Ever scratched your head when encountering some phrases and other terms while reviewing insurance options? Well, getting insurance now is easy, but going through the new terms in your contract can be a little daunting. Don’t let insurance terms get in the way of protecting yourself and your loved ones!
In this article AIA Philippines is going to teach you some of the common insurance terminologies to help you understand insurance so you can make smart decisions that will benefit you and your family, today and for years to come.
Account Value. The Value of the policy’s investment fund(s) derived by multiplying rhe fund outstanding number of units to the NAVPU of the time of valuation.
Administrative Charge. The corresponding monthly fee representing expenses for setting up and maintaining the policy that is taken out of the investment fund(s) through unit cancellations.
Cost of Insurance Coverage (COl). The corresponding monthly insurance fee that is based on the net amount at risk and attained age of the insured. The COl is taken out of the investment fund (s) through unit cancellations.
Insurance coverage. The value of protection of an in-force insurance policy. This is usually equivalent to the death benefit which the beneficiaries will receive to sustain their standard of living or to fund other financial needs.
Net Amount at Risk. The difference between the policy's guaranteed death benefit and account value at the time of valuation.
Net Asset Value per Unit (NAVPU). The value of one unit of a chosen investment fund.
Premium. The amount required to keep the life insurance policy in-force. The net investible amount after charges is allocated to the chosen investment fund(s).
Premium Charge. The corresponding fee that is taken from the premium and directed towards the company's miscellaneous expenses in line with the policy you own, i.e., agent commissions, operating expenses, account opening expenses.
Riders. Supplementary benefits chosen to tailor-fit the policy and avail of a more comprehensive insurance coverage.
Top-Up. Excess or additional payment on top of the required premium that can be allocated into the chosen investment funds. This can increase potential returns of the policy and provide additional insurance coverage. Top-ups can either be done regularly or as needed, depending on your policy contract.
Top-Up Charge. The up-front charge or processing fee taken out of top-up payments.
Units. The number of shares which the net investible premium is able to purchase based on the unit price of NAVPU.
And that’s just a few you can find in many of AIA Philippines’ insurance plans! Remember, these are just the most common use insurance terms and as you dive in deeper, you might encounter a lot more difficult one! Worry not, just fill out the form if you want me to explain them to you or if you want to know more about insurance!
