Insurance Glossary of Terms

Home
>
Insurance
>
Insurance Glossary of Terms

Insurance Glossary of Terms

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 and House Insurance specialists in the UK.

This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.

In The News:

Yahoo! News: Top Stories

Obama OKs modest tax changes after seeking ideas (AP)

AP - Pushed by fellow Democrats, President-elect Barack Obama agreed to modest changes in his proposed tax cuts on Friday after inviting lawmakers to "just show me" ideas for fixing an economy shedding jobs at an alarming rate. Democratic congressional officials said that Obama aides came under pressure in closed-door talks to jettison or significantly alter a proposed tax credit for creating jobs.

Ill. House impeaches governor, who vows to fight (AP)

AP - Gov. Rod Blagojevich was impeached Friday by Illinois lawmakers furious that he turned state government into a "freak show," setting the stage for an unprecedented trial in the state Senate that could get him thrown out of office.

Israel and Hamas ignore UN call for cease-fire (AP)

AP - Israeli jets and ground troops hammered at Hamas targets in the Gaza Strip and Islamic militants fired barrages of rockets at southern Israeli cities Friday, ignoring a U.N. resolution calling for an immediate cease-fire after two weeks of combat.

Pastor in gay scandal: I'm back from 'wilderness' (AP)

AP - Speaking out two years after being embroiled in a gay sex scandal, former evangelical pastor Ted Haggard said Friday his sexual identity is complex and can't be put into "stereotypical boxes," but that his relationship with his wife is stronger than ever.

Palin: Is Kennedy getting 'kid glove' treatment? (AP)

AP - She messed up her first interviews, didn't show much of a grasp of the issues and, dontcha know, had a speech pattern that was widely mimicked.

Texas death row inmate pulls out eye, eats it (AP)

AP - A Texas death row inmate with a history of mental problems pulled out his only good eye and told authorities he ate it. Andre Thomas, 25, was arrested for the fatal stabbings of his estranged wife, their young son and her 13-month-old daughter in March 2004. Their hearts also had been ripped out. He was convicted and condemned for the infant's death.

Rare 'dinky' bird migrates to US for first time (AP)

AP - Birders with binoculars and cameras are flocking to a remote state park in search of a small yellow-chested bird that apparently crossed the U.S. border for the first time from its high-mountain habitat to the south.

'Dexter' brother and sister are husband and wife (AP)

AP - They play brother and sister on "Dexter." Now in real life, Michael C. Hall and Jennifer Carpenter are husband and wife. Hall's spokesman, Craig Bankey, said on Friday that the couple eloped in California on New Year's Eve. They'll walk the red carpet together at the Golden Globe Awards on Sunday the first time publicly acknowledging their relationship.

George the lobster gets new lease on life at 140 (AP)

AP - A new lease on life at 140? That's what a Manhattan lobster got Friday, when the 20-pound crustacean named George was released from a swanky Park Avenue restaurant's tank. City Crab and Seafood agreed to a request from People for the Ethical Treatment of Animals to let the lobster return to the Atlantic Ocean.

Stimulant exemptions in baseball on the rise (AP)

AP - Baseball authorized nearly 8 percent of its players to use drugs for ADHD last season, which allowed them to take otherwise banned stimulants. A total of 106 exemptions for banned drugs were given to major leaguers claiming attention deficit hyperactivity disorder from the end of the 2007 season until the end of the 2008 season, according to a report released Friday by the sport's independent drug-testing administrator.

Citi, Morgan Stanley in brokerage talks; Rubin quits (Reuters)

Reuters - Citigroup Inc is in advanced talks to sell its Smith Barney brokerage unit to Morgan Stanley, a person familiar with the matter said on Friday, in a move that would further dismantle the financial supermarket that has been bailed out by the U.S. government.

Illinois House votes to impeach Gov. Blagojevich (Reuters)

Reuters - The Illinois House of Representatives impeached Gov. Rod Blagojevich on Friday for abuse of power, including a charge that he tried to sell President-elect Barack Obama's former U.S. Senate seat.

Israel, Hamas press on with Gaza war (Reuters)

Reuters - Israel pressed on with a punishing Gaza offensive and Hamas sent more rocket salvoes into southern Israeli towns in a two-week-old war that continued to defy international efforts to stop it.

Obama team, Rep. Frank eye bailout fund overhaul (Reuters)

Reuters - President-elect Barack Obama and a key Democratic lawmaker revealed plans on Friday to overhaul the government's $700 billion financial rescue fund as a way to aid struggling homeowners and speed the flow of credit.

Salmonella outbreak linked to peanut butter (Reuters)

Reuters - An outbreak of salmonella food poisoning that has sickened at least 399 people and put 70 or more into the hospital has been linked to peanut butter, officials in Minnesota said on Friday.

Jobless rate at 16-year high as payrolls plunge (Reuters)

Reuters - The unemployment rate surged to the highest in nearly 16 years last month as a deepening year-long recession forced companies to axe more than half a million jobs, government data showed on Friday.

Supreme court to decide voting rights law challenge (Reuters)

Reuters - The U.S. Supreme Court said on Friday it would consider a challenge to a central provision of the 44-year-old voting rights law aimed at preventing states and local governments from making it harder for minorities to vote.

Bank industry slams lawmaker-Citi mortgage deal (Reuters)

Reuters - A top bank industry group said on Friday that it opposes an agreement between Citigroup Inc and Democratic senators that would rewrite U.S. bankruptcy law to help troubled mortgage borrowers avoid foreclosure, saying it could make home loans more expensive.

Gaza conflict set to enter third week as ceasefire appeal ignored (AFP)

AFP - Israel's offensive against Hamas in the Gaza Strip was set to enter its third week on Saturday, with both sides brushing off a UN appeal to halt devastating attacks that have claimed over 800 lives.

Somali pirates say they have released Saudi supertanker (AFP)

AFP - Somali pirates said Friday they had freed a Saudi-owned supertanker, whose capture nearly two months ago caused panic in international shipping and spurred the world into tougher anti-piracy action.

Insurance Glossary of Terms

Insurance Insurance