Life Insurance Glossary

ABI (www.abi.org.uk)
97% of the life insurance business in the UK is provided by the trade Association of British Insurance Companies (ABI). It currently has more that 400 members registered to it.

Assured
Under the terms and conditions of a life insurance policy these are those that are insured.

Benefit
When a life insurance claim is made this is the money paid to the policy holder

Bonus
If the policy holder has a with profits life insurance policy the bonus is the payments made under the policy as a bonus, which is dependant on the profits that are made by the life insurance company.

Convertible Term Assurance
This life insurance policy types enables the policy holder to convert a term life insurance policy into a whole or permanent life insurance policy after a few years of premium payment, with no need for any further health checks.

Critical Illness Insurance
A criteria that can be added onto a life insurance policy that will pay out a lump sum if the policy holder is diagnosed with a critical illness.

Death Benefit
This is the pay out that the beneficiaries receive if the life insurance policy holder dies during the term of the policy

Decreasing Term
This is a type of term life insurance policy that is commonly used to pay off a repayment mortgage. The value of the life insurance policy will decrease throughout the term but the premiums will remain the same.

Family Income Benefit
If the policy holder dies during the term of the life insurance policy the family of the policyholder will receive a payment of a regular income until the life insurance policy expires.

Increasing Term
This is a type of life insurance policy where the amount of cover increases throughout the term as does the premiums to be paid. This is to enable to life insurance policy to increase in value as your earnings increase, plus it will make the lump sum more realistic in years to come.

Maturity
This is the agreed date when a life insurance policy, usually a endowment policy pays the lump sum and any bonuses.

Premium
This is the money that is paid to the life insurance company regularly to support the policy.

Renewable Term
A renewable term gives the policy holder the option to renew a term life insurance policy without the need for further health checks.

Single Premium Policy
This is a life insurance policy that has only one payment of the lump sum

Sum Insured
This is the sum of money that is guaranteed to be paid to the policy holder's beneficiary's once the claim on the life insurance policy has been made.

Surrender Value
This is the amount that the life insurance company will pay to the policy holder if the life insurance policy is terminated before the term runs out or the policy holder dies.

Term Insurance
This is the cheapest type of life insurance and will only protect the policy holder for the term of the life insurance policy. The policy will only pay out if the policy holder dies during the term

Unit-Linked
This is a type of life insurance policy where any excess funds are invested and are used to purchase ‘units’. The value of the sum of the policy is dependant on how well the ‘units’ have performed.

Whole Life Insurance
This type of life insurance policy will pay out a death benefit as it covers the policy holder for the whole of their life. The policy can include some investment if required, that will be paid out along with any death benefit.