Convertible Term
Life assurance which pays out if you die within
the period of protection, but gives you the option to convert to
an endowment or whole-of-life policy. <back>
Endowment
An endowment policy combines savings and life assurance
cover. The investment element is not guaranteed but the life assurance
will pay you a fixed amount if you die during the term of the policy. <back>
Family Income Benefit
Life assurance that pays out a regular income
rather than a lump sum, if you die within the term. The income is
paid until the term expires. <back>
Life Assurance
An assurance policy that pays a sum of money if
you die during the term of the policy and may also include a savings
element. <back>
Level Term Assurance
The simplest form of life assurance, it pays
out if you die during the term of protection. <back>
Maturity
The word used to describe the date, other than when a
claim is made, on which a contract taken out for a specific length
of time becomes payable by the product provider. <back>
Premium
The amount paid by the policyholder for life assurance. <back>
Renewable Term Assurance
Life assurance which pays out if you
die within the period of protection, but which gives you the option
to renew the cover at the end of the term. <back>
Sum Assured
The amount the policy will pay out in the event of
death before the end of the policy term. <back>
Surrender
Where you cancel an investment policy including a life
assurance policy with an investment or savings element. You may receive
a payout, which can be less than paid in, due to the impact of charges.
In some cases there will be no surrender value at all. <back>
Terminal Illness Benefit
Can be added to some policies to effectively
accelerate the payment of a death benefit were you to be diagnosed
as having a terminal illness. <back>
Term
Length of time during which the life assurance policy will
pay out in the event of you dying. When the term has expired you
are no longer insured and there would be no payment were you to die. <back>
Unit Linked
Your contributions buy units in the selected fund.
The value of the units depends on the underlying assets in the fund.
Consequently the value of your fund can go down or up. There is a
wide range of funds to choose from: some are relatively low risk
and others can be very speculative. <back>
Unit Linked Endowment
A fixed term savings plan with a level of
life cover. Your savings go into an underlying fund of investments
and the eventual return you get depends on the performance of these
investments. <back>
Whole-of-Life Policy
As the name suggests, can provide life cover
without imposing a limited term. The level of life cover chosen will
be paid out on death of the life assured whenever it occurs, as long
as the policy is in force at the time of death. <back>
With Profit
At the end of each year the company declares the reversionary
bonuses (also known as 'regular' or 'annual'). These bonuses
are added
to the value of the fund and once added, cannot be taken away -
although the product provider will usually reserve the right to apply
a 'Market Value Adjuster'. Reversionary bonuses are guaranteed
to be
paid in
full on the contractual maturity date. A Market Value Adjuster
(also known as 'Market Level Adjuster' or 'Market Value Reduction')
is
a type of penalty applied on early encashment. It is usually
applied when the stock market is falling or fluctuating rapidly.
The idea
is to ensure the surrender value received is not unrealistic
when compared with the underlying assets of the fund. A further
bonus
may be paid on the contractual maturity date or on a death claim.
This is called the 'terminal' or 'final' bonus. A factsheet (pdf
file, 105kb) on with profit policies can be found on the FSA
Consumer Help website. <back>
Hedgelands Financial Services Ltd, Hedgelands, Abbotskerswell, Newton
Abbot, TQ12 5PW
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Telephone
0845
165 1280
General Insurance
0845 165 1281
Fax
01626 332622
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