|
Term
|
Definition
|
Source
|
| Accident
& Health |
Class of insurance
under the Insurance Companies Act including two main types
of business personal accident and medical expenses. Personal
accident policies will pay a lump sum or weekly benefits in
the event of accidental death or injury. Medical expenses
insurance will pay the costs of treatment for acute conditions. |
ABI
|
| Act
of God |
An event, which
is not the fault of any individual. Acts of God can be insurable. |
ABI
|
| Actuary
|
A professional
person qualified to apply mathematical principles to solving
longterm financial problems, primarily in connection with
pensions, life insurance and investment. |
ABI
|
| Additional
Voluntary Contributions |
Additional contributions
made voluntarily by pension scheme members to boost their
eventual retirement income. |
ABI
|
| Agent |
A person who acts
for one or small number of companies, particularly in selling
insurance. |
ABI
|
| All
Risks |
Wider cover than
given under a normal property insurance policy. Covers any
loss or damage apart from exclusions stated in the policy. |
ABI
|
| Annual
Premium |
See "Yearly Premium". |
ABI
|
| Annuity |
An arrangement
by which insurance company pays someone a regular income,
usually for life, in return for a lump sum premium. |
ABI
|
| Assistance |
The provision
by an insurer or a service company of immediate practical
help to resolve an insured problem (e.g. arranging medical
treatment abroad/organising a roadside repair). |
ABI
|
| Assurance |
See "Insurance". |
ABI
|
| AVCs |
See "Additional
Voluntary Contributions". |
ABI
|
| Average |
A policy condition
that requires the amount of a claim payment to be reduced
proportionately if the policyholder has not insured his property
for the full amount of its value or replacement cost. |
ABI
|
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|
| Benefit |
The money paid
by the life insurance company when a claim is made. |
ABI
|
| Betterment |
The principle
by which a claimant has to make a payment towards the cost
of the claim because his or her property will be in better
condition after repair than before the loss or damage occurred. |
ABI
|
| Bonus |
Amount of money
added to the sum insured of a "withprofits" policy. It may
be added during the term of the policy (reversionary) or when
the policy matures (terminal), or both. |
ABI
|
| Broker |
An "intermediary"
registered with the Insurance Brokers Registration Council
(IBRC) under the Insurance Brokers (Registration) Act 1977. |
ABI
|
| Buildings
Insurance |
A policy covering
the structure of a house or other building against a number
of different risks. |
ABI
|
| Business
Interruption |
See "Consequential
Loss". |
ABI
|
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|
| Capacity |
Capacity is the
measure of an insurer's ability to write new business. It
depends on the maintenance of adequate reserves. |
ABI
|
| Captive
Insurer |
An insurance company
set up by an industrial or commercial company, for example
an oil company, to provide insurance to that company only. |
ABI
|
| Certificate |
Document issued
by insurers as evidence that insurance is in force to meet
the requirements of the law (notably for motor and employers'
liability insurance). |
ABI
|
| Claim |
When a policyholder
or beneficiary seeks payment or settlement under the terms
of a policy. |
ABI
|
| Co-Insurance |
An arrangement
whereby a number of separate insurance companies share in
the cover of one particular risk. |
ABI
|
| Collective
Life Policies |
Group life policies
that do not relate to schemes established by an employer for
the benefit of employees. Commonly used by credit companies
to cover loans made. |
ABI
|
| Commercial
Business |
Any policy taken
out by a company, partnership or organisation to cover their
business. Would include fleet policies for motor business. |
ABI
|
| Commission |
Money paid by
an insurance company to a broker/ independent intermediary/agent
for selling policies. |
ABI
|
| Company
Representative |
An agent appointed
by a life insurance company who is authorised to sell only
that company's products. |
ABI
|
| Composite
Insurer |
A company which
transacts both life and non-life insurance. |
ABI
|
| Comprehensive
Insurance |
A policy covering
a number of types of loss or damage. The name is used mainly
in motor insurance. |
ABI
|
| Condition |
Part of a policy
stating that certain rules must be followed, for example,
the duty to take reasonable care to protect property, or to
report claims to the insurance company promptly. |
ABI
|
| Consequential
Loss |
Insurance covering
the loss of profits of a business and certain other costs
resulting from fire or other insured event (also known as
Business Interruption). |
ABI
|
| Contents
Policy |
A policy covering
the contents of a home or other building against a number
of different risks. |
ABI
|
| Contingent
Annuities |
Annuities paid
if a certain event (events) happen. |
ABI
|
| Contribution |
The principle
of contribution applies where a risk is insured on more than
one insurance policy (for example on a travel and household
policy), and the two insurers concerned may share the cost
of any claim. |
ABI
|
| Convertible
Term |
A term insurance
policy which gives the policyholder an option to convert the
policy to a whole life or endowment insurance without giving
further evidence of health. |
ABI
|
| Cover
Note |
A document giving
temporary evidence of cover while the policy and certificate
are being prepared. |
ABI
|
| Critical
Illness Insurance |
Pays out a lump
sum on the diagnosis of certain lifethreatening illnesses
specified in the policy. |
ABI
|
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|
| Decreasing
Term |
A term insurance
policy, in which the sum insured is reduced by a fixed amount
each year, decreasing to nil at the end of the term. |
ABI
|
| Deferred
Annuities |
Annuities that
commence after a specified number of years or at a specified
age (usually on retirement), usually continuing through the
policyholder's life. |
ABI
|
| Direct
Sources of Business |
Insurance business
where no intermediary is involved, including marketing sources
(e.g. newspaper advertisements), telephone sales and business
through branch offices. |
ABI
|
| Disability
Benefit |
Certain life policies
will pay out if the policyholder becomes permanently disabled.
No further benefit is paid on the policyholder's subsequent
death. (See also "Critical Illness Insurance".) |
ABI
|
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|
| Employers'
Liability |
A compulsory class
of insurance which most employers must have to cover them
against claims by employees who are injured at work. |
ABI
|
| Endorsement |
A written amendment
to an insurance policy which becomes part of it. |
ABI
|
| Endowment
Policy |
A life insurance
policy which pays a sum of money after an agreed period of
time, or on the death of the policyholder, whichever happens
first. |
ABI
|
| Ex
Gratia Payment |
Any payment made
by an insurance company which is not strictly necessary, under
the terms of the policy. |
ABI
|
| Excess |
An amount of
money which the policyholder has to pay towards the cost of
a claim, for example, the first £50. |
ABI
|
| Excess
of Loss Policy |
Covers claims
costs exceeding an amount specified in the policy |
ABI
|
| Exclusion |
Specified property,
person or event which the policy does not cover. |
ABI
|
| Export
Credit Insurance |
Provides cover
for exporters' losses arising from nonpayment. |
ABI
|
| Exposure |
Whether, and the
extent to which, an insurer is subject to losses arising from
a particular risk. |
ABI
|
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|
| Family
Income Policy |
A type of term
insurance policy which, on the death of the life insured,
pays benefits by instalments until the end of a specified
period. |
ABI
|
| Fatal
Accident Benefit |
Certain life policies
will make an additional payment over and above the sum insured
if the policyholder dies as a result of an accident. |
ABI
|
| Fidelity
Guarantee Policy |
A policy covering
the risk of dishonesty on the part of an employee who holds
a position of trust, for example, a wages clerk. |
ABI
|
| Freestanding
AVCs |
Additional contributions
paid voluntarily into personal pension policies by employees
in occupational schemes who wish to top up their pensions,
but keep the money separate from the occupational scheme. |
ABI
|
| Friendly
Society |
Similar to a mutual
insurance company. A friendly society is owned by and established
for the benefit of its members, mainly through the provision
of life insurance and sickness benefit. |
ABI
|
| Fully
Contracted Out |
Pension policy
where the only premium received is the DSS rebate. |
ABI
|
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|
| General
Insurance |
Insurance of (non
life) risks where the policy offers cover for a limited period,
usually one year. |
ABI
|
| General
Liability |
Covers the policyholder's
legal liability for injury, property damage or financial loss
caused to others. |
ABI
|
| Green
Card |
A document issued
to policyholders motoring abroad as evidence that they have
the minimum insurance cover required by the law of the country
visited. Not essential for European travel, because minimum
legal cover is automatically included in UK policies. |
ABI
|
| Group
Life |
A term which relates
to the provision of lump sum death in service benefits for
groups of employees. |
ABI
|
| Group
Permanent Health Insurance |
Policies arranged
by employers for their employees, providing for the payment
of income during a period of incapacity due to ill health
or accident. The benefit is usually payable until retirement. |
ABI
|
| Group
Personal Pensions |
An arrangement
made for the employees of a particular employer to participate
in a personal pension scheme on a group basis. This is not
a separate, or occupational, pension scheme, but merely a
collecting arrangement. |
ABI
|
| Group
Sponsored Schemes |
Scheme set up
by employers for the benefit of their employees to provide
life cover or a pension on retiring, or both. |
ABI
|
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|
| Holiday
Insurance |
A policy covering
certain risks connected with holidays. Usually includes cover
for the costs of unavoidable cancellation, personal accident,
medical treatment abroad and lost or stolen luggage. |
ABI
|
| Home
Foreign |
Home foreign policies
are issued to provide insurance where the business is written
in one country, although the risk is actually situated abroad. |
ABI
|
| Home
Service |
The provision
and servicing of life and nonlife insurance by company agents
calling regularly at policyholders' homes. (See also Industrial
Branch) |
ABI
|
| Household
Business |
Includes insurance
of both structure and contents, along with any "add ons" included
within the policy such as legal expenses. |
ABI
|
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|
| Immediate
Annuities |
Annuities which
commence immediately, or shortly after, purchase. |
ABI
|
| Impaired
Lives Register |
Lists individuals
who have been refused, or charged more for, life insurance,
for medical reasons. |
ABI
|
| Increasing
Term |
A term insurance
policy in which the sum insured increases each year by a fixed
percentage of the original sum insured. Designed to increase
policyholders' life cover as their earnings increase. |
ABI
|
| Indemnity |
The principle
by which policyholders are put in the same financial position
after a loss as they were immediately before it. |
ABI
|
| Independent
Financial Adviser |
A broker or other
intermediary authorised to sell or advise on the policies
of any life insurance company, as well as other financial
products (e.g. unit trusts). |
ABI
|
| Indexlinked |
Insurance where
the amount of cover changes automatically in line with an
index. Examples are the cost of rebuilding a house or replacing
its contents. |
ABI
|
| Individual
Permanent Health Insurance |
Policies arranged
by an individual providing for the payment of income during
a period of incapacity due to ill health or accident. The
benefit is paid to the policyholder until he/she is able to
return to work, or until retirement. |
ABI
|
| Individual
Policy |
Insurance taken
out by an individual on his or her own life or by an individual
or legal person on the life of another. |
ABI
|
| Industrial
Branch |
Life insurance
where premiums are collected by an insurance company agent
at the policyholder's home, at intervals of less than two
months, often for a relatively small amount. Whole life and
endowment contracts are the only types of business written
in the industrial branch. |
ABI
|
| Insurable
Interest |
A principle of
insurance which states that someone may only take out insurance
if he/she stands to suffer a financial loss from an event
covered by a policy. Individuals have an unlimited insurable
interest in their own life and that of their spouse. |
ABI
|
| Insurance |
A service that
offers financial compensation for something that may or may
not happen. Originally the term assurance was generally used
for life insurance, but now the two words are interchangeable. |
ABI
|
| Insurance
Company |
A company that
takes on risks under the policies it sells in return for the
payment of premiums. Companies may be "mutual" (owned by the
policyholders) or "proprietary" (owned by the shareholders). |
ABI
|
| Insurance
Premium Tax |
A tax imposed
on most non life insurance premiums. |
ABI
|
| Insured |
A person covered
by an insurance policy. |
ABI
|
| Insurer |
See "Insurance
Company"/"Lloyd's". |
ABI
|
| Intermediary |
Person or organisation
that offers advice and arranges policies for clients. Intermediaries
may be either "tied" representing one company in the case
of life business or a limited number of companies for general
business, or "independent" with no limit on the number of
companies with which they can deal. |
ABI
|
| Investment |
The act of allowing
someone else to have use of your money in return for payment
of interest and/or a share in profits that may be made. |
ABI
|
| Investment
Income |
Income earned
on the money held by insurers on behalf of policyholders,
having been received in premiums but not yet paid out on claims. |
ABI
|
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| Key
Person Insurance |
In the event of
the death of a key employee on whom the business depends for
its continued profitability, or even existence, this type
of cover provides a sum of money which can be used to pay
for the cost of finding and training a successor, and to compensate
for reduced profitability. |
ABI
|
| Knock
for Knock |
An agreement whereby
each motor insurer paid for damage to its policyholder's car,
regardless of which driver was to blame, providing the policy
covered damage to the policyholder's own car. Currently rarely
applies. |
ABI
|
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|
| Legal
Expenses Insurance |
Covers the cost
of legal proceedings in circumstances defined in the policy. |
ABI
|
| Level
Premium |
The same premium
paid throughout the term of a policy. |
ABI
|
| Liability |
Legal responsibility
for causing loss to someone else by injuring them or damaging
their property. |
ABI
|
| Life
Assurance Premium Relief |
Tax relief on
life insurance premiums. Applies only to policies taken out
before 14 March 1984. |
ABI
|
| Life
Expectancy |
The average length
of time people are likely to live, taking into account such
factors as their present age, health and occupation. |
ABI
|
| Life
Fund |
The pool of money,
maintained by an insurance company, into which all its life
insurance policyholders' premiums are paid and out of which
all claims are paid. |
ABI
|
| Linked |
Describes any
savings product where the saver's money buys, or is deemed
to buy, "units" in an investment fund and the value of the
saver's fund is thus linked to the value of the units. |
ABI
|
| Lloyd's
Members |
Individuals on
whose behalf Lloyd's policies are issued. They pledge all
their personal wealth to pay losses. Corporate members were
also introduced in 1994. |
ABI
|
| Lloyd's
of London |
An insurance market
organised into syndicates, which underwrites most types of
policy. |
ABI
|
| Loading |
The extent to
which an individual is charged more than the "average" for
his/her insurance. |
ABI
|
| Long
Term Care Insurance |
Provides for the
cost of long term care. Intended mainly to cover the costs
of elderly people being looked after either at home or in
residential care. |
ABI
|
| Long
Term Insurance |
Insurance of risks
where cover extends over a period of more than a year, and
where predetermined premiums are often paid on a regular basis
over a long period. Frequently, these insurance contracts
are intended to provide an investment vehicle as well as risk
insurance, e.g. endowment policies |
ABI
|
| Loss
Adjuster |
A person, independent
of an insurance company but engaged and paid by it, who checks
that a claim is covered and negotiates with the policyholder
the amount payable for a claim. |
ABI
|
| Loss
Assessor |
A person who negotiates
claims on behalf of policyholders. |
ABI
|
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| Managed
Funds |
Schemes by which
the pension funds for a group of employees buy units in various
funds managed by an insurance company. |
ABI
|
| Marine
Aviation and Transport |
The class of insurance
which embraces damage to the hull and cargo of ships and aeroplanes,
and liability for property damage, injury and death to passengers
and others. |
ABI
|
| Maturity |
An agreed date
when an endowment policy comes to an end, and the sum insured
plus any bonuses earned is payable. |
ABI
|
| Mechanical
Breakdown Insurance |
Covers against
the cost of breakdowns of household appliances or motor vehicles. |
ABI
|
| Mortgage
Indemnity Insurance |
Provides cover
for a mortgage lender for any loss they might suffer as a
result of a property on which they provided a loan being sold
for less than the amount of the loan. |
ABI
|
| Mortgage
Payment Protection Policy |
Cover for monthly
mortgage repayments in the event of accident, sickness or
unemployment |
ABI
|
| Mortgage
Protection Policy |
A life insurance
policy which covers the outstanding amount of mortgage if
the policyholder dies before the loan is repaid. |
ABI
|
| Mortgage
Related Policies |
Policies used
both to provide protection for a mortgage loan and as a savings
vehicle to repay the loan at maturity. |
ABI
|
| Motor
Insurance |
Covers legal liabilities
arising from the use of a motor vehicle. Comprehensive policies
also cover damage to the vehicle. |
ABI
|
| Mutual |
An insurance company
which is owned by its policyholders. |
ABI
|
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| New
For Old |
Cover for property
where an item lost or destroyed would be replaced with a brand
new one, with no deduction for wear and tear. Also called
"replacement as new". |
ABI
|
| No
Claim Discount (or Bonus) |
A reduction in
a renewal premium to reflect a claim free record; used most
often in motor insurance. |
ABI
|
| Non
Motor |
Non motor includes
all business written under the accident and health, general
liability, pecuniary loss and property damage classes. Also
known as Fire and Accident. |
ABI
|
| Not
Contracted Out |
Someone who is
not contracted out of the State Earnings Related Pension Scheme
(SERPS). |
ABI
|
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|
| Occupational
Pensions |
Pension scheme
provided by an employer for its employees. Contributions will
be paid by the employer and often by employees also. Schemes
may be either "defined benefit" where the pension entitlement
of an employee is determined by, for example, number of years'
service and salary; or "defined contribution" whereby an employee's
pension entitlement depends only on how much has been paid
into the scheme in the form of contributions on his/her account,
and the value at retirement of the sum thus accumulated. Employers
may delegate responsibility for the running of their pension
scheme to an insurance company. |
ABI
|
| Ordinary
Branch |
Life insurance
and pensions business where the premiums are usually paid
through the banking system by cheque, standing order or direct
debit. |
ABI
|
| Out
go |
The total expenditure
of an insurer in relation to any class of insurance business,
comprising the cost of claims and the insurer's business expenses,
including any commission paid to sales staff, brokers or intermediaries. |
ABI
|
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|
| Partially
Contracted Out |
Pension policy
which receives both a premium from the policyholder and a
DSS rebate. |
ABI
|
| Pecuniary
Loss |
Covers any financial
loss which may have been incurred, e.g. business interruption
and mortgage indemnity policies. |
ABI
|
| Pension |
A regular income
paid to a person when he/she retires from work. An insured
pension is paid by a life company from funds built up from
contributions paid while working. |
ABI
|
| Pension
Annuities |
Annuities which
become payable on the vesting of pension policies. |
ABI
|
| Permanent
Health Insurance |
A policy which
pays an income for as long as the policyholder is unable to
work as a result of accident or illness. The benefit is usually
payable until retirement date. |
ABI
|
| Persistency |
The rate at which
policyholders keep their policies with a life insurer. |
ABI
|
| Personal
Accident Insurance |
A policy which
pays specified amounts of money if the policyholder is injured
in an accident. Depending on the type of disability, the payments
may be made weekly, for a set period, or as a lump sum. |
ABI
|
| Personal
Lines of Business |
Any policy taken
out by an individual in his/her private capacity. |
ABI
|
| Personal
Pensions |
Contracts under
which payments are made to an insurance company by an individual
policyholder during his/her working life, in return for a
regular income, to be paid after retirement. |
ABI
|
| Pluvius
Insurance |
Covers against
losses arising as a result of bad weather. |
ABI
|
| Policy
|
The document providing
full details of the contract between the insurer and the policyholder. |
ABI
|
| Policyholder |
Person or organisation
to whom the insurer issues the policy. Normally the person
to whom benefits are payable. |
ABI
|
| Pool
Re |
A Government backed
reinsurance scheme which meets the cost of claims over £100,000
occurring as a result of terrorist attacks in Great Britain. |
ABI
|
| Premium |
The amount paid
by the policyholder for insurance. |
ABI
|
| Private
Medical Insurance |
A policy which
covers the cost of private medical treatment. |
ABI
|
| Product
Liability Policy |
Protects businesses
against liability claims resulting from defects in the products
they sell. |
ABI
|
| Professional
Indemnity Insurance |
Protects professionals
against liability claims resulting from negligent work. |
ABI
|
| Property
Damage |
Property policies
cover specified property which may be damaged or destroyed
by events or perils, such as fire, storm or theft. |
ABI
|
| Proposal
Form |
An application
for insurance cover. |
ABI
|
| Proposer |
Person or company
who applies to take out insurance. |
ABI
|
| Public
Liability Policy |
Covers legal liability
for injury or damage caused to others. |
ABI
|
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| Rate |
The price of insurance,
usually expressed as the cost of a unit of cover, e.g. £x
per £1,000. |
ABI
|
| Reinsurance |
Reinsurance is
the cover insurance companies can purchase to protect themselves
against large losses. |
ABI
|
| Renewable
Single Premium Policy |
Policies under
which additional premiums can be paid later to provide increased
benefits; these are at the policyholder's discretion and are
noncontractual. |
ABI
|
| Renewable
Term |
A term insurance
policy which gives the policyholder the option, after a specified
period, to take out a further term policy without the need
for any further evidence of health, providing the policy will
not continue beyond age 65. |
ABI
|
| Renewal
Notice |
Notice sent to
the policyholder inviting him/her to renew a policy for a
further period and stating the premium payable. |
ABI
|
| Replacement
as New |
See "NewforOld". |
ABI
|
| Reversionary
Bonus |
A bonus which
is added to the policyholder's investment during the course
of the policy. |
ABI
|
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|
| Savings
Policies |
Policies used
as a savings vehicle. |
ABI
|
| Single
Premium Policy |
A long term insurance
policy where the premium is paid in a single lump sum. |
ABI
|
| Solvency
Margin |
The solvency margin
is the excess of the reserves the insurance company holds
over its liabilities. |
ABI
|
| Subrogation |
The right of an
insurer who has indemnified a policyholder to take over any
legal rights the policyholder may have had in respect of that
particular claim. |
ABI
|
| Sum
Insured |
The amount for
which property is insured, and the maximum amount which the
insurance company will pay for any claim. In life insurance,
the amount which is guaranteed to be paid and to which bonuses
may be added. |
ABI
|
| Surrender
Value |
The amount of
money paid to the policyholder when certain types of life
policy are discontinued before the full benefit becomes payable.
Not all life policies have a surrender value. |
ABI
|
| Syndicate |
Group of underwriters
at Lloyd's. |
ABI
|
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|
| Temporary
Policy |
See "Term Policy". |
ABI
|
| Term
Policy |
Life cover provided
for a specified number of years. The insurer only pays out
if the policyholder dies within this time. |
ABI
|
| Terminal
Bonus |
A bonus paid on
certain life insurance policies either at maturity, or if
a claim is made. |
ABI
|
| Third
Party |
Someone involved
in a claim who is neither the policyholder nor the insurer. |
ABI
|
| Trading
Result |
An insurer's overall
profit/loss calculated as the underwriting result plus investment
income. |
ABI
|
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|
| Underinsurance |
When the sum insured
is not enough to cover the maximum possible loss or damage. |
ABI
|
| Underwriter |
Person who decides
whether to accept a risk and calculates the premium to be
charged. |
ABI
|
| Uninsurable
Risk |
A risk where loss
is either inevitable (e.g. a house already on fire or a person
suffering from a terminal illness). Also applies where damage
is gradual e.g. rust and corrosion. |
ABI
|
| Unitised
With Profit |
Contracts where
premiums are invested in units, either in the withprofits
fund or in linked funds or in a mix of both. |
ABI
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| UnitLinked |
See "Linked". |
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| Utmost
Good Faith |
The principle
of insurance which requires proposers to give all relevant
information to the insurer. |
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| Waiver
of Premium |
An optional extra
on a life policy which means that the insurance company will
pay the premiums if the policyholder is unable to because
of illness or injury. |
ABI
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| Warranty
Insurance |
This type of insurance
provides cover against the cost of repairs to broken down
household appliances. |
ABI
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| Whole
Life Policy |
A policy where
premiums are paid for the rest of an individual's life, or
up to a specified advanced age, and benefit is paid on the
death of the person insured, whenever that occurs. |
ABI
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| With
Profit Bonds |
A single premium
policy where a lump sum is paid into a with profits fund made
up of investments like company shares, fixed interest securities,
commercial property and money. |
ABI
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| Write
Off |
A damaged vehicle
which is not repairable, or one which would cost more to repair
than the car was worth before the damage occurred. Also known
as a "total loss". |
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| Yearly
Premium |
Recurring premiums
paid over the term of the policy, at intervals specified in
the policy. |
ABI
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