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Glossary

Welcome to our glossary.

We are passionate about making insurance simpler and easier for everyone to understand. So we thought it would be helpful to explain some of the unfamiliar terms that we have to use to ensure we are accurate.

We would love this to become the most comprehensive glossary in the industry so if you spot a term not listed here, please send a note to insurancemadesimple@manulife.com

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Simplifying the language we use is critical to our mission. We found that we couldn’t avoid using some technical terms because it’s the language of our industry and changing them might cause confusion. Instead, we have explained each using plain language. This glossary is intended to help you understand insurance terms which may be confusing or complex. It isn’t intended to replace conversations with our agents or partners, who are equipped to help you make the right decisions for your needs.

Account value

The value of your investment in any or all the funds you own. This is equal to the number of units you own multiplied by the unit price of the fund.

Asset class

This refers to a group of investments that are classified in a similar way. For example, stocks or bonds would be financial asset classes.

Attained age

This is the age at which you're able to take action; for example to withdraw funds or receive benefits. We calculate this as your current age, based on your nearest birthday.

Automatic premium loan

This feature allows you to stay covered even if you have missed a premium payment. The money and interest are deducted from your cash value, which means that your benefits will be reduced if you don't restart your payments.

Balanced fund

This is a fund that can invest in equities, bonds and cash.

Beneficiary

This refers to someone who is entitled to receive money from an insurance policy. There are two main types of beneficiaries - primary and secondary.

For example, Mr. Wong takes a life insurance policy. He selects Mrs Wong (his wife) as the primary beneficiary and his only child, Alice, as the secondary beneficiary.

When Mr. Wong passes away, Mrs. Wong is entitled to receive the proceeds of the policy (or the 'death benefit'). If Mrs. Wong has also passed away then Alice, the secondary beneficiary, is entitled to the death benefit.

Benefit

A benefit is the amount of money we'll pay according to the terms of a policy. This is typically the reason why you would invest in an insurance policy, allowing you to plan for the future and giving you peace of mind.

Bond fund

This is a type of fund that invests in bonds and is typically considered as a lower risk investment than an equity fund, which invests in stocks.

Cash value

This is the amount of money we will pay you when your policy ends and the policy is eligible.

We understand that circumstances change and perhaps you need to cancel your policy before it is supposed to end. The cash surrender value (also known as 'surrender value') is the amount of money we'll pay in that situation. Cancelling the policy in the early years might result in penalty charges. This means that the cash surrender value could be smaller than the cumulative amount you've paid into your policy.

Compound interest

There are two types of interest: simple and compound.

Simple interest calculates the interest on the initial sum invested, every year.

With a compound interest, we will pay interest on the interest already earned and the initial sum invested, helping you grow your savings faster. This is the type we use to project Account Values in a variable life policy.

For example, you invest $100 at 5% annual interest. In the case of a simple interest, we will pay you $5 every year. With a compound interest, we will pay you $5 in the first year. In year 2, you will earn an interest of $5.25 (5% on $105), and so on.

Cool-off period / Cooling off period

This means you can cancel your policy if you change your mind without any financial penalty. It's usually limited to a short period of time e.g. 15 days.

Cover / Coverage

This is the amount of protection under your insurance policy. You pay us a premium to protect you and your loved ones against unexpected events. If these events take place, we fulfil the promise of the policy.

It is important that you discuss your needs with us before choosing a policy. It's also critical that you read your policy terms and conditions to understand what is included and what is excluded.

Critical illness

This expression has different meanings in different industries. When we refer to 'critical illness', we mean a serious physical or mental health issue (for example cancer, a heart attack or Alzheimer disease).

Different policies will cover different critical illnesses, so it's important that you discuss your needs with us before choosing a policy. It's also important that you read your policy terms and conditions, so you know both what is included and what is excluded.

Death benefit

A death benefit is typically the reason why you would invest in a life insurance policy, allowing you to plan for the future and giving you peace of mind. When you pass away, your beneficiary will receive the proceeds of the policy, which is called a death benefit.

Dividend

An insurance policy dividend is a sum of money that is paid to you (usually annually) from the profits of the policy. Dividends are not guaranteed.

Equity fund

An equity fund is a fund that invests in stocks and is typically considered as a higher risk investment than a bond fund.

Exclusions

The coverage (or cover) of a policy defines what is included in a policy whereas an exclusion provision defines what isn't.

This is why it is important that you discuss your needs with us before choosing a policy. It's also critical that you read your policy terms and conditions to fully understand what is included and what isn't.

Grace period

This is the amount of time that we continue to cover you if you stop paying your premium. It is really important that you reinstate your premium payments before this period ends so that you continue to be protected.

Group insurance policy

This type of insurance typically covers groups of people such as employees of a company, or members of an association. This is different from an individual insurance policy, which you would select and pay for yourself.

Guaranteed insurability offer

This is a hassle-free program that gives insurance cover without having to answer any additional medical questions or provide any additional medical reports, if conditions are met.

Guaranteed renewal

This means that as long as you pay the premiums on your policy, we'll continue to insure you up to a pre-agreed age.

Immediate family member

This usually refers to the legally recognised parent, child or spouse of the person insured.

Incontestability provision

If you have made a mistake in your policy details, this clause prevents us from denying a claim after a certain period of time, typically 2 years.

Individual insurance policy

This is a personal insurance policy that you choose and pay for yourself. It is different from a group insurance policy which is typically provided to you by your employer.

Initial premium

This is the first payment made under a new insurance policy.

Insurability

This refers to how eligible you are for insurance. We take into consideration factors like health, age and risk profile before making a decision.

Issue age

This is the age we use as basis for your premium when you buy a policy. This is computed as your age on your nearest birthday when the policy is issued. Typically, the older you are, the higher the premium.

Lapse

This means that you are no longer covered by your policy. It happens when you stop paying your premium and any potential grace period has expired. If this has happened please contact us immediately.

Level premium

This is a type of life insurance where premiums stay the same throughout the term of the policy.

Life insurance policy

Let's face it: life insurance is not fun to think or talk about, but like taxes or visiting the dentist, planning for the future is an essential part of being an adult.

If people depend on you for financial support, then life insurance is an important way of keeping them protected. At Manulife, we've made it our mission to help you make easier decisions, so that we can support you and your loved ones.

Life insured

This describes a person who is covered by an insurance policy. They may also be the the policyowner.

Limited pay option / limited payment option

This means you pay a premium for a number of years but still have the benefits of the policy for the rest of your life. This can be especially helpful if you buy a policy later in life and only want to pay premiums for a limited period of time.

Loyalty bonus

This feature allows us to reward your loyalty by giving you additional units. Typically, loyalty bonuses are not guaranteed.

Paid-up additions

When we issue dividends, you may wish to use these to get additional coverage instead of paying an additional premium. This is a good way for you to increase your protection without increasing your premiums. This is sometimes called paid-up additional insurance.

Participating policy

A participating policy is an insurance contract where you 'participate' in the profits of the insurance investment, which means that you may receive dividends. These profits are not guaranteed.

Payout

This is a fixed amount of money paid to you as the policyholder at regular intervals.

Permanent partial disability vs. Permanent total disability

The term 'disabilities' can be classified as temporary or permanent, and as partial or total, depending on circumstances.

Temporary disabilities means that you are either unable to work full-time (this is called 'temporary partial disability') or unable to work at all for a period of time (this is referred to as 'temporary total disability'). In either of these situations, you are expecting to make a full recovery and return to work as normal at a later stage.

In the case of a permanent disability, you would never be able to work in the same capacity as before you were ill and/or injured. A permanent disability would prevent you from being able to work full-time for the rest of your life (this is called 'permanent partial disability'), whereas a permanent total disability means that the you will never work again.

It is important for you to understand which of these 4 types of disabilities are covered by your policy, so be sure to read and understand the terms and conditions.

Policy loan

A life insurance policy loan is just a loan from the 'cash value' of your policy. It is important that you keep up the payments on your loan so that we do not need to reduce the final pay-out.

Policy owner

A policy owner is the person in whose name the insurance policy is held. Another term for this is 'policyholder'. So, if you buy an insurance policy under your own name, you’re the policy owner.

As the policy owner, you can add more people to your policy. These would become additional 'people insured' under the policy.

Policy year

This refers to every 12-month period, starting from the day the policy becomes effective.

Policyholder

A policyholder (also known as 'policy owner') is the person in whose name the insurance policy is held. So, if you buy an insurance policy under your own name, you’re the policyholder.

Pre-existing condition

This is a health condition (either physical or mental) that is diagnosed before your policy becomes effective. It is important that you declare these conditions, so that we can confirm whether we can cover them. If you do not declare these conditions upfront, your policy may become invalid.

Premium

This is the cost of your insurance policy, which may be paid on a monthly, quarterly or annual basis.

Premium holiday

This is an option where you can choose to delay paying your premiums, as long as your living benefit is enough to cover the monthly deductions and rider premiums. During this period you'll still be covered by your policy.

Premium paying period

This is the total number of periods (eg. years) that a policyholder will need to pay premiums. It will vary depending on the type of policy you choose.

Premium rate

This is the amount of money you need to spend for your policy. This may vary from year to year, depending on the level of cover and your risk profile. Premium rates can be fixed, we call these 'level premiums'.

Projected account value

This is an estimate of how much your fund might be worth when it reaches maturity, or when you start taking money out. As it is an estimate, this amount is not guaranteed.

Rider

This refers to an additional, optional provision to your insurance policy. A rider increases the level of your coverage and will usually increase premiums.

Risk profile

This is something that we use to determine your willingness and ability to take risks with the way you invest your money. It helps us make sure we invest your money in a way that is appropriate for you.

Simple interest

There are two types of interest: simple and compound.

Simple interest calculates the interest on the initial sum invested, every year.

Supplementary benefit

This refers to an additional provision to your insurance policy and is often called a 'rider'. A rider increases the level of your coverage and will usually increase premiums.

Surrender

This simply means to cancel a policy.

Surrender value

We understand that circumstances change and perhaps you need to cancel your policy before it is supposed to end. The surrender value (also know as 'cash surrender value') only applies to eligible policies. It is the amount of money we'll pay you if you cancel your policy.

Cancelling the policy in the early years might result in penalty charges. This means that the cash surrender value could be smaller than the cumulative amount you've paid into your policy.

Temporary partial disability vs. Temporary total disability

The term 'disabilities' can be classified as temporary or permanent, and as partial or total, depending on circumstances.

It is important for you to understand which of these 4 types of disabilities are covered by your policy, so be sure to read and understand the terms and conditions.

Term life insurance

There are two types of life insurance policy: term life and whole life.

'Term life' means we cover you for a defined period of time (for example, 25 years) whereas 'whole life' means we cover you for your entire life.

Underwriters

These are risk assessment experts and they are really important in the world of insurance. Their role is to understand your risk profile so that they can determine the right price for your insurance. It's important for them to know all of the facts (such as pre-existing conditions) so that they can make a fair evaluation.

Underwriting

This is the process by which we assess how eligible you are for insurance and the level of risk we will take on your behalf.

Valuation day

This is the day that we buy or sell assets on your behalf, which means that it is the date the value of the assets is determined. This date may vary from fund to fund.

Variable life products

These products combine life insurance with investment features, so a portion of the insurance premiums are invested into a designated investment fund or funds.

Waiting period

When you take out an insurance policy you sometimes need to wait for a period before you can claim benefits. If you experience symptoms of an illness and need medical attention, you will not be able to make a claim during this period.

Waiver of premium option

This option continues to pay your premium if you are unable to pay for it yourself due to disability or illness. It's an optional benefit (also known as rider) that you'll find on several of our plans.

Whole life insurance

There are two types of life insurance policy: term life and whole life.

'Term life' means we cover you for a defined period of time (for example, 25 years) whereas 'whole life' means we cover you for your entire life. Typically, a whole life insurance is more expensive than a term life.

This glossary has been created for informational purposes and should not be considered as legal or financial advice. Contractual terms and conditions will prevail should any of the content in this glossary conflict with your policy documents.

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