Glossary of Insurance Terms
If you are confused about your insurance policy then our glossary of terms should help you to identify which policy would best suit your needs.
If you would prefer to speak to an advisor, then call us on 0845 0945 474 or alternatively fill in the application form and we will get back to you.
Critical Illness Cover (CIC)
This type of policy is payable upon diagnosis of critical illness and is non-dependent upon the level or speed of recovery.
Income Protection (IP)
This policy protects your loss of income due to ill health. If you became ill and could not work this policy would protect you until either you were able to return to work, you retired, you died or the policy expired.
Family Income Benefit (FIB)
This policy provides an annual income – tax free, instead of a lump sum payout. Initially, a term is specified for the policy.
Trust
If, after your death, you wish for your life insurance proceeds to be received by your dependants then a trust is important.
Level Term Assurance (LTA)
This policy pays out a fixed amount if the claimant dies within the policy term.
Increasing Term Assurance (ITA)
Increasing Term Assurance increases yearly without necessitating medicals. This should be considered as an alternative alongside Level Term Assurance if you require additional cover in line with income increases and inflation.
Mortgage Protection Assurance (MPA)
Mortgage Protection Assurance is life cover where the lump sum reduces relative to your outstanding mortgage balance.
Decreasing Term Assurance (DTA)
This is similar to Mortgage Protection Assurance, although the cover is reduced yearly at a fixed rate instead of matching a mortgage, which normally reduces slower in the early years.
Renewable Term Assurance (RTA)
Normally a short period of cover, typically 5 – 10 years, this policy does not require medical underwriting for it to be renewed.
Covertible Term Assurance (CTA)
Covertible Term Assurance (CTA) is level term life cover with an additional option which allows you to change to a different policy, such as a Whole of life policy, at a later date.
Whole of Life (WOL)
This complete life cover is available either as an investment or as a guaranteed rate, non-investment policy.
Terminal Illness Benefit (TIB)
This benefit can be claimed if you are diagnosed with less than a year to live. Often included with life insurance.
Accident, Sickness and Unemployment (ASU) - also known as Mortgage Payment Protection Insurance (MPPI)
This benefit covers your monthly mortgage payments as well as additional outgoings in the event of unemployment or illness, normally for up to a year.
Waiver of Premium
This covers the cost of premiums during periods of illness and/or unemployment.
Total and Permanent Disability (TPD)
This is included in most critical illness policies and covers you if there is no prospect of you making a recovery in the long term.
Guaranteed and Reviewable Premiums
Guaranteed rates remain the same throughout the policy term. Reviewable rates can be reviewed at the insurer’s discretion. This is normally after the first 5 years.
Indexation
Policies can be linked to inflation where premiums and benefits increase annually.
