Assured - Those insured under the terms of an insurance
policy.
Benefit - The money paid to the policyholder
when a claim is made.
Bid Price - The selling price or
cash-in value of your unit holdings.
Bonus - Relates to
a with-profits policy. The amount of money added to the benefit payable under
the policy. The amount is dependent upon the profits made by the insurance
company. Added bonuses cannot be taken away.
Convertible Term
Assurance - A term insurance policy which gives you the option to
convert your current policy to a whole-life or endowment insurance policy,
without having to take further medical examinations.
Critical
Illness Insurance - A policy that pays out a lump sum on the diagnosis
of life threatening illnesses indicated in the terms of the
plan.
Decreasing Term - A form of term life insurance
where the death benefit decreases each year as per your policy. Premiums remain
level. This type of certificate is frequently sold as mortgage insurance. There
is no surrender value for this policy.
Endowment
Insurance - An insurance policy that pays a stated amount at the end of
a specified period or upon the death of the insured if it occurs within that
period.
Family Income Benefit - Term assurance which
pays money to the life assured’s dependants for a set period, rather than paying
a lump sum.
Guaranteed Bond - A bond in which principal
and interest are guaranteed by an entity other than the issuer. Guaranteed Bonds
can be income or growth.
Increasing Term - The cover and
the amount you pay into the policy are increased by a specific percentage each
year calculated on the original sum insured. Designed as a way to increase your
life cover as your earnings increase.
Investment Bond -
Combines investment with some life cover. The payments you make into an
insurance policy or investment bond, usually a lump sum, are invested in the
insurance company's with-profits or unit-linked funds (Life Funds). Different
types of bonds include the guaranteed bond and unit-linked single premium bond.
Not to be confused with a company or government bond, an investment that offers
a fixed rate of interest and an area where your chosen Life Funds may be
invested.
Life Fund - This usually refers to Unit linked
Investment Funds. These are funds run by Life Assurance or Pension Companies.
Such funds are used for individuals holding life assurance policies to invest
in. The assets held within the fund are divided into a number of units. When an
investor contributes to a Life Fund, units are allocated to investors in
proportion to their investment.
Maturity - An agreed
date when an endowment policy ends and the proceeds, including any bonuses, are
payable.
Mutual - A life insurance company that is owned
by its with-profits policyholders.
Offer Price - The
price at which fund units are bought.
Premium - The
amount of money paid into an insurance
policy.
Proprietary - A life insurance company that
issues its profits to its shareholders.
Qualifying
Policy - A life assurance based savings plan that has to be written for
a minimum of 10 years and must fulfil certain qualifying policy criteria to
ensure the final payout is tax free.
Renewable Term -
Term Insurance that may be renewed for another term without evidence of
insurability.
Single Premium Policy - Where a single
lump sum is paid for an insurance policy.
Sum Insured -
The amount of money that is guaranteed to be paid under an insurance policy,
before any bonuses are added.
Surrender Value - Not
applicable to all life insurance policies. The amount that an insurance
policyholder is entitled to receive when he or she discontinues
coverage
Term Insurance - Provides policyholder with
protection only. Life insurance payable to a beneficiary only when an insured
dies within a specified number of years (the term). If you live beyond the term
you do not receive any payment. This is thought to be the cheapest type of
insurance.
Terminal Bonus - This is an extra bonus
determined when a death or maturity claim is paid. Terminal bonus is often only
paid if the policy has been in-force for a minimum number of years at claim
time. The amount is dependent upon the profits made by the insurance
company.
Unitised With Profits Fund - Also known as a
Unit-Linked With Profits Fund. A type of Life Fund that can invest in UK and
overseas shares, property, fixed interest securities and cash. When you invest
in this fund through an insurance policy, you buy 'units'. When an annual bonus
is declared, you can either receive more units or it is added to the unit price
on a daily basis. Due to the addition of bonuses the unit price does not reflect
the value of the underlying investments.
Unit-Linked -
Also called Unitised. If your insurance policy is unit-linked, some of your
money is used to purchase 'units' in a fund. The value of your policy at
maturity is dependent upon the growth of the fund in which the policy is
invested. Generally refers to policies that offer protection and saving such as
endowment insurance, whole life insurance and investment
bonds.
Unit-Linked Single Premium Bond - A single lump
sum life insurance policy where your investment is spread over a number of Life
Funds.
Whole Life Insurance - Whole life insurance
provides a death benefit for the policyholder as it builds up cash value. The
policy remains in force for the lifetime of the insured, as long as premiums are
paid according to the policy agreement. You can choose insurance that pays out
on death a guaranteed sum only, the sum plus any bonuses that have been added,
or the sum plus any additional value from the growth of the funds invested
in.
Without Profits - When a policy reaches maturity or
the policyholder dies, the amount paid out is the basic guaranteed sum only. You
would not be entitled to any bonuses.
With Profits -
Relates to insurance policies that combine investment with protection. This type
of policy is entitled to a share of the profits made by the insurance company.
Premiums are invested in the with profit fund, reversionary bonuses are applied
usually on an annual basis which reflect the investment growth of the fund
assets. On death and/or maturity a further terminal bonus might be applied to
the fund value.
With Profits Bond - An insurance policy
where your lump sum is in most cases invested in a Unitised With Profits Fund
(which is listed under the Life Funds section).
About the Author
First Hand
Insurance are Life Insurance (http://www.firsthandinsurance.com/Life-Insurance.php) and House Insurance specialists in the
UK.
