Understanding the Jargon

This page is designed to explain some of the commonly used jargon or phrases that you may see in the Life Insurance industry.

Actuary A person who calculates the premiums required for insurance and makes sure that the Insurance company has enough assets to be able to pay all its potential liabilities
Assignment/Reassignment The signing of a document that pays the proceeds to another person (or company) in the event of a claim. Reassignment is the person/company saying that no longer need the assignment
Convertible A facility to change to a different policy (up to the same level of cover) without providing medical evidence
Elimination period A waiting period before a claim is paid (usually used with Permanent Health Insurance)
Endowment A form of savings policy that combines an agreed sum assured and a level of investment
Expiry date The date on which the insurance ends
Family Income Benefit A policy that pays a regular monthly amount on the death of the life insured until the expiry date of the policy
Guaranteed acceptance A form of policy that does not require medical evidence, but may not cover death in the early years of the policy
Investment returns The increase in the value of the fund(s) invested in
Joint life, first death A Joint life policy where the sum assured is paid on the first death of persons insured
Joint life, second death A Joint life policy where the sum assured is paid on the second death of persons insured
Level of cover The amount of Life insurance
Life Assurance The same as life Insurance, but may also contain a level of investment and may not be for a specified term
Life Assured/Insured The person who is insured
Life Cover The amount payable if the life assured dies before the end of the term of the policy
Life Insurance If a person dies within a specified term, the life cover will be paid out provided all premiums have been paid
Permanent Health Insurance A policy that pays a regular income in the event of long term illness
Premium The amount that is paid to the insurance company for the policy
Reducing Term Assurance The amount of life cover reduces each year based. This type of plan is often used to protect debts such as mortgages.
Renewable This allows the person to renew or take out a new policy (up to the same level of cover) without having to provide medical details
Sum Assured/Insured The amount of life cover payable on the death of the Life Assured/Insured
Term The period of time that the person is insured for
Underwriting/underwritten The assessment of a persons medical history and if acceptable a policy is issued
Unit Linked A fund of pooled investments divided into units and the price of units is calculated on a regular basis
Whole of Life A policy that has no fixed term and can continue until the death of the life or lives assured
With profits A form of investment fund that often shares out the investment returns across all people invested in the fund

 

This article is for guidance only and must not be construed as advice. The contents of this article are aimed at the UK market, although many countries will have similar policies available. If you need advice you should refer to a Financial Adviser.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>