As with many areas of our financial health, insurance is an area that is present in our everyday living, but it’s not always easy to understand.
We’re here to help!
Here is our A-Z Glossary of Protection to help educate and simplify the jargon that surrounds the subject of insurance…
A-Z Glossary of Protection
A
• Accident Cover: A policy that provides financial support if you’re injured due to an accident and unable to work or perform daily activities.
• Assurance: Often used in life insurance, it guarantees a payout on death, whenever it occurs.
• Annual Premium: The amount you pay yearly for your insurance policy.
• Accelerated Critical Illness: A type of cover that pays out early if you’re diagnosed with a critical illness, instead of waiting for death.
B
• Beneficiary: The person or people who will receive the payout from an insurance policy.
• Broker: A professional who advises on the best insurance products for your needs.
• Buyback Option: Allows you to reinstate cover after a critical illness payout, usually for an additional premium.
C
• Critical Illness Cover - Insurance that provides a lump sum if you’re diagnosed with a specified serious illness, such as cancer or heart disease.
• Claim: The process of requesting payment from your insurance provider after an insured event occurs.
• Convertible Term Assurance: A policy that allows you to convert your term life insurance into a permanent policy without additional health checks.
D
• Deferred Period: The time you must wait after an illness or accident before you can claim under an income protection policy, typically ranging from 4 weeks to 12 months.
• Decreasing Term Insurance: A life insurance policy where the payout decreases over time, often used to cover a repayment mortgage.
• Double Indemnity: A clause in a policy that pays double the amount if death is caused by accidental means.
E
• Exclusions : Specific conditions or circumstances for which the policy won’t provide coverage.
• Endowment Policy: A life insurance policy that also serves as a savings plan, paying a lump sum on a specific date or on death.
• Excess: The amount you agree to pay towards a claim before your insurance kicks in.
F
• Family Income Benefit: A policy that provides regular income payments to your family rather than a lump sum if you die during the term.
• Full Medical Underwriting: A thorough medical evaluation done before the insurance policy is issued.
• Funeral Plan: A pre-paid service that covers the costs of your funeral.
G
• Guaranteed Insurability: The option to increase cover in certain life events (like marriage or having children) without a medical assessment.
• Group Life Insurance: Life insurance coverage provided by an employer for employees, usually as part of a benefits package.
• Guaranteed Premiums: Premiums that remain the same throughout the life of the policy.
H
• Health Insurance: A policy that covers the cost of medical treatments, surgeries, or hospital stays.
• Hazardous Occupation: A job that is considered high-risk, potentially leading to higher premiums or exclusions.
• Hospital Cash Plan: A policy that provides a fixed cash payment for every day you spend in the hospital.
I
• Income Protection: Insurance that replaces a portion of your income if you can’t work due to illness or injury.
• Indexation: A feature that adjusts your cover in line with inflation.
• Indemnity: A principle where the insurance payout matches the value of your loss, no more, no less.
J
• Joint Life Insurance: A policy that covers two people, typically paying out on the first or second death, depending on the terms.
K
• Key Person Insurance: A policy taken out by a business to cover financial losses that may occur due to the illness or death of a key employee.
L
• Life Insurance: A policy that pays a lump sum to your beneficiaries when you die, helping them cover expenses or debts.
• Level Term Insurance: A life insurance policy where the payout remains the same throughout the policy term.
• Lapsed Policy: A policy that is no longer in force, usually due to non-payment of premiums.
M
• Mortgage Protection: A type of decreasing term life insurance designed to pay off your mortgage if you die during the term.
• Moratorium Underwriting: A simplified underwriting process, typically used in health insurance, where only recent medical history is considered.
• Medical Examination: An assessment of your health often required when applying for certain types of insurance.
N
• Non-Disclosure: Failure to disclose relevant information to the insurer, which can lead to a denied claim.
• Non-Smoker Rates: Reduced insurance premiums for people who don’t smoke.
O
• Own Occupation: An income protection policy that pays out if you can’t perform the specific duties of your current job due to illness or injury.
• Over 50s Life Insurance: A type of life insurance available without medical underwriting, specifically aimed at those over 50.
P
• Premiums: The regular payments you make to keep your insurance policy active.
• Permanent Health Insurance: A form of income protection that pays out until retirement if you're unable to work due to long-term illness.
• Policyholder: The person who owns the insurance policy.
Q
• Qualifying Policy: An insurance policy that meets certain HMRC conditions, which may entitle it to special tax treatment.
R
• Renewable Term Insurance: A policy that can be renewed at the end of the term without a new medical examination.
• Riders: Additional features or benefits you can add to a policy, such as critical illness cover.
S
• Sum Assured: The amount paid out by the insurance policy when a claim is made.
• Single Life Policy: A life insurance policy that covers just one person.
• Suicide Clause: A period during which life insurance won’t pay out if the insured dies by suicide, often within the first two years of the policy.
T
• Trust: A legal arrangement allowing you to put your life insurance payout into a trust, which can help avoid inheritance tax and ensure the money goes directly to your beneficiaries.
• Term Insurance: Life insurance that covers you for a specified period.
• Terminal Illness Benefit: Pays out early if you're diagnosed with a terminal illness and are expected to live less than 12 months.
U
• Underwriting: The process insurers use to assess your application and determine your premium based on the level of risk.
V
• Voluntary Excess: An additional amount you agree to pay on top of the standard excess when making a claim, often used to reduce premiums.
W
• Waiver of Premium: An optional benefit where the insurer continues to pay your premiums if you become unable to work due to illness or injury.
• Whole of Life Insurance: A life insurance policy that provides cover for the whole of your life and pays out when you die, whenever that may be.
X
• Exclusion (Cross-reference): A condition or situation not covered by your insurance policy.
Y
• Yearly Renewable Term: A term insurance policy that is renewed every year, typically with a premium increase each time.
Z
• Zero Premium: A situation where no premiums are paid, either due to a waiver of premium feature or because the policy has matured.
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Willow Tree Financial Services are a Financial Adviser firm based in Polegate, East Sussex, UK. We specialise in Financial Planning, Mortgages, Investments & Pension Planning, Protection & Insurance Wills, Trusts & Estate Planning.
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