Personal insurance glossary
Insurance contracts have their own vocabulary. Here are the terms you will come across most often, explained simply. Your advisor is the right person to apply them to your situation.
A
- Adjusted cost basis (ACB)
- Tax value of a policy used to calculate the taxable portion of a withdrawal or surrender.
- Application
- Insurance request form, completed with the advisor, which becomes part of the contract. Answers must be accurate and complete.
B
- Beneficiary
- Person or organization that receives the death benefit. A revocable beneficiary can be changed at any time; an irrevocable beneficiary must consent to any change.
C
- Capital dividend account (CDA)
- Tax account of a corporation allowing it to pay shareholders, tax-free, the portion of the death benefit exceeding the policy's adjusted cost basis.
- Cash surrender value
- Amount paid by the insurer if you cancel a permanent contract. It grows over the years and can secure a loan.
- Conversion
- Right to convert term insurance to permanent insurance without evidence of health, up to an age limit set in the contract.
D
- Death benefit (face amount)
- Amount paid to beneficiaries at the insured's death. Tax-free for an individual.
- Disability (definition)
- Criterion by which the insurer recognizes inability to work: "own occupation" (your job), "reasonable occupation" (a job suited to your training) or "any occupation".
- Dividends (participations)
- Share of the participating account's results distributed each year to participating policyholders. Not guaranteed, but vested once paid.
E
- Evidence of insurability (evidence of health)
- Information requested by the insurer to assess risk: questionnaire, blood test, paramedical exam, medical records.
G
- Grace period
- Period (usually 30 days) after a premium due date during which the contract stays in force despite non-payment.
- Guaranteed issue
- Life insurance granted without health questions, with a limited amount and a two-year waiting period for non-accidental death.
I
- Insurability
- A person's ability to obtain insurance based on age, health, occupation and lifestyle. A guaranteed insurability option lets you increase coverage later without new evidence.
- Insured
- The person whose life or health is covered by the contract. May differ from the owner (e.g. a parent owning a contract on their child's life).
L
- Lapse
- End of the contract when premiums stop being paid after the grace period. Reinstatement is often possible within a given time, with evidence of health.
- Level premium
- Premium fixed for the entire period set in the contract (10, 20 years, lifetime, etc.).
N
- Non-cancellable
- Disability insurance contract the insurer can neither cancel nor change (guaranteed premium and benefits) as long as premiums are paid.
O
- Owner (policyholder)
- Person or corporation that holds the contract, pays the premiums and names the beneficiaries.
P
- Paid-up additions
- Additional permanent insurance bought with the dividends of a participating contract, without extra premium or evidence of health.
- Partial payment
- In critical illness insurance, a reduced benefit (often 15-25%) paid for a less severe condition, without reducing the main coverage.
- Policy loan (advance)
- Amount borrowed from the insurer, secured by the cash value. The unpaid balance is deducted from the death benefit.
- Premium
- Amount paid to the insurer to keep the contract in force, monthly or annually.
R
- Rating (extra premium)
- Premium increase due to higher risk (health, occupation, dangerous sport).
- Renewal
- Automatic extension of term insurance at expiry, at a higher premium based on attained age.
- Rider
- Option added to the base contract to extend coverage: waiver of premium, child rider, accidental death, critical illness, etc.
S
- Simplified issue
- Insurance granted on the basis of a short health questionnaire, with no medical exam or blood test.
- Smoker / non-smoker
- Status that strongly affects the premium. Most insurers require 12 months without tobacco or nicotine products for non-smoker rates.
- Survival period
- In critical illness insurance, the number of days (usually 30) the insured must survive after diagnosis to receive the benefit.
U
- Underwriting
- Review of the file by the insurer to decide whether to accept, rate, exclude or decline. The process can take from a few days to several weeks.
W
- Waiting (elimination) period
- In disability insurance, the period between the start of the disability and the first payment (30, 60, 90 or 120 days). The longer it is, the lower the premium.
- Waiver of premium
- Rider under which the insurer pays the premiums for you in case of total disability.
Y
- Yearly renewable term (YRT)
- Cost of insurance that increases every year; used notably in some universal life policies.
Our coverage
Choose the coverage you're interested in — your advisor can also combine them.
Life insurance
Term, permanent, universal, participating or simplified issue: understand the differences, then let an advisor compare insurers for you. Free and without obligation.
Learn moreTerm life insurance
Cover your mortgage, your debts and your family's income for a specific period. Your advisor compares terms, premiums and options from several insurers.
Learn morePermanent life insurance
Coverage designed to last a lifetime, provided the policy stays in force. Depending on the product, premiums and cash values may be guaranteed or variable.
Learn moreUniversal life insurance
Lifetime insurance paired with an investment account you control. You decide the amount deposited, the funds selected and the pace of deposits, within tax limits.
Learn moreParticipating life insurance
Permanent insurance whose death benefit and value increase each year through dividends paid by the insurer — without you having to manage investments.
Learn moreSimplified issue life insurance
A few health questions, no blood test, no medical appointment. Coverage that stays accessible even if you were declined elsewhere or have a health history.
Learn moreDisability insurance
Illness or accident: your ability to earn an income is your most valuable asset. Disability insurance pays you a monthly benefit while you recover.
Learn moreCritical illness insurance
At diagnosis of a covered illness, you receive a tax-free amount to use as you wish: care, time off, help at home, debts. No requirement to be unable to work.
Learn more