Life Insurance Jargon Buster

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Life Insurance and Protection Products can be confusing at the best of times.

Here at Quick Quote Protect, we are here to give you the information to help you understand Life Insurance.

We try to be as jargon-free as possible, but sometimes there are no other options. Because of this, we have created a ‘one-stop shop’ for all your Jargon busting needs.

Life Assurance

This term is also known as ‘Life Insurance’. It provides certain levels of protection for your loved ones for if you die during the term of the policy.

Life Insurance

Also known as Life Assurance (see above).

Life Insurance Quotes

This is the initial estimated price of an insurance product offered to a customer.

Cover

This simply means the protection given by your insurance provider.

Critical Illness Cover

This policy provides a lump sum of money should the client be diagnosed with a Critical Illness during the length of their policy. It is also known as Critical Illness Insurance.

Terminal Illness Cover

See ‘Critical Illness Cover’ above. 

Terminal Illness Benefit

This is like Critical Illness cover, the difference is it provides a payout should the insurance holder be diagnosed with a Terminal Illness within the terms of the policy.

Reviewable Premium

When you take out Critical Illness cover, you can choose from two options reviewable premiums and guaranteed premiums. A reviewable premium means your policy is guaranteed for an introductory period and then reviewed on a regular basis after that. 

Total and Permanent Disability Cover

This type of Life Insurance Policy provides a payout should the policyholder become permanently disabled during the policy term. 

Level Term Assurance

This is one of the more basic forms of Life Insurance. It’s where the customer pays a premium for a certain length of time and the insurer pays a lump sum should they die during the policy term.

Decreasing Term Assurance

This type of Life Insurance policy decreases in value over time.  This type of policy is usually linked to mortgage repayments and can be known as ‘Mortgage Protection’. 

Mortgage Protection Assurance

See ‘Decreasing term Assurance’.

Premium

These can be paid monthly or annually. It’s the amount of money you pay an insurer for providing you with cover.

Retail Price Index (RPI)

This measures the change in the price of goods and services purchased by consumers for the purpose of consumption.

Indexation

The indexation option that some insurers offer allows policyholders to 'index link' the value of sum assured.  Every year the insurer will review UK inflation and the RPI (Retail Price Index) to gain an understanding of the value of the pound. 

The Insurer will assess the sum assured against these to ensure that the level of cover remains the same 'pro-rata value' in the future. 

Family Income Benefit

This provides a regular income to your family when you die. It can be taken out as a policy on its own or it can be added on to other life insurance cover. It’s also tax-free.

Income Protection

This protects your income should you become unable to work because of an accident or Illness.  Also known as Income Protection Insurance.

Trust

You can put your life insurance policy in a trust; this means that you may be able to avoid inheritance tax on the payout.

Whole of Life

This is known as ‘Permanent Life Insurance’ because you are covered until the time of your death – whenever this occurs.

Body Mass Index (BMI)

This is a statistical way of working out a person’s ideal healthy weight. This is done by comparing that person’s height and weight.

Accidental Death Benefit

This is an insurance policy that pays out a lump sum to your loved ones should you die as a result of an accident. It’s also tax-free (under current legislation)

Death In Service

This policy provides a lump sum of money should you die whilst working for your employer. It can be set up by the company you work for and usually pays out 3-4 times your annual salary.

Commonly this is part of a business insurance policy, but this can be added to some personal insurance policies.

Accident, Sickness and Unemployment Insurance

Also known as ‘ASU’, this policy provides you with a monthly sum of money should you become unable to work due to an accident, illness or redundancy.

Actuary

An actuary is someone who is qualified to work out the financial risk and impact. They can pass their findings on to insurance providers so that those providers can assess their own risks and how much they should charge their customers. 

Joint Life

This covers two people rather than one on one combined policy.

Joint Life First Death

If you have taken out a joint life insurance policy, ‘First Death’ means there will be a payout after the first person passes away.

Joint Life Second Death

This means there will be a payout after both people pass away rather than the first person.

General Practitioner Report

This is a document that provides details of your medical history and current health provided by your GP. It’s used by your insurance company to assess your health and ultimately your life insurance policy terms and conditions.

Life Insurance Smoker

Often different policy terms apply to people who smoke. Most insurers will ask if you have used tobacco products within a certain period which can have an impact on the cost of your policy.

Guaranteed Insurability Option

This is usually abbreviated to ‘GIO’ and allows you to increase the amount of cover you have without the need for any more medical information. 

In Force

This describes the status of your Life Insurance Policy. If it is in force, it means that your premiums are being paid and that you are protected and fully covered by the policy.

Insurable Interest

This is a life insurance policy that you take out for somebody else. You have to prove that the death of that person would impact you financially. This is usually something that people do for their partners for example.

Intestate

This refers to a person that has passed away without making a will. If this has happened, the government is responsible for distributing their estate/belongings. 

Lapsed Policy

If you don’t pay your full premium, your policy and the benefits that come with it will stop and may be terminated.

Policy Documents

These documents will be sent to you once you have taken out insurance. They will include the details of your policy schedule and policy terms and conditions. It is important you keep them safe.

Sum Assured

This is the amount of cover you are insured for.

Surrender

If you surrender your policy, it means you want to cancel it. There can be a charge for this and if there is cash value in your policy, the charge will be taken from that. 

Underwriter/Underwritten

An underwriter is a qualified professional who assesses the risks of an applicant. They will determine how much your premium is and how much the policy could pay out.

Waiver Of Premium

This can be offered as a policy add-on. It means that you may be able to continue with your life insurance policy without further premiums if you become unable to pay due to sickness, injury or unemployment. 

These are just some of main the terms associated with life insurance but if you need help understanding any others, why not get in touch?

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