Accident & Sickness Insurance - Accident Insurance covers you in the event of an injury or death., either on a weekly benefit basis up to a specified time limit or it will provide you with a capital sum if you loose a limb etc. To Accident Insurance, you can usually add Sickness cover. The cost of the covers depends on your occupation and exposure to a loss.

Annuity - This is a term used by a life assurance company for a product where they will someone a regular income, usually for life, in return for a lump sum payment. There are many different types of annunity and expert advice should always be sought to help you decide between products.

Bonus - Amount of money to be added to the guaranteed part of the sum insured of a With Profit Insurance policy. Bonus’s can be added at different times throughout the lifetime of a contract either during the policy term or at the end of it

Contracted out - Someone who is contracted out of the State Second Pension (S2P), formerly known as the State Earnings-Related Pension Scheme (SERPS).

Convertible Term - This relates to a Life Insurance contract where the policyholder is able to alter the term of the policy

Critical Illness Insurance - An insurance policy where the insurer will pay the sum insured in the form of a lump sum to the policyholder in the event of diagnosis of a life threatening disease. The insurers have a standard set of diseases that they will provide cover for they include; cancer, heart attack, stroke, coronary artery disease, kidney failure, paralysis, a major organ transplant, heart valve surgery, multiple sclerosis, blindness in both eyes, total and permanent disability, loss of hearing, stage one Hodgkin’s disease, terminal illness, AIDS but only via infected blood transfusion.

Death in Service Benefit - A policy taken out by an employer to pay a benefit to the estate of an employee if they were to die during their employment.
The payout is usually calculated as a multiple of the persons salary

Decreasing Term - A term insurance policy in which the sum insured payable reduces steadily every year, decreasing to nothing at the end of the term. This type of policy is usually taken out to cover a debt.

Disability Benefit - Certain life insurance policies will pay out if the policyholder becomes permanently disabled. .

Endowment Policy - A life insurance policy which will pay a sum of money after an agreed period of time. This type of policy used to be a popular method of repaying a mortgage. The policy will also pay out if death occurs before the end of the agreed policy term . .

Joint Life - A life insurance policy covering two or more people. Usually written on a first death basis.

Joint Life Annuity - A life insurance contract, that will pay out to a partner after the policyholder’s death.

Life Assurance Premium Relief - If you took out a life insurance policy before 14th March 1984, you would be entitled to tax relief on the contract.

Life Expectancy - A term given to describe how long an individual is likely to live

Life Fund - This terms relates to the pool of money that all the policyholders of a life insurance company have paid in to

Life Insurance - A policy that will pay out a sum of money in the event of death. There are many different forms of Life Insurance cover to suit different needs and situations.

Long Term Care Insurance - This type of contract will pay for some or all of the agreed costs of long-term care. |This policy is mainly intended to cover the costs of elderly people being looked after either at home or in a residential care facility

Managed Funds - This term relates to Investment funds, that can also be used for life insurance and pension plans. A manager is appointed to oversee the investments in a variety of areas.

Permanent Health Insurance - A wider form of cover that that provided by basic Personal Accident & Sickness Insurance. The term of the policy will usually be until retirement age. Sometime the policy will pay out a restricted amount if the person is still able to carry out some form of work..

Personal Accident Insurance - A policy that pays specified amounts of money if the policyholder is injured in an accident. The premiums are usually arranged in units with a premium payable per unit. The premiums are calculated on the persons occupation linked to the chance of a loss.

Pension - A regular income you receive when you retire from either the government or a pension provider

Pension Annuity - An annuity which will become payable on the maturity of a pension policy.

Personal Equity Plan - An arrangement as known as a PEP that allows a policyholder to pay money into a plan usually arranged by a n insurance company or Investment house. The plan is overseen by a manager who will use his expertise to invest the money.

Pre- Existing Medical Condition Clause - This clause is inserted in to insurance policies, particularly Travel or Health Insurance polices stating that the insurer will not pay out for any condition that has already manifested itself. Sometimes it is possible to obtain cover for pre existing medical conditions especially if they are established and well controlled.

Private Medical Insurance - A policy that covers the cost of private medical treatment can be arranged on either an individual or Group basis. The policyholder can choose the level of cover required based on location and personal circumstances

Renewable Term Insurance - A policy that can be extended without then need for another health declaration to be made.

SERPS State Earnings Related Pension Scheme - part of and employed National Insurance contributions goes towards SERPS to provide an additional pension over and above the Government basic sate pension. This scheme was replaced in April 2002 by the State Second Pension

Single Life Annuity - An annuity based on the life of one person.

Single Premium Policy - This is a long term life insurance policy were the premium is paid in a lump sum usually at the inception date of the contract

Stakeholder pension - This is the type of pension introduced by the Government in 2001
In an attempt to make it easier for individuals to save for their future. Stakeholder pensions are cheap & flexible.

State Second Pension (S2P) - This is the extra state pension that replaced the extra pension known as SERPS in 2002. It is linked to your earnings whilst you are employed,

Whole Life Policy - A policy where the premiums have to be paid for the entirety of an individuals life or until maturity

With Profits Insurance - A Life insurance policy that receive its investment income in the form of “bonuses”, This bonus is paid out of the total income earned by the insurance company on its particular pooled fund. The value of the saver’s fund thus depends on the amount he/she has bought and the amount of bonuses added. Once added, bonuses cannot be taken away, they are guaranteed .
 

Additional Voluntary Contribution (AVC) - An additional contribution made
By a pension scheme member to his pension plan to help boost the final payout.

Agent - This is a person or a company who acts for one or a number of insuers when selling insurance products. Agents tend to deal with only a small number of insurers. Larger concerns tend to refer to themselves as Brokers or Intermediaries

Aggregate Limit of Indemnity – This is the maximum amount an insurer will pay under an insurance policy in respect of all accumulated claims arising within a specified period of insurance. So if the aggregate limit of Indemnity is £5,000,000 that is the maximum the insurer will pay out for claims arising within the policy period

Beneficiary – Someone who may be named in a particular legal document or insurance policy that will receive a benefit from the policy if a claim is made

Benefit - The money paid by an Insurance company when a claim is made. This is usually made by a life insurance company but benefits would also be paid by a Personal Accident & Sickness Insurer for example.

Deferred Annuity – This is an annuity which starts after a specified number of years or at a specified age (usually on retirement), usually continuing through the policyholder's life time.

Defined Benefit Scheme - A pension scheme where benefits are usually a fixed proportion of final salary and calculated using number of years in 'pension able service'.

Family Income Policy - A type of term insurance policy which will , on the death of the named person insured, pays out a regular amount until the end of a specified period.

Fidelity Guarantee – Insurance which provides cover for a business in against Theft by an employee.

Free-standing AVCs (FSAVCs) - A life assurance term where additional contributions paid voluntarily into policies similar to personal pensions by employees in occupational schemes, who wish to top up their pensions, but keep the money separate from the occupational scheme.

Friendly Society - A friendly society is set up for the benefit of and is owned by it’s members.

Group Life - A life insurance term that relates to the provision of a lump sum Death in Service Benefit for groups of employees.

Group Personal Pension - This is an arrangement made for the employees of a particular company to participate in a personal pension scheme on a group basis. This is merely a collecting arrangement and is not a separate, or occupational, pension scheme.

Impaired Lives Register - This is a list of individuals who have been refused, or charged more for, life insurance, for various medical reasons.

Inception Date - This is the date that an insurance contract started.

Income draw down - This is a way of taking regular income directly from a pension fund instead of buying an annuity . An annuity can be purchased at a later date.

Increasing Term - A term insurance contract in which the sum insured increases each year by a fixed percentage of the original sum insured.

Indemnity - This is an Insurance principle by which policyholders are put in the same financial position after a loss as they were immediately before it.

Independent Financial Adviser - Also referred to as an IFA, this is an Adviser authorised to recommend or sell the products of any insurance or investment firm.

Individual Policy - Insurance taken out by an individual on his or her own life or by an individual or legal person on the life of another person..

Individual Savings Account (ISA) - This is a savings vehicle that allows customers to invest in equities, life assurance policies or save in cash without having to pay tax on the returns gained from them.

Insurable Interest - A principle of insurance which states that you may only take out insurance if you would suffer a financial loss if the event covered by the policy happens. Individuals have an unlimited insurable interest in their own life and that of their husband or wife. Insurable Interest also relates to the insurance of property.

Insurance - in simple terms, insurance is a risk transfer mechanism; someone (The policyholder) pays someone else (The Insurer or Underwriter) a sum of money (The premium or consideration) in return for a policy, which will provide a payment if an event (usually something unfortunate and unforeseen) happens to the item, which is the subject of the insurance. Perhaps you worry about your home being broken in to or being damaged in a flood or your car being involved in an accident. What would you do if you were suddenly faced with a large bill to replace or repair your belongings? Insurance can provide you with peace of mind as well as help remain financially secure. The terms Insurance & Assurance are interchangeable.

Insurance Company - A company that takes on insurance risks by offering policies in return for the payment of premiums. Insurance Companies may be ‘mutual’ (owned by the policyholders) or ‘proprietary’ (owned by shareholders).

Investment - The act of allowing someone else to have use of your money in return for payment of interest and/or a share in profits that may be made.

Investment funds - This is the general name for life funds used for savings and investment plans.

Investment trusts - A type of Collective Investment Scheme, the main difference between this and a unit trust is that this type of fund can borrow money to by more stcks etc if it feels the opportunity is good

Maturity - This is the date when a policy ends and a payout is made by the insurer. At this time any a bonus may be added to the final payout

Mutual - A Mutual Insurance company is owned by it’s policyholders.

With-Profit Bonds - A fund made up of investments including sharers & equities . Policies can be purchased with a single premium (with-profits bonds) or bought with regular premiums usually on a monthly basis to help save for pensions or just for general savings.

Not Contracted-out - A person who is has not contracted out of the State Earnings-Related Pension ( SERPS)

Occupational Pension Scheme - A scheme set up by employers for the benefit of their employees.

Open Market Option - |The ability to move the value of your pension fund at retirement to another insurance company or pension provider - This is usually down because a better annuity is available elsewhere.

Partially Contracted-out - This is a Pension policy that receives both a premium from the policyholder and a DSS rebate as well.

Pecuniary Loss - . or Pecuniary Insurance relates to the loss of money. A term also used to describe a financial loss.

Personal Pension - A pension plan taken out by an Individual in his or her own name. The plan will offer certain tax advantages and the monies invested will be allowed toi build up to purchase an Annuity at the retirement date. The Annuity will then provide a regular income to support the person throughout their retirement.

Savings Policy - A plan taken out usually via an insurance company where regular payments are made in attempt to accumulate a lump sum.

Surrender Value - The amount of money you may receive if you cash in a life insurance policy. Surrender values can be quite low as with most insurance policies, they only start to realise their true value towards the end of the contract term.

Terminal Bonus - A bonus that is added to a life insurance contract at the end of the policy term

Term Assurance - A type of Life Insurance policy issued for a set term that will expire at the end with no payout if the policyholder or beneficiary is still alive. Because there is only a payment following a death, this type of insurance contract is relatively cheap to buy.

Tied agent - A sales person who will only sell the products of one company . This usually relaters to the selling of Life Insurance products

Transfer Value - The amount money that can be transferred from a pension scheme to another pension scheme.

Trust - A trust fund is an arrangement whereby control over an asset is transferred to another person or organisation for the benefit of someone else.

Trustee- This is a person or group, of persons appointed to manage and safeguard the assets of a trust fund.

Underinsurance - Under insurance occurs when the sum insured under an insurance policy is not sufficient to cover a total loss claim. Evidence of under insurance is normally only spotted at the time of a loss by a loss adjuster acting on behalf of an insurance company. If the amount of under insurance is severe, the insurance company may decide to apply an average clause which will reduce the amount of any claim in direct proportion to the amount of any under insurance.

Underwriter - A person usually employed by an insurance company that decides if the company should accept an insurance risk or not. The underwriter will decide how much premium has to be paid and decided on what terms will apply to the contract wording

Uninsurable Risk - A risk which is uninsurable for a variety of reasons, perhaps for underwritten reasons ( There is just too much chance of a loss occurring) or the event has already happened or started to happen

Unit trust - A unit trust is an investment fund which uses monies paid in by many investors. The fund is split in to units of equal value and the price of these units can move up or down. You can usually check the value of Unit Trusts in daily newspapers.

Utmost Good Faith - An insurance principle that puts obligations on both the policyholder and the insurer. In principle it means that any prospective policyholder must tell the insurance company any fact that is likely to effect their assessment of the proposal and that the insurance company must disclose full details of it’s cover and not withhold any exclusions which might effect the policyholder decision to buy a particular insurance contract from them.

Waiver of Premium - An optional extra on a life, or pension insurance policy which means that the insurance company pay any premiums on the policyholders behalf if they are unable to so because of injury or illness. This type of contract will of course attract a premium loading to cover this eventuality