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Glossary of Insurance Terms

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We have created a glossary of insurance terms to help you understand some common words, terms and acronyms used in the insurance industry:

 

A

  • Accelerated or additional cover (CIC) – accelerated CIC means if a claim was paid the CIC amount would deduct from the life insurance policy, additional CIC means the life insurance element of the policy isn’t affected

B

  • Beneficiary – the person who will receive the pay out from a policy when placed into trust
  • Broker – a licensed representative who sells insurance policies on behalf of other companies, usually acting on behalf of the customer

C

  • CIC – critical illness cover, pays out if you are diagnosed with a critical illness as long as it’s covered in the policy
  • Cotinine test – a test to see if nicotine is present in a client’s system

D

  • Decreasing/mortgage cover – a type of life cover where the cover amount decreases annually, usually used for mortgage cover and decreases at the same rate the mortgage is paid off
  • Deferment period – (relating to IP) the period of time a client can last without the monthly income protection benefit being received

E

  • Exclusions – specific conditions/activities that are not covered by your policy

F

  • FIB – family income benefit

G

  • GPR – General practitioner (GP) report

H

I

  • IP – income protection

J

K

  • Key person insurance – an insurance policy for the life of an important person within a company

L

  • Level cover – a type of life cover where the cover amount stays the same throughout the duration of the policy
  • LI – life insurance
  • Lump sum – the amount of cover (£’s) that is paid out in one go when a policy pays out

M

  • Mini screen – a type of medical exam that insurers may ask for, a medical professional (usually a nurse) will measure your height, weight, waist size and other various medical aspects and give this information to the insurer

N

  • Non-smoker – anyone who doesn’t smoke, or who hasn’t smoked for 12 months or more consecutively

O

  • On risk – the policy is live, your life cover is active

P

  • Per mille loading – a way of insurers increasing someone’s premium due to the risk they present them, instead of it increasing the premium permanently, this can be used to increase the premiums for the first 5 years for example
  • Percentage loading – a way of insurers increasing someone’s premium due to the risk they present them, e.g. 150% loading would be the standard rates plus 50%
  • PMI – private medical insurance, used to cover your private medical fees
  • Policy – the written document issued by an insurance company to a policy owner, a life insurance contract between the insurance company and the customer
  • Premium – cost of policy, usually per month, but can be other lengths of time e.g. annually

Q

  • Quote – an estimated premium for a person’s application, based on term length, cover amount and personal circumstances

R

  • Relevant life – a type of insurance that allows employers to offer death-in-service benefit to their employees

S

  • Settlor – a person who currently owns the policy and wants to set up the trust, transferring legal ownership to the trustees, the settlor still remains responsible for paying for the policy
  • Sum assured – how much cover your policy covers you for

T

  • Term – length of the policy (years)
  • TGPR – targeted general practitioner (GP) report – a targeted GP report which specifies upon a specific condition or medical issue, instead of just the full medical history
  • Total permanent disability – a type of insurance policy that will pay out if you suffer an accident or medical condition that leaves you permanently disabled and therefore unable to work
  • Travel insurance – a type of insurance policy that will cover you for a period of which you are traveling/out of your own country
  • Trust – an additional option to your policy where you can specify who your beneficiaries are, and who you trust to act upon your wishes, using trust means that the money paid out is not part of your estate, avoiding inheritance tax and increasing the amount of money passed on to your loved ones
  • Trustee – someone who you trust to ensure that the sum of money intended for the beneficiary is given to them as stated in the policy

U

V

W

  • Waiver of premium – a provision that allows the insured person to stop paying their premiums due to a certain event that has lasted a particular length of time i.e. stop paying for income protection when you are off work and claiming the policy benefit
  • WOL – whole of life, an insurance product that will cover you for your whole life until you pass away

X

Y

Z

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