform. What it pays depends on the price of the units at the time you cash it in or die. Your estate may also get a death benefit.

Living Benefits: This feature allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care, or confinement to a nursing home. Also known as ‘accelerated death benefits.’

Long-Term Care Insurance: Long-term care is designed to meet some or all of your costs of daily living if, as a result of accident or sickness, you are physically disabled to the extent that you cannot live alone, and have to depend on others to help you carry out the most basic activities of daily living.

Maturity Date: An agreed date on which an insurance company pays out a lump sum.

Medical Expense Insurance: Medical expense insurance (or commonly known as hospital and surgical insurance) pays medical expenses that result from accidents and sicknesses. The policy will refund the in-patient expenses you have to pay while in hospital as well as certain out-patient expenses, depending on the limits shown in the policy.

Medisave: This is a national medical savings scheme which helps you put aside a part of your income into your Medisave account for your own or your family member’s medical expenses. It can be used to pay for hospitalisation, day surgery and certain approved outpatient treatments.

MediShield: MediShield is a catastrophic medical insurance scheme that will help you and your dependants meet the costs of treatment for serious illnesses or prolonged hospitalisation. It operates on a deductible and co-payment system.

Needs Analysis: A systematic procedure performed by a financial adviser which involves calculating and examining your overall financial situation, including your income and expenses, and assets and liabilities, before he makes a recommendation.

Non-Forfeiture Values: The value of the policy if canceled, either in cash or in another form of insurance.

Non-Participating Policy: An insurance policy that does not participate in the profits of the insurance fund.

Participating Policy: An insurance policy that participates in the profits of the insurance fund.

Policy: The written contract and certificate affecting insurance, and including all clauses, riders, endorsements, and papers attached to it.

Policy Loan: A policyholder in temporary need of cash may apply for a policy loan against the security of the policy. Interest will be charged from the date of the policy loan.

Premium: The price of insurance protection for a specified risk for a specified period of time.

Product Summary: This describes the features, fees and charges of the plan you are purchasing.

Regular Premium Policy: A policy that requires periodic premium payments for example, monthly, quarterly, half-yearly or yearly.

Riders: A policy rider is a provision or modification to an existing insurance policy that provides additional coverage. Common examples include disability waiver of premium, which allows you to stop paying premiums for a policy if you become disabled for a sustained period of time; death benefit, which pays additional benefit in the event of a death resulting from an accident and a family income benefit rider, which guarantees that your family will continue to receive your monthly income if you die.

Risk Appetite: The amount of capital that an individual is willing to lose in order to generate a potential profit.

Single Premium Policy: A policy that only requires a one-time upfront payment.

Sum Assured: The guaranteed amount that the policyholder is insured for.

Term Insurance: Term insurance provides you with protection for a set period of time. It pays the sum insured only if you die or become totally or permanently disabled (if this benefit is provided) during this period.

Unit Trust: A financial product where money from investors is pooled together and invested collectively in investments such as shares and bonds.

Universal Life Insurance: Universal life is a form of ‘interest sensitive’ type whole life insurance that offers a death benefit, and because of its flexible premium feature, it provides the opportunity to build cash values which you can borrow from or withdraw. The policy cash values earn interest at a declared rate, which may change over time. Most universal life plans guarantee a minimum interest crediting rate. Within certain limits, you can choose the amount, method and timing of your premium payments.

Waiver of Premium: A provision in some insurance contracts which enables an insurance company to waive the collection of premiums while keeping the policy in force if the policyholder becomes unable to work because of an accident or injury.

Whole-Life Insurance: Whole-life insurance gives you protection for life. You pay premiums throughout your life but that can be changed to a limited period. The policy will pay out the sum insured and any bonuses you have built up (if any) when you die or become totally and permanently disabled (if this benefit is provided).