Life Insurance Glossary

Many special conditions are encountered when you’re reading files that refer to types of insurance, Employee Benefits and Superannuation.

The most commonly found of those “jargon” conditions are:

Accumulation Plan

This really is a superannuation scheme at which the last benefit paid into a fund is calculated by an accumulation of those contributions paid by or on a manhood’s behalf and a share of an investment income earned from the fund.

Annuity

This is a collection of regular payments generally quarterly or monthly obtained in exchange for a lump sum. Annuities are usually purchased from life insurance firms even though banks, building societies and other financial institutions can supply them if they prefer.

Approved deposit fund

This can be a rollover fund set up specifically to maintain and spend Eligible Termination Payments. The fund is only available to people who retire or move jobs before age 65.

Benefit Promise Plan (defined benefit)

This is a strategy where the retirement benefit is described. A frequent strategy is based on a multiple of a worker’s salary, e.g. 10 percent of a salary per year of membership. An associate with 40 decades of membership could be given a retirement benefit of four times salary.

Bonus

Under engaging (with gain) policies that the life office increases the amount guaranteed a share of its finance surplus for a bonus.

Capital Guarantee

A form of investment under the funds asset value and any interest levels as they’re added and declared are ensured.

Commutation

The tradition of converting a part of a retirement fund entitlement to a lump sum is known as commutation.

Deferred Annuity

This is a kind of rollover arrangement in which the last payout is in the form of annuity.

Eligible Termination Payment

After a superannuation member leaves his occupation Eligible Termination Payment is created. If that really is “rolled over” to an approved deposit fund an accepted deferred annuity or a different superannuation finance, taxation is deferred.