Life insurance glossary: an A–Z
76 terms from New Zealand life, trauma, TPD and income protection policies, defined in plain English. Most of them are the words that decide whether a claim gets paid.
Last updated 2026-09-04
Definitions vary between insurers. Everything here describes ordinary market practice, not the wording of any particular policy — and the wording is what the insurer pays on. If a term matters to your decision, find it in the policy document and read it there. For a longer walk through the language, read life insurance jargon explained.
A
5 terms- ACC weekly compensation
- The weekly payment ACC makes when an injury stops you working, generally 80% of your pre-injury earnings after a stand-down period. It covers accidents only. Illness is not covered at all, and illness causes most long absences from work — which is the gap income protection is bought to fill.
- Accelerated benefit
- A benefit attached to life cover that pays out of the same sum insured rather than in addition to it. Claim $150,000 of accelerated trauma cover on $500,000 of life cover and $350,000 of life cover remains. It is cheaper than a standalone benefit, and that reduction is exactly why.
- Accidental death benefit
- Cover that pays only if death results from an accident, usually within a defined period after it. It is cheap because it excludes every illness, and illness causes the large majority of deaths. Useful as a small add-on or a stopgap, but not a substitute for life cover.
- Agreed value
- An income protection arrangement where the monthly benefit is fixed when the policy is issued, based on income evidence supplied then, and paid at that level without re-proving earnings at claim time. Valuable if your income fluctuates or you are self-employed, and increasingly restricted in the New Zealand market.
- Any occupation
- A disability definition that pays only if you cannot work in any occupation you are reasonably suited to by education, training or experience. It is far harder to satisfy than an own occupation test and it is the definition most likely to surprise a claimant. Check which one your policy uses.
B
4 terms- Beneficiary
- The person or entity nominated to receive a life insurance payout. In New Zealand a nomination is not always binding on the insurer, and where there is none the money usually goes to the policy owner’s estate, where probate can delay it and creditors can reach it. Get advice before nominating.
- Benefit period
- How long an income protection or disability policy keeps paying once a claim is accepted — commonly two years, five years, or to age 65 or 70. A longer benefit period costs more, and it is the feature most often cut to make a premium fit, usually without the buyer realising what was traded.
- Business protection
- Cover arranged to protect a business rather than a household: key person cover, shareholder or buy–sell cover, and business expenses cover. Ownership, funding and the shareholder agreement all have to line up, and getting that structure wrong creates tax and legal problems that no policy wording can fix.
- Buy-back
- An option that lets you restore life cover reduced by an accelerated trauma or TPD claim, usually after a waiting period of around twelve months and without new medical evidence. Without it, one trauma claim permanently shrinks the life cover left for your family.
C
6 terms- Child cover
- A small trauma benefit covering a policy owner’s children, limited to a modest sum insured and to listed conditions. Its real purpose is not to insure a child’s life but to fund time away from work if a child becomes seriously ill. Many policies allow conversion to adult cover later without underwriting.
- Clawback
- The period at the start of a policy during which an adviser must repay some or all of the upfront commission if the policy lapses, is cancelled or is replaced. It gives an adviser a reason to write cover you can sustain — and a quiet reason to be lukewarm about switching you.
- CoFI
- The Conduct of Financial Institutions regime, in full force since 31 March 2025. It requires licensed insurers and other financial institutions to run a fair conduct programme covering how products are designed, sold and administered, including how intermediaries are incentivised. The Financial Markets Authority enforces it.
- Cooling-off period
- A short window after a policy is issued during which you can cancel and have any premium paid returned, commonly around fifteen to thirty days depending on the insurer. Use it to read the wording properly, including the exclusions and any special terms underwriting applied to you.
- CoverPlus Extra
- An optional ACC cover agreement for self-employed people and non-PAYE shareholder-employees that fixes an agreed level of weekly compensation in advance, so a claim is not assessed against fluctuating past earnings. It still covers injury only, and it interacts with the offset clauses in income protection.
- CPI indexation
- An option that increases your sum insured each year in line with the Consumers Price Index, with the premium rising to match. It stops cover eroding quietly against inflation. You can normally decline an increase in any year, but declining repeatedly leaves the cover standing still while prices do not.
D
3 terms- Deferral
- An underwriting outcome where the insurer declines to decide now and invites you to reapply after a stated period — common after recent surgery, an unresolved investigation, a recent mental health episode or during pregnancy. It is not a decline, and the eventual terms depend on what happens in between.
- Direct insurer
- An insurer that sells to the public without an adviser, usually online or by phone. Products are simpler, underwriting is often lighter at application and heavier at claim time, and the premium still contains the cost of distribution — it is spent on advertising rather than on advice.
- Disclosure
- Two different duties share the word. In underwriting, it is your obligation to tell the insurer everything it asks and everything material before cover starts. In advice, it is the information an adviser must give you about their licensing, scope, conflicts, remuneration, complaints process and dispute resolution scheme.
E
3 terms- Estate
- Everything a person owns at death, dealt with under their will or, if there is none, under the rules for intestacy. Insurance paid to an estate can be delayed by probate and reached by creditors, which is the practical argument for nominating a beneficiary or structuring ownership in advance.
- Evidence limits
- The thresholds above which an insurer requires medical evidence — blood tests, a medical examination, a report from your doctor — rather than accepting your answers alone. They vary by age and sum insured, and an adviser who knows them can often keep an application simple without shortchanging the cover.
- Exclusion
- A term written into your policy that removes cover for a specified condition, body part or activity. Exclusions may be applied at underwriting because of your history, or built into the standard wording for everyone. They are usually permanent unless the policy allows review, so read them before accepting an offer.
F
6 terms- FAP
- Financial Advice Provider — the licensed entity under which regulated financial advice is given in New Zealand. An individual adviser gives advice under a FAP licence, must give priority to the client’s interests where they conflict with their own, and must be searchable on the Financial Service Providers Register.
- Financial underwriting
- The insurer’s check that the cover applied for is justified by your income, debts and dependants rather than by optimism. It applies mainly at larger sums insured, and it is why an insurer may ask for tax returns, financial statements or a loan statement before it will offer terms.
- FMA
- The Financial Markets Authority, New Zealand’s conduct regulator. It licenses Financial Advice Providers, oversees the CoFI regime for insurers and takes enforcement action over misconduct. It regulates how products are sold and how advisers behave, not whether an insurer can pay claims — that is the Reserve Bank’s job.
- FSCL
- Financial Services Complaints Limited, one of New Zealand’s approved dispute resolution schemes. If the firm you are dealing with belongs to it and your complaint is not resolved internally, you can escalate to FSCL at no cost to you, and its decisions can be made binding on the firm.
- FSPR
- The Financial Service Providers Register, a free public register of everyone providing financial services in New Zealand. Look up an adviser or a firm before you deal with them: you can check their status, what they are registered for, and which dispute resolution scheme they belong to.
- Future insurability
- An option allowing you to increase your sum insured later without further medical underwriting, generally tied to defined life events and subject to limits on amount, age and timing. It is the cheapest available protection against the risk of becoming uninsurable before you need more cover. See also guaranteed insurability.
G
2 terms- Grace period
- The time after a premium due date during which the policy stays in force even though payment has not been made, commonly around thirty days. Miss the grace period and the policy lapses; reinstating it may then require fresh health evidence at your current age and current health.
- Guaranteed insurability
- An option to increase cover without new medical underwriting when a defined event happens — a mortgage, a marriage, a birth, a significant pay rise — within stated limits on amount, age and timing. Worth having on any policy taken out young, because health rarely improves with time.
H
1 term- Hazardous pursuits
- Activities an insurer treats as raising risk: motorsport, diving, aviation, climbing and similar. The usual responses are a premium loading, an exclusion for that activity, or acceptance on standard terms if participation is occasional. Not disclosing a pursuit is a straightforward route to a declined claim.
I
4 terms- IFSO
- The Insurance & Financial Services Ombudsman Scheme, an approved dispute resolution scheme. In the year to 30 June 2025 it received 4,293 consumer approaches and accepted 600 disputes for investigation. You go to it after complaining to the firm first, and it costs you nothing to use.
- Income protection
- Cover paying a monthly benefit while illness or injury stops you working, after a waiting period and for a defined benefit period. Unlike ACC it covers illness, which causes most long absences from work. The definitions, offsets and benefit period matter far more than the headline premium.
- Indemnity value
- An income protection arrangement where the benefit is calculated from your actual earnings around the time of claim, not from what you earned when the policy started. Cheaper than agreed value and unforgiving if your income has since dropped — you can end up paying for cover you cannot fully claim.
- IPSA
- The Insurance (Prudential Supervision) Act 2010, under which the Reserve Bank of New Zealand licenses and supervises insurers. It is concerned with solvency and financial strength — whether an insurer can meet its obligations — rather than with how policies are sold or how customers are treated.
J
1 term- Joint life
- One policy covering two people, usually a couple, and usually paying on the first death, after which the policy ends. It is cheaper than two policies and it leaves the survivor with no cover, at an older age and possibly in worse health. Two single policies are often the better structure.
K
1 term- Key person cover
- Insurance owned by a business on the life or health of someone the business depends on, paying the business rather than the family. It funds lost revenue, recruitment or debt repayment while the business recovers. Ownership and tax treatment need to be set up deliberately, with advice.
L
5 terms- Lapse
- The end of a policy because a premium was not paid within the grace period. Cover stops, and reinstating it usually means new health disclosure at your current age. Lapses cluster in the fifties and sixties as stepped premiums climb — which is precisely when the cover was meant to earn its keep.
- Life assured
- The person whose life or health is insured. Not necessarily the policy owner and not necessarily the person paying the premium. Keeping the two roles distinct matters for tax, for who can change or cancel the policy, and for who ultimately receives the money.
- Loading
- An increase to the standard premium reflecting a higher assessed risk, usually expressed as a percentage — a 50% or 100% loading, for example. Applied for health history, weight, occupation or pastimes. Some loadings can be reviewed and removed later if the underlying risk genuinely improves.
- Loss of earnings
- A disability definition that pays based on the income you have actually lost rather than on whether you can perform an occupation. It can be more generous on partial claims and more demanding in evidence, because you have to document earnings both before and during the claim.
M
2 terms- Material fact
- Anything a reasonable person would expect an insurer to want to know when deciding whether to offer cover and on what terms. The test is not whether you personally thought it mattered. Failing to disclose a material fact is the usual basis on which an insurer challenges a claim.
- Mortgage protection
- Cover designed to repay or service a home loan on death, illness or disability. Sometimes it is ordinary life cover named after its purpose; sometimes it is a monthly benefit covering repayments. Bank-arranged versions frequently duplicate cover you already hold, so check before adding another policy.
N
2 terms- Needs analysis
- The process an adviser uses to work out what cover you actually need: debts, dependants, income, existing cover, what you already hold through work or KiwiSaver, and what premium you can sustain. A recommendation made without one is a product sale wearing a different hat.
- Non-disclosure
- Failing to tell the insurer something it asked about, or something material, when applying or when varying cover. Depending on severity the insurer may add an exclusion, reprice the policy, reduce the claim or avoid the policy entirely. It is among the most common reasons a claim is declined.
O
3 terms- Occupation class
- The category an insurer places your job in, from professional office work through to heavy manual and high-risk trades. It drives the premium, the disability definitions available to you and sometimes the maximum benefit period. Changing jobs can change your class, and insurers are not always told when it does.
- Offset
- A clause reducing your income protection payment by other income received while on claim — ACC weekly compensation, sick leave, other policies, sometimes employer payments. Offsets are why two policies rarely pay twice, and they are the first thing to check before buying cover that sits on top of ACC.
- Own occupation
- A disability definition that pays if you cannot perform your own occupation, whether or not you could do some other job. It is the stronger test and it costs more. Some policies apply it for a limited period and then switch to an any occupation test, which is easy to miss.
P
7 terms- Partial disability benefit
- A reduced payment for someone who has returned to work in a limited capacity, or is earning less after a period of total disability. It is what makes a phased return to work financially possible, and the formula used to calculate it varies significantly between insurers.
- Pass-back
- An insurer’s practice of applying improved policy terms to existing policyholders, so a definition upgraded for new customers also benefits people who bought years earlier. Not every insurer does it, and few do it unconditionally. Worth asking about, because these policies are held for decades.
- Policy fee
- A flat administration charge added to every policy on top of the risk premium, charged per policy rather than per benefit. It is why bundling several benefits under one policy can cost less than holding them separately, and why a very small policy is usually poor value.
- Policy owner
- The person or entity that owns the contract and can change, cancel or claim on it. Often the life assured, but it may be a spouse, a trust or a company. Ownership decides who controls the policy and, in many cases, who receives the money.
- Policy wording
- The document that sets out what the insurer will and will not pay, including every definition, exclusion, waiting period and condition. It is the contract. Marketing material, comparison tables and conversations are not. If a benefit matters to you, find its definition in the wording and read it.
- Pre-existing condition
- Any condition you had, had symptoms of, or received advice or treatment for before cover started. Insurers deal with these at underwriting through exclusions, loadings or deferrals, and disputes at claim time usually turn on what was known and disclosed before the policy was issued.
Q
1 term- Quote
- An indication of premium for a stated sum insured, age, smoking status and occupation, given before underwriting. It is not a price you are entitled to. What you actually pay is decided once the insurer has assessed your health, occupation and pastimes, and it may include a loading.
R
3 terms- Reinstatement
- Restoring a lapsed policy to force. Insurers usually allow it within a limited window and typically require a declaration of health plus payment of arrears. If your health has changed since the policy started, reinstatement may come with new terms, or may be refused outright.
- Reinsurance
- Insurance bought by insurers to share the risk on the policies they write. It matters to consumers because reinsurers heavily influence underwriting rules, evidence limits and benefit definitions across the whole market — which is why different insurers often ask similar questions and treat conditions in similar ways.
- Rider
- An optional benefit attached to a base policy rather than bought on its own — trauma or TPD added to life cover, for example. Riders cost less than standalone benefits and are usually accelerated, which means a claim reduces the base sum insured rather than adding to it.
S
7 terms- Severity-based benefit
- A trauma benefit that pays a proportion of the sum insured according to how serious the diagnosed condition is, rather than paying in full or not at all. It produces more small partial payments and fewer arguments about whether a condition met a single threshold definition.
- Special events benefit
- An option to increase cover without further medical evidence when a specified event occurs — buying a house, having a child, marrying, a significant pay rise. Limits apply to the amount, your age, and how long after the event you have to exercise it, so diarise the deadline.
- Stand-down
- A period at the start of a policy, or following an event, during which a particular benefit will not pay — a survival period after a trauma diagnosis, for example, or an initial period during which suicide is excluded. Distinct from the waiting period on a disability claim.
- Standalone benefit
- A benefit held as its own policy with its own sum insured, so a claim on it does not reduce anything else. It costs more than the accelerated version, and the difference is that after a trauma claim your life cover is still there in full.
- Sum insured
- The amount of cover — the maximum the insurer will pay under that benefit. For income protection the equivalent is a monthly benefit. The right number comes from your debts, dependants and income, not from a multiple-of-salary rule of thumb imported from another country.
- Surrender value
- The cash amount payable if a policy with a savings component is cancelled. Most modern New Zealand life cover is pure risk cover with no surrender value at all, so cancelling returns nothing. Older whole of life and endowment policies are the exception, and are worth checking before you cancel.
T
4 terms- Term life insurance
- Life cover for a defined period or to a defined age, paying a lump sum if you die within it and nothing if you do not. It is the standard shape of life cover in New Zealand: no savings element, no surrender value, and the cheapest way to hold a large sum insured.
- Terminal illness benefit
- An early payment of the life cover sum insured when you are diagnosed as terminally ill, commonly with a certified life expectancy of twelve months or less. It brings the same money forward rather than adding to it, and the certification requirements differ between insurers.
- TPD
- Total and permanent disability cover, paying a lump sum when you are permanently unable to work. Whether the policy uses an own occupation or an any occupation definition changes the odds of a claim being paid enormously, as does whether it instead tests activities of daily living.
- Trauma cover
- Also called critical illness cover. It pays a lump sum on diagnosis of a listed condition — cancer, heart attack and stroke account for most claims — provided the diagnosis meets the policy’s definition. The list of conditions and the wording of each definition is the product.
U
1 term- Underwriting
- The insurer’s assessment of your application: health, family history, occupation, pastimes and finances. The outcome is standard terms, a loading, an exclusion, a deferral, an offer of reduced cover, or a decline. Different insurers reach different conclusions on identical histories, which is the practical case for using an adviser.
V
1 term- Voidable policy
- A policy the insurer may treat as though it never existed, usually because of material non-disclosure or misrepresentation when it was applied for. Premiums are typically refunded and no claim is paid. It is the most serious consequence of getting the application wrong.
W
3 terms- Waiting period
- The time you must be disabled before an income protection benefit starts to accrue — commonly four, eight, thirteen, twenty-six or fifty-two weeks. A longer waiting period cuts the premium substantially. Choose it against your actual sick leave and savings, not against what looks affordable today.
- Whole of life
- Cover that lasts for life rather than to a set age, historically carrying an investment component and a surrender value. Largely displaced in New Zealand by term cover. If you hold an old whole of life policy, take advice before cancelling — the guarantees inside it are sometimes worth keeping.
Y
1 term- Yearly renewable term
- The underlying structure of most stepped cover: the policy renews each year at the rate set for your age at that renewal. Renewal is guaranteed regardless of how your health has changed, which is the valuable part — but the price rises every single year.
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