Accident, sickness and unemployment (ASU) cover
A type of insurance which provides a regular income if you’re off work through an accident, sickness or if you become unemployed through no fault of your own. Also known as short-term protection insurance.
Annual
Occurring once a year.
APR
The annual percentage rate (APR) is the figure that includes interest rates and any associated charges such as administration or redemption fees that may be applied to money you borrow. The APR shows the cost of borrowing money over a 1-year period. This figure can be used to compare costs between different lenders.
ATOL protection
UK law says your holiday must be protected if you book a package holiday. ATOL is a UK financial protection scheme and it protects most air package holidays sold by travel businesses that are licensed in the UK.
Benefit
This is what the insurance company has agreed to pay you if you make a valid claim under the terms of the policy. It is sometimes called the sum assured or pay out.
Beneficiary
This is the person who will receive a payment in the event of an insurance claim. The term beneficiary is also used when writing wills to describe the person who is inheriting possessions.
Buildings insurance
Insurance for home owners or landlords which covers the actual building and main fixtures and fittings like the bathroom or kitchen.
Car insurance
An insurance product which protects either your car or someone else’s in the event of a fire, theft or accident.
Cash lump sum
In relation to an insurance pay out, this means receiving part or all of the benefit claim as a cash payment.
Civil partner
Each member of a couple who have formed a Civil partnership.
Civil partnership
A legally recognised union of a couple, with rights similar to those of marriage.
Claim
To use an insurance policy to make a claim. This pays a pre-agreed benefit to you from the insurer, normally after paying an excess, if a specified event occurs.
Claimant
The person making an insurance claim is known as the claimant.
Contents insurance
Insurance which covers the contents of a home.
CPI
The Consumer Price Index (CPI) is an index that measures changes in the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
Critical illness insurance
A type of insurance which provides a tax-free lump sum payment if you’ve been diagnosed with a critical illness such as cancer or a heart attack. What you’re covered for varies amongst policies.
Decreasing term insurance
A type of life insurance which pays out a tax-free lump sum on death, if you die within the term of the policy. The value of the lump sum decreases throughout the term.
Deed of variation
This allows beneficiaries to rearrange or vary their entitlement. A deed of variation can be used by any person who receives a gift under a will to redirect their inheritance to another person.
Deferred period
The amount of time between when an insurance product is bought and when the protection begins. In some insurance products this could be the amount of time between when a claim is made and when a benefit can be received.
Delayed period
The delayed period is the amount of time between when you make a claim and when you receive your benefit. In some insurance policies this is also referred to as the deferred period.
Emergency fund
An easily accessible sum of money, normally recommended to be equivalent to at least 3 months’ worth of outgoings or salary.
Estate
When you die your belongings are grouped together to make your estate. This includes money, property and valuables. Any debt reduces the value of the estate.
Excess
In the context of an insurance claim, the excess refers to the amount the claimant contributes toward a claim. Some insurances have both compulsory and voluntary excesses.
Exclusions
Specific terms, conditions or items not included in what the policy covers.
Family income benefit
A type of life insurance which pays a tax-free income on death if you die within the term of the policy.
FCA
The Financial Conduct Authority (FCA) is the regulator of financial firms in the UK.
Funeral Planning Authority (FPA)
Some providers of pre-paid funeral plans are regulated by the FPA. This is an optional subscription for the provider to be party too. It also provides an independent complaints mechanism in the event of disputes, for the protection of consumers.
Home insurance
An insurance policy designed to cover your home or the belongings inside it. For further details see the definitions of Buildings insurance and Contents insurance.
Index linked
A product that is index linked has its value adjusted according to the value of an inflation index such as the CPI.
Inflation
The rising cost of goods and services over time. Where the cost of the things you buy increases, the amount you can buy with your savings reduces.
Inherit
To inherit money, valuables or property is to receive them once a person has died.
Insurance
An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
Intestacy laws
When you die without leaving a valid will, you are said to have died intestate. There is a legal process which decides how your belongings will be divided up, known as intestacy laws.
Investment
The action or process of investing money for profit.
Investment growth
The term used to refer to how much an investment rises in value. As investments can also fall in value, the holder of an investment can experience an investment loss.
Level term insurance
A type of life insurance which pays out a tax-free lump sum on death, if you die within the term of the policy. The value of the lump sum remains the same throughout the term, or can increase with inflation.
Life insurance
Life insurance can be set up to pay either a tax-free lump sum or tax-free income upon death of the policyholder.
Mortgage
A type of loan normally used to purchase a house.
No claims bonus
Also known as a NCB. This is a discount applied to some insurance policies as a reward for not making a claim previously.
Over 50’s life insurance
A type of whole-of-life insurance designed to make a tax-free lump sum payment when the policy holder dies.
Percentage
A percentage means ‘out of 100’. For example, 20 out of 100 is 20%. Equally 20p out of £1.00 is 20%.
Personal possessions cover
Sometimes included as part of a home contents insurance policy, designed to cover personal possessions when outside the home.
Pet insurance
An insurance policy designed primarily to cover the costs of medical treatments for pets. Policies may cover other scenarios but these will vary between policies.
Pre – existing
A condition or situation that existed and was known about prior to taking an insurance policy.
Premium
This is the amount you pay for the policy. Some policies have one off premiums, some are paid yearly and some are paid monthly.
Pre-paid funeral plan
An agreement where the policy holder pays a set amount either upfront or over a number of months in order to get a guaranteed payment toward funeral costs, based on today’s prices when they die.
Policy
This document normally includes details of the product and lists what you are insured for and what you are not insured for as well as the start and end date.
Power of attorney
Someone you would like to help you with important decisions about your finances or health when you’re not able to make those decisions yourself, detailed in a legal document. The document name varies depending on which region of the UK you live in and which type of power of attorney you are appointing.
Quote
A quote or quotation for an insurance policy based on your circumstances which provides an indicative price for the policy, often guaranteed for 28 days.
Redundant
No longer employed as the position is no longer needed.
Regulated
The person or organisation is subject to a set of rules which are designed to ensure they are operating in an honest manner and in accordance with all applicable law.
Revoked
Taken away or no longer valid in relation to a will or insurance.
RPI
The Retail Price Index (RPI) is an index that measures changes in the weighted average of prices of a basket of consumer goods and services, such as rises in mortgage payments, rents, and council tax.
Self-insurance
When you save enough money to cover your outgoings for a set period of time.
Spouse
A spouse is the name given to a husband or wife when they are married. Spouse does not include Civil partner.
Sum assured
This is what the insurance company has agreed to pay you if you needed to make a claim. It is sometimes called the benefit or pay out.
Tax Free
No tax will be taken from the sum of money.
Tech insurance
An insurance product designed to cover a piece of tech like a mobile phone, tablet or laptop in a number of events such as loss, theft or accidental damage.
Term
This is the length of time the insurance policy runs for.
Travel insurance
Covers problems you may face whilst travelling such as flight cancelations, loss or theft of your belongings or getting injured. Also known as holiday insurance.
Warranty
A written guarantee, issued to the purchaser of a product by its manufacturer, promising to repair or replace it if necessary within a specified period of time.
Whole-of-life insurance
A type of life insurance which pays a tax-free lump sum on death. This policy does not have an end date and your policy will cover you for as long as the premiums are paid.
Will
A legal document that sets forth your wishes regarding the distribution of your property and the care of any children or minors. It can also be used to detail any funeral plans.
