Insurance Glossary

Some of the most common industry terms are explained below.  If you have any questions about these terms or others which may not be included in this insurance glossary please do not hesitate to contact us.

Assured
a person or persons who are insured under the terms of a protection policy.

Convertible Term Assurance
a term assurance plan which gives the owner the option to convert the policy to a Whole of Life contract or Endowment, without the need for medical checks.

Critical Illness Insurance
a very valuable policy which pays the benefits on the diagnosis of one or more critical illnesses under the terms of the plan.

Decreasing Term Assurance
a term assurance plan designed to reduce its cover each year decreasing to nil at the end of term. Decreasing term cover is most commonly used to cover a reducing debt or repayment mortgage.

Deferred Period
a period of delay prior to payment of benefits under a protection  policy.  Periods are normally 4, 13, 26, 52 weeks, the longer the period the cheaper the premium.

Family Income Benefit (FIB)
a term assurance policy which pays regular benefits on death to the end of the plan term.

Income Protection Plan
a protection plan which pays a monthly benefit to replace a proportion of income lost due to illness or disability. Also know as Permanent Health Insurance (PHI).

Indexation
a means to increase the premiums to a plan in order to reduce the effects of inflation.  Premiums are normally increased in line with RPI (Retail Prices Index) or NAEI (National Average Earnings Index).

Insurable Interest
a legally recognised interest enabling a person to insure  another. The insured must be financially worse off on the death of the life assured.

Joint Life Second Death
a policy which will only pay out when the last survivor of a joint life policy dies.

Key Person Insurance (Key Man)
insurance against the death or disability of a person who is vital to the profitability of a business.

Level Term Assurance
a life assurance policy which pays out a fixed sum on the death of the life assured within the plan term. No surrender value is accumulated.

Life Assured
the person who's life is insured against death under the terms of a policy.

Long Term Care (LTC)
insurance to cover the cost of caring for an individual who cannot perform a number of activities of daily living, such as dressing or washing.

Paid Up Plan
a policy where contributions have ceased and any benefits accumulated are preserved.

Permanent Health Insurance (PHI)
cover that provides a regular income until retirement should the insured be unable to work due to illness or disability.

Renewable Term Assurance
an ordinary term assurance policy with the option to renew the plan at expiry without the need for further medical evidence.

Sum Assured
the benefit payable under a life assurance policy.

Surrender Value
the value of a life policy if it is encashed before a claim due to death or maturity.

Term Assurance
a life assurance policy that pays out a lump sum on the death of the life assured within the term of the plan.

Terminal Illness Benefit
an option under term assurance policies, although most plans now include this benefit as standard. A policy with this option will pay out the sum assured if you suffer a terminal illness.

Total Permanent Disability Cover
pays out the benefit of a policy if you are unable to work due to illness or disability.

Trust
putting your life assurance policies in trust ensures that any proceeds paid out on death do not form part of your estate which may be  liable to inheritance tax.

Trustee(s)
person(s) holding and administering property or monies in a trust fund for others.

Waiver of Premium Benefit
an option under a policy which continues to pay the premiums to the plan if you are unable to work due to illness or disability.

Whole of Life Assurance
a life assurance policy which is for life and as such will definitely pay out on the death of the life assured.