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Absolute owner
This is the only owner of an item such as a building, vehicle or a piece of equipment.
Accidental damage
Accidental death
A death caused by an unexpected or unplanned event or incident.
Accidental death benefit
Some life policies will make an additional payment, over and above the original sum insured, if the policyholder dies as a result of an accident.
To build up or accumulate.
Act of God



A professional person who is qualified to calculate risks and probabilities relating to insurance and pensions.
An additional piece of information added on to a policy.
Additional premium
A written statement sworn to be true in front of a third party, such as a solicitor.
Someone who acts as a third party to help customers buy insurance or providers sell insurance.
Aggregate limit of indemnity
Allocation rate
When money is being paid into a fund (like a pension fund), the allocation rate is the percentage of the money left which can be invested after the charges have been taken off. For example, if the charges were 2% then the allocation rate would be 98%.
Annual allowance
The maximum amount that can be saved by you or on your behalf in a pension scheme each year while still getting tax relief. This allowance may be reviewed and changed by government, and it is currently £40,000. Some people may have a higher allowance.
Annual management charge
A yearly charge made by fund managers. It is usually a percentage of the value of the funds that are being managed.
Annual payment
A sum of money paid out every year, such as an annuity.
Annual percentage rate
This tells you how much you will be charged as a percentage when you borrow money.
Annual premium
A person who receives a regular income from an annuity.
An annuity (also called lifetime annuity or pension annuity) converts money from your pension fund into a regular taxable income in your retirement. There are different types to suit your circumstances, but most annuities guarantee to provide you with an income until you die. Generally, you cannot change or cash in your annuity.
Annuity protection
An option you can choose when you take out an annuity. If you die, your nominated or chosen beneficiary will receive a lump sum payment or a percentage of the value of your pension fund (the annuity income you took from your pension fund while you were alive will be deducted). (Also known as value protection).
Annuity rate
This is the amount of regular retirement income you can buy from an annuity provider with your pension fund. It is dependent on factors such as your life expectancy, expected returns on your investment, and the type of annuity you choose. Annuity rates vary between providers, so it is important to shop around before buying an annuity.
Appointed representative
third party who is appointed to sell insurance and investment products.
Things that you own such as buildings, vehicles, stocks, shares and money in the bank.
This is cover for an event that is certain to happen, such as death. This is different from insurance which protects from an event that might happen.
Authorised insurer
An insurance company given permission to provide insurance in the UK and supervised by the Financial Conduct Authority.
Beneficiary (pensions)
Money paid by an insurer when a claim is accepted.
Bid or offer spread
Bid price
Business interruption
Cash in value
A warning or an exception.
Claim frequency
The number of claims made on a policy.
Claims and underwriting exchange
Collective investment scheme
Commercial business
Composite insurer
Required by law or an insurance policy.
Compulsory excess
Part of any claim that a customer has to pay.
Contents policy
Contestable period
Contracted out
Convertible term assurance
Cooling off period
Money received from selling goods or services.
Someone who is owed money.
Current assets
Current liabilities
This is the process of removing harmful carbon emissions from the economy.
Declined risk
Decreasing term insurance
A term insurance policy where the amount of money you have insured your life for reduces steadily every year to the end of the term – in line with a repayment mortgage – but the premium stays the same.
When saved funds or assets are turned into an income, for example when you convert the pension assets you’ve built up during your working life into a pension income that you can spend in retirement.
This is a specified amount that has to be paid before an insurance company will pay a claim.
Default fund
Your pension contributions will be invested in a default fund if you do not make a decision on where your funds are invested, or if you choose it over the other funds available. All pension schemes being used for automatic enrolment have offer a default fund (also called default investment fund).
Deferred premium
This is the waiting time (agreed when the policy is taken out) before an income replacement policy starts to pay out. The longer the waiting period the less expensive the policy will be.
Defined ambition
The Government is considering whether to introduce a new type of pension called defined ambition. These would be new pension products that are not defined benefit or defined contribution. The Government is developing detailed policy proposals on this issue. For more information see the Department for Work and Pensions website.
Defined benefit pension scheme
A type of scheme where what you get when you retire depends on your pensionable earnings and years of membership of that pension scheme. (Also called final salary pension scheme).
Defined contribution pension scheme
A pension scheme that provides retirement benefits based on the amount of money paid in and investment growth on this money. At retirement you should shop around to choose how your regular retirement income will be provided from the scheme. All personal pension schemes, including stakeholder schemes, are defined contribution pension schemes. (Also called money purchase pension scheme).
Someone who is reliant on you, such as a family member, child, wife or husband.
Direct sales
Insurance sold directly by an insurer without the involvement of intermediaries such as comparison websites, brokers, advisers, retailers and banks. Direct sales include those carried out online, through newspaper advertisements, telephone sales, and may also include business through a branch office.
Distribution bond
A single premium (a single one-off payment) investment policy. The funds are invested in different assets (such as equities, gilts, stocks and shares) to provide a regular income.
This is another name for an intermediary or a broker. It means a third party that sells insurance products to customers.
Eligible capital

The type of financial resources held by insurance companies that they are allowed to use in order to meet their regulatory capital requirement.

Types of eligible capital (for example shareholders equity and subordinated debt) are determined by rules such as the European Union’s Solvency II Directive. These rules are written by financial regulators.
An income or lump sum of money bequeathed or left to a beneficiary or loved one after you die.
Endowment policy
A life insurance policy linked to a with-profits fund that pays out a sum of money after an agreed period of time or when you die, whichever comes first.
Enhanced annuity
A type of annuity that may pay you a higher regular retirement income if your life expectancy is shortened because of your lifestyle (for example if you smoke) or your medical history. For this type of annuity the annuity provider will normally ask for a medical questionnaire to be completed and a report from your doctor. (Also called impaired annuity).
Escalating annuity
An option for your retirement income to increase in line with an inflation index, or to increase at an agreed fixed rate each year. (Also known as index-linked annuity or inflation-linked annuity).
Escalation benefit
Where premiums and benefits rise every year by an agreed amount.
Evidence of insurability
This is evidence to show if you are an acceptable candidate for insurance. It can involve looking at your health, age, job and other factors.
A risk or item specifically not covered by a policy.
Ex-gratia payment
Export credit insurance
policy providing cover for exporters’ losses arising from non-payment.


Extended warranty
Family income benefit
A type of term insurance which pays out a regular amount of money to your family or beneficiary over a specified period of time if you die during the specified period of time. This type of policy is designed to provide a regular income (rather than a lump sum) for your family, for example while your children are young.
Fixed asset
Fixed interest rate
This is the rate of interest to be paid which does not change during a set time period.
Friendly society
Similar to a mutual insurance company, which is owned by its policyholders, a friendly society is owned by and established for the benefit of its members, usually providing life insurance and sickness benefit.
General insurance
General insurance is non-life insurance cover for damage or loss. It includes products such as motor, travel, pethealth and home insurance.
Glass replacement
A clause in your home or motor insurance policy that allows you to claim for the replacement of glass in your windscreen, sunroof, windows, doors, skylights, etc.
The amount before costs are deducted.
Gross interest
Gross premium
Group personal pension
A type of personal pension scheme (also called group personal pension plan or GPP) set up by an employer on behalf of its employees. Although arranged by the employer, who can also make contributions, each pension contract is between the pension provider and the employee.
Guarantee period
The retirement income from your annuity will normally stop when you die, but you can opt for your annuity to be paid out over a number of years, usually five or ten, even if you die within this period of time. If you die before this period ends, the annuity will continue to be paid to a nominated person or your estate for the rest of the guarantee period. If you live past this period, the annuity will continue to pay you a retirement income until you die.
Guaranteed annuity rate
A fixed rate offered with some pension policies, to turn a pension fund into a retirement income and which does not alter with changing investment conditions. It can be very valuable and will often provide a higher income than an annuity bought via the open market option.