Decode your insurance policy

Decode your insurance policy

Published on 25th May, 2022 at 02:44 pm

Making the right insurance choices begins with understanding the options available to you, and the jargon. So, to make life easier for you, and to empower you in conversations with your financial planner, we’ve compiled a guide to common terminology used in insurance policies to ensure you’re getting the cover you need when you need it, and can live with confidence.


A premium is the monthly amount of money an individual pays in return for the coverage of insurance products/an insurance policy. The price you pay depends on many things, eg your gender, salary, age, occupation, medical history etc. As a policyholder, if you fail to pay the premium, it could result in the cancellation of the policy and a loss of coverage.

Sanlam Reality Plus and Health members get up to 30% off risk products, including life insurance, disability cover, income protection and more.


An exclusion is something that is not covered by a policy, and it may be put on your policy depending on your risk profile. “Examples include a medical condition, body part, medical procedure, risky activity or travel to a high-risk country,” says Karen Bongers, product development actuary at Sanlam Individual Life. Exclusions are stated within your contract documents.


Disclosure refers to the provision of accurate and complete information to the insurer when you apply for cover. “This would include providing accurate and complete information about your medical history, in response to medical questions asked by the insurer,” says Bongers. You must disclose to the insurer all material facts and circumstances of which you have actual or constructive knowledge. Constructive knowledge is that which, legally, you are presumed to know.

Invalid claim

An invalid claim is a claim that will not be paid by the insurer because it doesn’t meet the terms and conditions as specified within your contract documents. “An example would be if you claim for early cancer when early cancer is not a condition covered by your benefit,” explains Bongers.


Underwriting is the process whereby an insurer considers the information you’ve provided during the application process, such as information about your medical history and lifestyle, and decides whether to accept your application and on what terms, says Bongers. “Possible outcomes include being accepted at standard terms; being accepted subject to a higher premium, lower cover amount or exclusion; or having your application declined,” Bongers adds. Insurance underwriters are professionals who evaluate and analyse the risks involved in insuring people and assets, and establish pricing for accepted insurable risks. The term ‘underwriting’ refers to the receipt of remuneration for the willingness to pay a potential risk.

Grace period

A grace period is an insurance policy provision that gives you extra time to pay your premium before your coverage expires. So, if you miss a premium payment, the grace period is a period within which you can still pay it, without losing your cover. It’s important to find out how long yours is.

Protect your finances and your future with these practical money tips to navigate tough economic times.

Waiver of premium

A waiver of premium is a provision that allows you, the insured, not to pay premiums during a period of disability or critical illness that has lasted for a particular length of time. It’s a ‘feature’ or ‘benefit’ whereby you are not required to pay premiums for your cover. “This could be while you are receiving an income payment on an income protection policy, or if you become permanently disabled if you have such a feature/benefit on your policy,” says Bongers.

Cover start date

This term speaks for itself. It’s the date from which you are covered. “You can only claim if the event for which you want to claim happened on or after the cover start date, and before the cover end date,” explains Bongers, adding that you should bear in mind that some products provide free cover before the cover start date, in which case your cover can start sooner than the official cover start date.

As a Sanlam Reality Plus or Health member, you get up to 30% off risk products such as income protection.

To ensure you’re taking out the cover best suited to you, your life stage and financial circumstances, or to check how comprehensive you cover is, speak to a financial planner.

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