Glossary of Insurance Terms
Helping you understand your cover with confidence.
Understanding insurance terminology can make your financial protection decisions clearer and more informed. Below is a list of commonly used terms in Life, Health, and Disability insurance. If you're unsure about anything, please contact your adviser for clarification.
A–C
ACC
New Zealand's scheme for accidental injury compensation. It can cover medical costs, rehabilitation, or partial income.
Accelerated Benefit
A type of cover that reduces another linked benefit when a claim is made. For example, an accelerated Trauma benefit may reduce the Life cover it's attached to.
Agreed Value
Income Protection cover where your income is confirmed at application, and payments are based on that figure.
Any Occupation
A Total & Permanent Disability definition. A claim is paid only if you cannot work in any job, not just your own.
Annual Premium Income
The total cost of your policy premiums over a year.
Benefit Period
The maximum time you can receive payments once you claim on a monthly benefit product like Income Protection.
CPI (Consumer Price Index)
Inflation measure. If applied to your policy, it increases your cover amount annually to match inflation.
D–L
Deferred
The insurer postpones offering cover, usually while awaiting health improvements or tests.
Disclosure
The process of sharing accurate health and financial information. Not disclosing material information could affect your claim.
Duty of Disclosure
Your legal responsibility to share all information that could influence your insurer’s decision to offer cover.
Excess
The portion of a claim cost you pay yourself (common with medical insurance).
Exclusion
A condition or scenario not covered by your policy. May be general (for everyone) or specific (just for you).
Guaranteed Wordings
Policy terms that the insurer cannot change in the future unless it’s in your favour.
Health Insurance
Health Insurance helps cover the cost of medical treatment, including surgery, specialists, and diagnostic tests. Most policies include both surgical and non-surgical care. Pre-existing conditions are often not covered under new policies, so it’s important to: a) Avoid cancelling an existing policy without understanding the impact, and b) Make sure you're getting the best available terms when starting a new policy.
Household Expenses Cover
This cover pays a monthly amount to help with your regular household bills if you’re unable to work due to illness, injury, or accident. Payments begin after a waiting period and continue until you return to work or the benefit period ends.
Income Protection Cover
Income Protection pays you a monthly amount if you’re unable to work due to illness, injury, or accident. Payments usually begin after a waiting period and continue until you're able to return to work or the benefit period ends. You can typically insure up to 75% of your income.
Indemnity Cover
Cover where your income is assessed at claim time. Payment may reduce if your income is lower than at application.
Life Insurance
Life Insurance pays a lump sum to your family if you pass away. It helps replace the income you would have earned and can be used to cover living costs, debt repayments, funeral expenses, and future savings needs.
Loading
An increase in premium due to higher risk (e.g., health condition, dangerous occupation).
Life Insured
The person whose life or health is covered by the insurance policy.
M–R
Medical Underwriting
The process where insurers assess your health risks before offering cover.
Mortgage Repayment Cover
This cover pays a monthly amount toward your mortgage if you’re unable to work due to illness, injury, or accident. Payments start after a set waiting period and continue until you're able to return to work or the benefit period ends. Unlike Income Protection, this cover is not reduced by ACC payments.
Non-PHARMAC
Drugs not funded by New Zealand’s PHARMAC system. Some medical insurance policies cover these.
Offset
When another benefit (like ACC) reduces your claim payment.
Own Occupation
A Total & Permanent Disability definition. A claim is paid if you can’t return to your specific job, even if you could do another.
PHARMAC
The government agency that decides which medicines are subsidised in NZ.
Policy Fee
An administrative charge added to your premiums.
Pre-existing Condition
A health issue you had before applying. It may be excluded or incur a loading.
Premium
The amount you pay for your insurance cover, either monthly, quarterly, or annually.
S–Z
Severe Trauma Cover
This type of cover pays a lump sum if you're diagnosed with a serious and potentially life-threatening condition listed in the policy. It’s designed to help reduce the financial impact of major illnesses. The payment can be used however you choose — such as paying off debt, making home modifications, covering care costs, or supporting your income while you recover.
Specific Conditions Cover
This cover pays a lump sum based on the severity of a medical event or condition — the more serious the event, the higher the payout. It’s modelled on Income Protection but works differently and may be a good option when Income Protection isn’t available or is outside your budget.
Standalone Benefit
A cover that operates independently from others. If you claim, other cover amounts aren’t affected.
Stepped Premium
A premium that increases with age (or after fixed “steps” such as every 5 years).
Sum Insured
The amount of money your policy would pay out if you claim.
Total Permanent Disability
Total & Permanent Disability Insurance, pays a lump sum in the event you are unable to work again.
Trauma Buy Back
Lets you repurchase Trauma cover after a claim without underwriting (excluding the condition you already claimed for).
Trauma Cover
Trauma Cover pays a lump sum if you're diagnosed with a serious medical condition listed in the policy (such as cancer, stroke, or heart attack). The payment is not based on financial loss — it’s designed to support you during recovery and can be used however you choose.
Underwriting
The insurer’s process for assessing your risk level and deciding whether to offer you cover (and on what terms).
Wait Period
How long you must wait before benefits begin after a claim event (applies to Income Protection, Mortgage Repayment, etc).
Need more help?
Contact your adviser or reach us at contact@mauricetrapp.com. We're here to help explain anything further.