Insurance A–Z
The words on your quote or policy, in plain English, and what each one means for you.
Accelerated critical illness cover
Life insurance and critical illness cover in one policy, paying out once: on a diagnosis of a covered illness, or on death, whichever comes first.
What it means for you: Cheaper than two separate policies, but once it pays, the policy ends. Separate, or “standalone”, cover can pay twice.
See also: Critical illness cover, Life insurance
Claim
Asking the insurer to pay out under the policy, because something it covers has happened.
See also: Non-disclosure, Exclusions
Convertible term
Term cover that you can later turn into a whole of life policy without answering health questions again.
See also: Whole of life, Term
Cooling-off period
The 30 days after your policy starts, when you can cancel and get back anything you’ve paid.
Critical illness cover
Insurance that pays a lump sum if you’re diagnosed with one of the serious illnesses the policy lists, such as some cancers, heart attacks and strokes.
What it means for you: Policies list different illnesses and define them differently. Read the list, not just the headline number.
See also: Life insurance, Income protection
Decreasing term
Cover where the amount paid out goes down over the term, usually in step with a repayment mortgage.
What it means for you: Cheaper than level cover, and a good fit when the debt it protects shrinks too.
See also: Level term, Sum assured
Deferred period
With income protection, how long you must be off work before the payments start: often 4, 13, 26 or 52 weeks.
What it means for you: Match it to your sick pay or savings. The longer you can wait, the less the cover costs.
See also: Income protection
Estate
Everything you own when you die: money, property and possessions, less any debts.
What it means for you: A payout into your estate can be counted for Inheritance Tax, and waits for probate. A trust can avoid both.
See also: Trust, Probate, Inheritance Tax
Exclusions
Things a policy doesn’t cover, set out in its terms, such as a health condition you already have.
See also: Pre-existing condition
Family income benefit
Life cover that pays a regular income, rather than one lump sum, from the claim until the end of the term.
What it means for you: Often cheaper than a lump sum, and it replaces a monthly wage the way your family actually spends it.
See also: Level term
Income protection
Insurance that pays part of your income each month if illness or injury stops you working.
See also: Deferred period, Own occupation
Joint life
One policy that covers two people, usually paying out once, on the first death.
What it means for you: Cheaper than two policies, but it only pays once. Two single policies can pay twice.
See also: Single life
Level term
Cover where the amount paid out stays the same for the whole term.
What it means for you: Suits a family’s living costs, or an interest-only mortgage.
See also: Decreasing term, Term
Life assured
The person whose life is covered. It isn’t always the person who pays for the policy.
See also: Policyholder
Life insurance
Insurance that pays out if you die during the policy, so the people who depend on you are looked after.
See also: Term, Whole of life
Medical underwriting
The insurer looking at your health answers, and sometimes your doctor’s records, to decide on the cover and its price.
See also: Underwriting, Non-disclosure
Non-disclosure
Leaving out something the insurer asked about, or getting it wrong, when you applied.
What it means for you: It can mean a claim is paid in part or not at all. Answer everything honestly and fully.
See also: Claim, Medical underwriting
Own occupation
With income protection, the policy pays if you can’t do your own job, not just any job.
What it means for you: The most generous definition there is. Worth checking for, especially in a skilled job.
See also: Income protection
Policyholder
The person who owns the policy and pays for it.
See also: Life assured
Pre-existing condition
A health condition you have, or have had, before you apply.
What it means for you: Tell the insurer about it. It may be covered at a normal price, cost more, or be excluded.
See also: Exclusions, Medical underwriting
Single life
A policy that covers one person.
See also: Joint life
Smoker status
Whether the insurer counts you as a smoker. Most count vaping and nicotine replacement too, and you’re usually a non-smoker after 12 months without nicotine.
What it means for you: Smokers pay more. Tell the truth: getting it wrong can stop a claim.
See also: Non-disclosure
Sum assured
The amount the policy pays out.
See also: Level term, Decreasing term
Term
How long the policy lasts. Term cover pays out only if you claim during it.
What it means for you: Match it to what it protects: the end of your mortgage, or your children growing up.
See also: Level term, Decreasing term
Terminal illness benefit
Paying the life cover early, if you’re diagnosed with an illness expected to end your life within 12 months. Most life policies include it.
Trust
A legal arrangement that holds the policy for the people you choose, so the payout goes to them directly.
What it means for you: Usually quicker for your family, and usually outside Inheritance Tax. Most insurers set one up for free.
See also: Beneficiary, Estate, Probate
Underwriting
How an insurer decides whether to cover you, on what terms and at what price.
See also: Medical underwriting
Whole of life
Cover that lasts for the rest of your life, so it always pays out in the end. It costs more than term cover.
See also: Term, Convertible term
Still puzzled?
Some words only make sense with your policy in front of you. Call us, and we’ll go through it with you.
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