Insurance jargon explained: 40 terms every policyholder should know
Deductibles, riders, pro-ration, cash value: policy documents are full of terms that quietly change what you actually get paid. Here is a plain-English run-through of the ones that matter most.
Most policy documents assume you already know what the words mean. That assumption is the source of a lot of frustration at claim time, when a term that sounded reassuring in the sales conversation turns out to have a narrow, specific meaning in the contract. Here is a working glossary of terms that come up most often across life, health and general insurance in Singapore, grouped so related ideas sit near each other.
Buying and owning a policy
Premium — what you pay, on whatever schedule the policy sets, to keep coverage in force. Sum insured — broadly, the minimum guaranteed amount payable on a covered event; the actual benefit can differ, so check the contract. Single premium policy — a one-time upfront payment. Regular premium policy — periodic payments (monthly to yearly) over a premium term. Rider — an add-on bought for extra premium, attached to a basic policy for cover such as critical illness or premium waiver.
Free look period — at least 14 days (21 for Integrated Shield Plans) to cancel for a refund, less exam or admin fees. Grace period — extra time, commonly around 30 days, after a due date before a policy lapses. Reinstatement — bringing a lapsed policy back into force within a set window, subject to conditions. Forfeiture — a policy ending because premiums went unpaid, with past premiums not refunded.
What a participating policy actually promises
Participating policy — profits from the insurer's fund, if any, are shared as non-guaranteed bonuses. Non-participating policy — no profit share; benefits are guaranteed only. Cash value / surrender value — the amount payable on surrendering a policy with a savings feature, typically built up only after the first few years. Reversionary bonus — a non-guaranteed bonus added annually that, once added, becomes guaranteed. Terminal bonus — a further non-guaranteed bonus payable on surrender, claim or maturity. Paid-up value — stopping premiums while keeping a reduced sum insured, funded by cash value already built up.
Life and disability terms
Term insurance — fixed-period cover, paying only on death or TPD, typically with no cash value. Whole life insurance — lifelong cover that also builds cash value. Endowment policy — fixed-period protection plus savings, paying at maturity or on earlier death or TPD. Investment-linked policy (ILP) — a death benefit plus an investment component, its payout depending partly on the unit price of funds you select. Disability income insurance — a fixed monthly amount replacing lost income, often after a deferment period. Waiver of premium — keeps a policy going without further premiums if you cannot work due to accident or injury.
Health insurance terms
MediShield Life — the national scheme covering all Citizens and PRs for large hospital bills and selected outpatient treatment in Class B2/C wards. Integrated Shield Plan (IP) — MediShield Life plus a private component, typically for Class A/B1 wards or private hospitals, with no duplication between the two. Deductible — what you pay first each policy year before the plan pays. Co-insurance — the bill percentage, after the deductible, you still pay. Pro-ration factor — a scaling-down applied when treatment is in a ward class or hospital type above what your plan is designed for. Exclusions — circumstances, such as a pre-existing condition, where a benefit will not be paid. Critical illness insurance — a one-time lump sum on a covered diagnosis or surgery, regardless of actual costs. Waiting period — often around 90 days from the start of cover, during which a diagnosis triggers no payout. Hospital cash insurance — a fixed daily amount per day in hospital, regardless of the actual bill.
Documents and process
Product summary — a product's features, benefits, fees and charges. Policy illustration — guaranteed and non-guaranteed benefits and costs for the policy; its two interest rates are illustrative only. Bundled product disclosure document — required since 2 July 2018 for endowment or whole life policies, to help assess suitability. Fact-find process — the assessment of your finances and goals an FA representative performs before recommending a product. Customer Knowledge Assessment (CKA) — a check on your financial knowledge required before some products, like ILPs, can be sold without full advice. Assignment — transferring policy ownership, which must be reported to the insurer in writing to be valid at claim. Nomination of beneficiary — a legal way to direct death-benefit payouts to chosen nominees, via a trust or revocable nomination.
When something goes wrong
FIDReC (Financial Industry Disputes Resolution Centre) — the independent body resolving disputes an insurer's own process could not settle, reachable within six months of its final letter. Policy Owners' Protection (PPF) Scheme — automatic protection, administered by SDIC, if a member insurer fails: 100% cover subject to caps for life and accident and health policies, uncapped for general insurance. Selected Client — someone meeting two of three criteria (62 or above, not proficient in English, or below GCE 'O'/'N' level), entitled to a confirmation call before advice is acted on.
Insurers can define terms slightly differently between products — check the definition inside the specific contract you hold, since that is the version a claim is assessed against.
Look up a term from your own policy using our assistant, or run your cover through our coverage gap check.
Talk to an advisor
Jargon is rarely the real obstacle — knowing which definition applies to your own contract is. A licensed advisor can walk through your specific policy wording line by line. Find one through our advisor directory, or ask our assistant to translate a term from a document you are holding right now.
Sources
This content is educational information from a licensed advisor, not financial advice. Product details vary by insurer — verify specifics with an advisor.
