5 / 19
What is a Policy?
A policy is a contractual agreement between the insurer and the life insured. The policy document
is the actual contract. It contains all the significant information about the agreement and the parties
involved. Both parties have to uphold their end of the contract for the agreement to remain valid.
The policyholder has to make his regular contributions as stipulated in the contract, and the insurer
has to pay out the benefits when called for, as stipulated in the contract.
The owner of the policy (or policy holder) may be someone other than the life insured. It is also
possible to change ownership of the policy during the term, by means of a session.
What is a Long Term Policy?
The Long term insurance Act defines Long Term Policy as:
“means an assistance policy, a disability policy, fund policy, health policy, life policy or sinking fund
policy, or a contract comprising a combination of any of those policies; and includes a contract
whereby any such contract is varied”
This type of insurance is provided by a life insurer, such as Sanlam Life Insurance Ltd. It is
regulated under the Long Term Insurance Act of 1999.
Examples of long term insurance policies: Whole life insurance, term life insurance, endowment
policies, retirement annuities, savings and investment policies, life and term annuities.
A long term insurance contract stipulates an inception date plus a maturity date (or option date).
The rates and premiums are calculated over the full term of the contract. There has to be a life
insured on the policy (even if there is no actual life insurance on the policy, e.g. on a pure savings
policy).