Glossary of Insurance Terms

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Below is a glossary of some of the more common insurance terms you might see around this site and hear when talking to an insurance adviser. 

If you are looking for a more detail explanation on a insurance term or if you cannot find the information you are looking for feel free to contact us on 0800 567 7450

The Association of British Insurers set standards and guidance upon which our industry follows. When applying for Critical Illness cover, there are specific minimum standards of cover for conditions such as cancer, heart attack and stroke.

Insurers will often state how many of these minimum standards that their policy offers, plus additional details of any enhanced cover that they provide.

A short-term protection policy providing a monthly income for a period between 12 and 24 months in the event of illness.

A short-term protection policy providing a monthly income for a period between 12 and 24 months in the event of illness or redundancy.

An alternative name to ‘Accident, Sickness and Unemployment Cover’.

This is a person that you choose to receive the payout from a life insurance policy if you die. You choose this person in a document called a Trust or Beneficiary Nomination. 

This is a person or company of advisers, who help you to find the insurance products that you need, with the right insurer for you.

Cura are an advised insurance broker. This means that we take responsibility for the advice that we give to you.

A form of Life and/or Critical Illness Cover that provides protection for the business. For example protection for shareholders, key persons and business loans.

Identity verification procedures to reduce the risk of Money Laundering.

This is the reason for the insurance that you have set up. It is some form of financial support that you receive from an insurer, when you die, become critically ill or are unable to work due to your health.

An alternative name to ‘Policy Term’.

Critical illness cover pays out a cash lump sum of money, if you are diagnosed with a medical condition that is listed in the insurer’s claims set e.g. cancer, heart attack, stroke.

An alternative name to ‘Direct Debit Mandate’.

The refusal of an insurance provider to offer insurance to an individual.

A protection policy where the lump sum payable reduces over the term of your policy, paying out upon diagnosis of a specified critical illness.

A protection policy with a reducing sum assured over the policy term, paying out a lump sum to your family upon your death. This is a life insurance policy that is used to provide financial support to repay a capital and repayment mortgage or loan, if you die. The amount that you are covered for reduces over time, in a similar way to the mortgage.

The time period that you wait for until your Income Protection or Accident, Sickness and Unemployment Cover begins your monthly benefit payments.

The full details of the bank account that the insurance policy is to be paid from.

Due to occupation, medical history, foreign travel and/or pastimes you may have exclusions placed upon your policy for certain types of claims.

Income Protection for company directors that can be paid through a limited company.

A protection policy that provides a monthly income to your family in the event of your death. This policy is often active until your children are grown, or until your retirement age

These are paid to an adviser for their work. Advisers either set a fee for their services or are paid a commission from the insurer, and they must tell you which way that they work. Fees are usually a one-off payment by you, commission is paid by the insurer directly to the adviser.

Cura do not charge a fee for our services, we are instead paid a commission by the insurer, only if a policy starts.

The Financial Conduct Authority

This is the Financial Services Compensation Scheme and it means that if your insurer goes bust and you need to make a claim the FSCS will pay 100% compensation for life insurance, critical illness cover and income protection policies.

A policy that provides a sum of money to pay for a funeral, for example ‘Whole of Life’ Cover.

An alternative name for ‘Certificate of Verification of Identity’.

A long-term protection policy providing a monthly income when you are incapable of working due to your health. This payment can last anywhere from 1, 2, 5 years or all the way to your retirement.

A joint life insurance policy covers two lives. It is set up either as a first death of second death policy. First death policies are often used to cover mortgages and general family protection. Second death policies are usually used for inheritance tax protection.

The primary terms and conditions of your policy document, detailing the circumstances where you can and cannot make a claim.

A type of business protection that pays out to the company in the event of the death or critical illness of a ‘key person’.

A protection policy that pays a lump sum to yourself upon the diagnosis of a critical illness.

A protection policy that pays a tax free lump sum to your beneficiaries upon your death, or if included to yourself upon diagnosis of a terminal illness (a prognosis of 12 months or less). This is a life insurance policy that has the amount of cover from start to finish. If the policy starts at £250,000, it will still be £250,000 in 20 years. It is often used to for general family protection and for Interest Only mortgages.

An alternative name to ‘Level Life Insurance’.

An alternative name to ‘Life Insurance’.

A protection policy that places Insurance of a specified sum assured, or policy benefit, upon your life in the event of your death during a set period of time.

The medical history of the person applying for insurance.

An alternative name to ‘Decreasing Life Insurance’.

When an insurance applicant does not disclose their full medical history, family history, pastimes, smoker status, occupation, BMI. 

This is when an insurance application is accepted at rated terms. This can include health exclusions, premium increases, a maximum sum assured and/or a maximum policy term.

This is when an insurance application is accepted at standard terms with a base premium for the cover.

Occupations fall into classes 1, 2, 3 or 4, depending upon the perceived risk of the regular working tasks with the job role. This is usually used to price Income Protection policies.

A protection policy that is not medically underwritten and provides a lump sum benefit to your loved ones on the event of your death. These often do not pay in the first 1-2 years of cover.

The application document for an insurance policy.

An alternative name to ‘Sum Assured’.

The official certificate of your insurance policy. You or your family will require the original of this at the point of claim.

The provisional policy summary that outlines premium, cover type, term and level of cover.

An alternative name to ‘Policy Document’.

This is how long your insurance policy lasts for. It is quite common for the insurance to last the same length of time as your mortgage, until your children reach an age of independence or until your retirement age.

An alternative name to ‘Non-Standard Terms’.

If you have smoked within the last 12 months you are classed as a smoker. You may also be required to declare the use of nicotine replacement products used within the last 12 months.

An alternative to ‘Non-Standard Terms’.

An alternative to ‘Normal Terms’.

This is the amount of money that the insurance policy covers you for. Life insurance and critical illness policies will usually be one big payment e.g. £220,000. Income protection will be regular monthly payments e.g. £1,250 per month. 

An alternative name to ‘Life Insurance’.

A legal document that names Trustees to allocate the funds of your insurance policy to your intended beneficiaries.

The individuals named within a Trust who are entrusted to allocate the funds from any insurance claims to the intended Beneficiaries.

This person works on behalf of the insurance company and decides who can have insurance and what price it’s going to be, if the application is not automatically accepted by the insurer’s systems. They make this decision based upon a person’s health, occupation and lifestyle choices.

The process where an insurance provider considers the acceptance terms that they can offer on an Insurance application.

A protection policy providing a short-term monthly benefit in the event of redundancy. This type of policy has currently no longer available for new applications.

These are non-contractual extras that are offered with some insurance policies and can offer access to services such as Square Health, Red Arc Nurses, Best Doctors, Teledoc and more.

A protection policy that provides a lump sum payout upon your death, at any age.

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