Class
of insurance under the Insurance Companies Act including two
main types of business - personal accident and medical
expenses. Personal accident policies will pay a lump sum or
weekly benefits in the event of accidental death or injury.
Medical expenses insurance will pay the costs of treatment for
acute conditions.
Act
of God
An
event, which is not the fault of any individual. Acts of God
can be insurable.
Actuary
A
professional person qualified to apply mathematical principles
to solving long-term financial problems, primarily in
connection with pensions, life insurance and investment.
Additional
Voluntary Contributions
Additional
contributions made voluntarily by pension scheme members to
boost their eventual retirement income.
Agent
A
person who acts for one or small number of companies,
particularly in selling insurance.
All
Risks
Wider
cover than given under a normal property insurance policy.
Covers any loss or damage apart from exclusions stated in the
policy.
Annual
Premium
See
"Yearly Premium".
Annuity
An
arrangement by which an insurance company pays someone a
regular income, usually for life, in return for a lump sum
premium.
Assistance
The
provision by an insurer or a service company of immediate
practical help to resolve an insured problem (e.g. arranging
medical treatment abroad/organising a roadside repair).
Assurance
See
"Insurance".
AVCs
See
"Additional Voluntary Contributions".
Average
A
policy condition that requires the amount of a claim payment
to be reduced proportionately if the policyholder has not
insured his property for the full amount of its value or
replacement cost.
B
Benefit
The
money paid by the life insurance company when a claim is made.
Betterment
The
principle by which a claimant has to make a payment towards
the cost of the claim because his or her property will be in
better condition after repair than before the loss or damage
occurred.
Bonus
Amount
of money added to the sum insured of a
"with-profits" policy. It may be added during the
term of the policy (reversionary) or when the policy matures
(terminal), or both.
Broker
An
"intermediary" registered with the Insurance Brokers
Registration Council (IBRC) under the Insurance Brokers
(Registration) Act 1977.
Capacity
is the measure of an insurer's ability to write new business.
It depends on the maintenance of adequate reserves.
Captive
Insurer
An
insurance company set up by an industrial or commercial
company, for example an oil company, to provide insurance to
that company only.
Certificate
Document
issued by insurers as evidence that insurance is in force to
meet the requirements of the law (notably for motor and
employers' liability insurance).
Claim
When
a policyholder or beneficiary seeks payment or settlement
under the terms of a policy.
Co-Insurance
An
arrangement whereby a number of separate insurance companies
share in the cover of one particular risk.
Collective
Life Policies
Group
life policies, which do not relate to schemes established by
an employer for the benefit of employees. Commonly used by
credit companies to cover loans made.
Commercial
Business
Any
policy taken out by a company, partnership or organisation to
cover their business. Would include fleet policies for motor
business.
Commission
Money
paid by an insurance company to a broker/ independent
intermediary/agent for selling policies.
Company
Representative
An
agent appointed by a life insurance company who is authorised
to sell only that company's products.
Composite
Insurer
A
company which transacts both life and non-life insurance.
Comprehensive
Insurance
A
policy covering a number of types of loss or damage. The name
is used mainly in motor insurance.
Condition
Part
of a policy stating that certain rules must be followed, for
example, the duty to take reasonable care to protect property,
or to report claims to the insurance company promptly.
Consequential
Loss
Insurance
covering the loss of profits of a business and certain other
costs resulting from fire or other insured event (also known
as Business Interruption).
A
policy covering the contents of a home or other building
against a number of different risks.
Contingent
Annuities
Annuities
paid if a certain event (events) happen.
Contribution
The
principle of contribution applies where a risk is insured on
more than one insurance policy (for example on a travel and
household policy), and the two insurers concerned may share
the cost of any claim.
Convertible
Term
A
term insurance policy which gives the policyholder an option
to convert the policy to a whole life or endowment insurance
without giving further evidence of health.
Cover
Note
A
document giving temporary evidence of cover while the policy
and certificate are being prepared.
Critical
Illness Insurance
Pays
out a lump sum on the diagnosis of certain life-threatening
illnesses specified in the policy.
A
term insurance policy in which the sum insured is reduced by a
fixed amount each year, decreasing to nil at the end of the
term.
Deferred
Annuities
Annuities
that commence after a specified number of years or at a
specified age (usually on retirement), usually continuing
through the policyholder's life.
Direct
Sources of Business
Insurance
business where no intermediary is involved, including
marketing sources (e.g. newspaper advertisements), telephone
sales and business through branch offices.
Disability
Benefit
Certain
life policies will pay out if the policyholder becomes
permanently disabled. No further benefit is paid on the
policyholder's subsequent death. (See also "Critical
Illness Insurance".)
A
type of term insurance policy that, on the death of the life
insured, pays benefits by instalments until the end of a
specified period.
Fatal
Accident Benefit
Certain
life policies will make an additional payment - over and above
the sum insured - if the policyholder dies as a result of an
accident.
Fidelity
Guarantee Policy
A
policy covering the risk of dishonesty on the part of an
employee who holds a position of trust, for example, a wages
clerk.
Freestanding
AVCs
Additional
contributions paid voluntarily into personal pension policies
by employees in occupational schemes who wish to top up their
pensions, but keep the money separate from the occupational
scheme.
Friendly
Society
Similar
to a mutual insurance company. A friendly society is owned by
and established for the benefit of its members, mainly through
the provision of life insurance and sickness benefit.
Fully
Contracted-out
Pension
policy where the only premium received is the DSS rebate.
G
General
Insurance
Insurance
of (non-life) risks where the policy offers cover for a
limited period, usually one year.
General
Liability
Covers
the policyholder's legal liability for injury, property damage
or financial loss caused to others.
Green
Card
A
document issued to policyholders motoring abroad as evidence
that they have the minimum insurance cover required by the law
of the country visited. Not essential for European travel,
because minimum legal cover is automatically included in UK
policies.
Group
Life
A
term that relates to the provision of lump sum death in
service benefits for groups of employees.
Group
Permanent Health Insurance
Policies
arranged by employers for their employees, providing for the
payment of income during a period of incapacity due to ill
health or accident. The benefit is usually payable until
retirement.
Group
Personal Pensions
An
arrangement made for the employees of a particular employer to
participate in a personal pension scheme on a group basis.
This is not a separate, or occupational, pension scheme, but
merely a collecting arrangement.
Group
Sponsored Schemes
Scheme
set up by employers for the benefit of their employees to
provide life cover or a pension on retiring, or both.
H
Holiday
Insurance
A
policy covering certain risks connected with holidays. Usually
includes cover for the costs of unavoidable cancellation,
personal accident, medical treatment abroad and lost or stolen
luggage.
Home-foreign
Home
foreign policies are issued to provide insurance where the
business is written in one country, although the risk is
actually situated abroad.
Home
Service
The
provision and servicing of life and non-life insurance by
company agents calling regularly at policyholders' homes. (See
also Industrial Branch)
Household
Business
Includes
insurance of both structure and contents, along with any
"add-ons" included within the policy such as legal
expenses.
I
Immediate
Annuities
Annuities
that commence immediately, or shortly after, purchase.
Impaired
Lives Register
Lists
individuals who have been refused, or charged more for, life
insurance, for medical reasons.
Increasing
Term
A
term insurance policy in which the sum insured increases each
year by a fixed percentage of the original sum insured.
Designed to increase policyholders' life cover as their
earnings increase.
Indemnity
The
principle by which policyholders are put in the same financial
position after a loss as they were immediately before it.
Independent
Financial Adviser
A
broker or other intermediary authorised to sell or advise on
the policies of any life insurance company, as well as other
financial products (e.g. unit trusts).
Index-linked
Insurance
where the amount of cover changes automatically in line with
an index. Examples are the cost of rebuilding a house or
replacing its contents.
Individual
Permanent Health Insurance
Policies
arranged by an individual providing for the payment of income
during a period of incapacity due to ill health or accident.
The benefit is paid to the policyholder until he/she is able
to return to work, or until retirement.
Individual
Policy
Insurance
taken out by an individual on his or her own life or by an
individual or legal person on the life of another.
Industrial
Branch
Life
insurance where premiums are collected by an insurance company
agent at the policyholder's home, at intervals of less than
two months, often for a relatively small amount. Whole life
and endowment contracts are the only types of business written
in the industrial branch.
Insurable
Interest
A
principle of insurance which states that someone may only take
out insurance if he/she stands to suffer a financial loss from
an event covered by a policy. Individuals have an unlimited
insurable interest in their own life and that of their spouse.
Insurance
A
service that offers financial compensation for something that
may or may not happen. Originally the term assurance was
generally used for life insurance, but now the two words are
interchangeable.
Insurance
Company
A
company that takes on risks under the policies it sells in
return for the payment of premiums. Companies may be
"mutual" (owned by the policyholders) or
"proprietary" (owned by the shareholders).
Insurance
Premium Tax
A
tax imposed on most non-life insurance premiums.
Insured
A
person covered by an insurance policy.
Insurer
See
"Insurance Company"/"Lloyd's".
Intermediary
Person
or organisation that offers advice and arranges policies for
clients. Intermediaries may be either "tied" -
representing one company in the case of life business or a
limited number of companies for general business, or
"independent" - with no limit on the number of
companies with which they can deal.
Investment
The
act of allowing someone else to have use of your money in
return for payment of interest and/or a share in profits that
may be made.
Investment
Income
Income
earned on the money held by insurers on behalf of
policyholders, having been received in premiums but not yet
paid out on claims.
J
K
Key
Person Insurance
In
the event of the death of a key employee on whom the business
depends for its continued profitability, or even existence,
this type of cover provides a sum of money which can be used
to pay for the cost of finding and training a successor, and
to compensate for reduced profitability.
Knock-for-Knock
An
agreement whereby each motor insurer paid for damage to its
policyholder's car, regardless of which driver was to blame,
providing the policy covered damage to the policyholder's own
car. Currently rarely applies.
Covers
the cost of legal proceedings in circumstances defined in the
policy.
Level
Premium
The
same premium paid throughout the term of a policy.
Liability
Legal
responsibility for causing loss to someone else by injuring
him or her or damaging their property.
Life
Assurance Premium Relief
Tax
relief on life insurance premiums. Applies only to policies
taken out before 14 March 1984.
Life
Expectancy
The
average length of time people are likely to live, taking into
account such factors as their present age, health and
occupation.
Life
Fund
The
pool of money, maintained by an insurance company, into which
all its life insurance policyholders' premiums are paid and
out of which all claims are paid.
Linked
Describes
any savings product where the saver's money buys, or is deemed
to buy, "units" in an investment fund and the value
of the saver's fund is thus linked to the value of the units.
Lloyd's
Members
Individuals
on whose behalf Lloyd's policies are issued. They pledge all
their personal wealth to pay losses. Corporate members were
also introduced in 1994.
Lloyd's
of London
An
insurance market organised into syndicates, which underwrites
most types of policy.
Loading
The
extent to which an individual is charged more than the
"average" for his/her insurance.
Long-Term
Care Insurance
Provides
for the cost of long-term care. Intended mainly to cover the
costs of elderly people being looked after either at home or
in residential care.
Long-Term
Insurance
Insurance
of risks where cover extends over a period of more than a
year, and where predetermined premiums are often paid on a
regular basis over a long period. Frequently, these insurance
contracts are intended to provide an investment vehicle as
well as risk insurance, e.g. endowment policies.
Loss
Adjuster
A
person, independent of an insurance company but engaged and
paid by it, who checks that a claim is covered and negotiates
with the policyholder the amount payable for a claim.
Loss
Assessor
A
person who negotiates claims on behalf of policyholders.
M
Managed
Funds
Schemes
by which the pension funds for a group of employees buy units
in various funds managed by an insurance company.
Marine
Aviation and Transport
The
class of insurance which embraces damage to the hull and cargo
of ships and aeroplanes, and liability for property damage,
injury and death to passengers and others.
Maturity
An
agreed date when an endowment policy comes to an end, and the
sum insured plus any bonuses earned is payable.
Mechanical
Breakdown Insurance
Covers
against the cost of breakdowns of household appliances or
motor vehicles.
Mortgage
Indemnity Insurance
Provides
cover for a mortgage lender for any loss they might suffer as
a result of a property on which they provided a loan being
sold for less than the amount of the loan.
Mortgage
Payment Protection Policy
Cover
for monthly mortgage repayments in the event of accident,
sickness or unemployment
Mortgage
Protection Policy
A
life insurance policy that covers the outstanding amount of
mortgage if the policyholder dies before the loan is repaid.
Mortgage-Related
Policies
Policies
used both to provide protection for a mortgage loan and as a
savings vehicle to repay the loan at maturity.
Motor
Insurance
Covers
legal liabilities arising from the use of a motor vehicle.
Comprehensive policies also cover damage to the vehicle.
Mutual
An
insurance company that is owned by its policyholders.
N
New-For-Old
Cover
for property where an item lost or destroyed would be replaced
with a brand new one, with no deduction for wear and tear.
Also called "replacement as new".
No
Claim Discount (or Bonus)
A
reduction in a renewal premium to reflect a claim-free record;
used most often in motor insurance.
Non-Motor
Non-motor
includes all business written under the accident and health,
general liability, pecuniary loss and property damage classes.
Also known as Fire and Accident.
Not
Contracted-out
Someone
who is not contracted out of the State Earnings-Related
Pension Scheme (SERPS).
O
Occupational
Pensions
Pension
scheme provided by an employer for its employees.
Contributions will be paid by the employer and often by
employees also.
Schemes may be either "defined benefit" where the
pension entitlement of an employee is determined by, for
example, number of years' service and salary; or "defined
contribution" whereby an employee's pension entitlement
depends only on how much has been paid into the scheme in the
form of contributions on his/her account, and the value at
retirement of the sum thus accumulated.
Employers may delegate responsibility for the running of their
pension scheme to an insurance company.
Ordinary
Branch
Life
insurance and pensions business where the premiums are usually
paid through the banking system by cheque, standing order or
direct debit.
Outgo
The
total expenditure of an insurer in relation to any class of
insurance business, comprising the cost of claims and the
insurer's business expenses, including any commission paid to
sales staff, brokers or intermediaries.
P
Partially
Contracted-out
Pension
policy that receives both a premium from the policyholder and
a DSS rebate.
Pecuniary
Loss
Covers
any financial loss that may have been incurred, e.g. business
interruption and mortgage indemnity policies.
Pension
A
regular income paid to a person when he/she retires from work.
A life company pays an insured pension from funds built up
from contributions paid while working.
Pension
Annuities
Annuities
which become payable on the vesting of pension policies.
Permanent
Health Insurance
A
policy that pays an income for as long as the policyholder is
unable to work as a result of accident or illness. The benefit
is usually payable until retirement date.
Persistency
The
rate at which policyholders keep their policies with a life
insurer.
Personal
Accident Insurance
A
policy that pays specified amounts of money if the
policyholder is injured in an accident. Depending on the type
of disability, the payments may be made weekly, for a set
period, or as a lump sum.
Personal
Lines of Business
Any
policy taken out by an individual in his/her private capacity.
Personal
Pensions
Contracts
under which payments are made to an insurance company by an
individual policyholder during his/her working life, in return
for a regular income, to be paid after retirement.
Pluvius
Insurance
Covers
against losses arising as a result of bad weather.
Policy
The
document providing full details of the contract between the
insurer and the policyholder.
Policyholder
Person
or organisation to which the insurer issues the policy.
Normally the person to whom benefits are payable.
Pool
Re
A
Government-backed reinsurance scheme that meets the cost of
claims over £100,000 occurring as a result of terrorist
attacks in Great Britain.
Premium
The
amount paid by the policyholder for insurance.
Private
Medical Insurance
A
policy that covers the cost of private medical treatment.
Product
Liability Policy
Protects
businesses against liability claims resulting from defects in
the products they sell.
Professional
Indemnity Insurance
Protects
professionals against liability claims resulting from
negligent work.
Property
Damage
Property
policies cover specified property that may be damaged or
destroyed by events or perils, such as fire, storm or theft.
Proposal
Form
An
application for insurance cover.
Proposer
Person
or company who applies to take out insurance.
Public
Liability Policy
Covers
legal liability for injury or damage caused to others.
Q
R
Rate
The
price of insurance, usually expressed as the cost of a unit of
cover, e.g. £x per £1,000.
Reinsurance
Reinsurance
is the cover insurance companies can purchase to protect
themselves against large losses.
Renewable
Single Premium Policy
Policies
under which additional premiums can be paid later to provide
increased benefits; these are at the policyholder's discretion
and are non-contractual.
Renewable
Term
A
term insurance policy that gives the policyholder the option,
after a specified period, to take out a further term policy
without the need for any further evidence of health, providing
the policy will not continue beyond age 65.
Renewal
Notice
Notice
sent to the policyholder inviting him/her to renew a policy
for a further period and stating the premium payable.
Replacement-as-New
See
"New-for-Old".
Reversionary
Bonus
A
bonus that is added to the policyholder's investment during
the course of the policy.
S
Savings
Policies
Policies
used as a savings vehicle.
Single
Premium Policy
A
long-term insurance policy where the premium is paid in a
single lump sum.
Solvency
Margin
The
solvency margin is the excess of the reserves the insurance
company holds over its liabilities.
Subrogation
The
right of an insurer who has indemnified a policyholder to take
over any legal rights the policyholder may have had in respect
of that particular claim.
Sum
Insured
The
amount for which property is insured, and the maximum amount
which the insurance company will pay for any claim. In life
insurance, the amount which is guaranteed to be paid and to
which bonuses may be added.
Surrender
Value
The
amount of money paid to the policyholder when certain types of
life policy are discontinued before the full benefit becomes
payable. Not all life policies have a surrender value.
Syndicate
Group
of underwriters at Lloyd's.
T
Temporary
Policy
See
"Term Policy".
Terminal
Bonus
A
bonus paid on certain life insurance policies either at
maturity, or if a claim is made.
Term
Policy
Life
cover provided for a specified number of years. The insurer
only pays out if the policyholder dies within this time.
Third
Party
Someone
involved in a claim who is neither the policyholder nor the
insurer.
Trading
Result
An
insurer's overall profit/loss calculated as the underwriting
result plus investment income.
U
Underinsurance
When
the sum insured is not enough to cover the maximum possible
loss or damage.
Underwriter
Person
who decides whether to accept a risk and calculates the
premium to be charged.
Uninsurable
Risk
A
risk where loss is either inevitable (e.g. a house already on
fire or a person suffering from a terminal illness). Also
applies where damage is gradual e.g. rust and corrosion.
Unitised
With-Profit
Contracts
where premiums are invested in units, either in the
with-profits fund or in linked funds or in a mix of both.
Unit-Linked
See
"Linked".
Utmost
Good Faith
The
principle of insurance that requires proposers to give all
relevant information to the insurer.
V
W
Waiver
of Premium
An
optional extra on a life policy that means that the insurance
company will pay the premiums if the policyholder is unable to
because of illness or injury.
Warranty
Insurance
This
type of insurance provides cover against the cost of repairs
to broken down household appliances.
Whole
Life Policy
A
policy where premiums are paid for the rest of an individual's
life, or up to a specified advanced age, and benefit is paid
on the death of the person insured, whenever that occurs.
With-Profit
Bonds
A
single premium policy where a lump sum is paid into a
with-profits fund made up of investments like company shares,
fixed interest securities, commercial property and money.
Write-Off
A
damaged vehicle which is not repairable, or one that would
cost more to repair than the car was worth before the damage
occurred. Also known as a "total loss".
X
Y
Yearly
Premium
Recurring
premiums paid over the term of the policy, at intervals
specified in the policy.
We hope the above information coupled to our comprehensive A to Z
directory of vehicle insurers, will make the task of finding the best
policy for you an easier job.
Now you’ve got enough to get you started, so good luck finding your
perfect policy from the Speedace team.
