life insurance jargon, mortgage jargon, remortgage and refinancing, prime financial solutions and mortgages ltd

52 Misunderstood Life Insurance and Mortgage Jargon and Words

Understanding Life Insurance and Mortgage Protection Product jargon can feel like learning a foreign language. These words can often be misunderstood. It can be very confusing for many who try hard to break through this barrier.

Understanding Life Insurance and Mortgage Protection Product jargon can feel like learning a foreign language. These words can often be misunderstood. It can be very confusing for many who try hard to break through this barrier. A professional broker can help you to bring clarity to it all, but the definitions here are a good starting point.

  1. Accelerated death benefit:  An accelerated death benefit, often as a rider to a policy, lets you use some of the life insurance death benefit before you die. This is an option if you’re terminally ill. People often use the accelerated death benefit to pay off debt, cover hospice costs or take a special trip with their families.
  2. Accidental Death Benefit: This is an insurance policy that pays out a lump sum to your loved ones should you die as a result of an accident. It’s also tax-free (under current legislation)
  3. Accident, Sickness and Unemployment Insurance: Also known as ‘ASU’, this policy provides you with a monthly sum of money should you become unable to work due to an accident, illness or redundancy.
  4. Actuary: An actuary is someone who is qualified to work out the financial risk and impact. They can pass their findings on to insurance providers so that those providers can assess their own risks and how much they should charge their customers.
  5. Annuity: These are financial instruments that some insurance companies offer that allow you to save money on a tax-favored basis and create an income for life. You choose one that meets your needs, such as how you will pay for it (immediately or over time) and when you will start taking your payments and for how long. Annuities are popular among retired people because they can offer protected income for life.
  6. Body Mass Index (BMI): This is a statistical way of working out a person’s ideal body weight. This is done by comparing that person’s height and weight.
  7. Contestability period: A contestability period is a set amount of time after a life insurance company issues your policy. During this time, the company can review your application to make sure you didn’t misrepresent anything. The contestability period starts as soon as the policy is issued. It usually lasts one to two years. Its purpose is to protect the life insurance company from fraud.
  8. Conversion right: Some term life insurance policies let you convert them into permanent life insurance policies later on. This is a great way to keep your coverage and build wealth.
  9. Cover: This simply means the protection given by your insurance provider.
  10. Critical Illness Cover: This policy provides a lump sum of money should the client be diagnosed with a Critical Illness during the length of their policy. It is also known as Critical Illness Insurance.
  11. Death benefit: The death benefit is the amount of money your beneficiaries receive from the life insurance policy. You typically don’t have to pay taxes on the death benefit.
  12. Death In Service: This policy provides a lump sum of money should you die whilst working for your employer. It can be set up by the company you work for and usually pays out 3-4 times your annual salary. Commonly this is part of a business insurance policy, but this can be added to some personal insurance policies.
  13. Decreasing Term Assurance: This type of Life Insurance policy decreases in value over time.  This type of policy is usually linked to mortgage repayments and can be known as ‘Mortgage Protection’.
  14. Disability: A disability is more than just an injury or illness in the world of disability insurance. Some disability policies cover lost wages due to depression, mental illness and complications from drug and alcohol abuse. It all depends on the policy, so make sure to read yours carefully.
  15. Family Income Benefit: This provides a regular income to your family when you die. It can be taken out as a policy on its own or it can be added on to other life insurance cover. It’s also tax-free.
  16. General Practitioner Report: This is a document that provides details of your medical history and current health provided by your GP. It’s used by your insurance company to assess your health and ultimately your life insurance policy terms and conditions.
  17. Guaranteed Insurability Option: This is usually abbreviated to ‘GIO’ and allows you to increase the amount of cover you have without the need for any more medical information.
  18. Grace period: Like many credit cards, some insurance policies may offer a grace period. This is the amount of time your policy remains in force if you don’t pay your premium before the due date. The grace period usually only lasts about a month.
  19. Income Protection: This protects your income should you become unable to work because of an accident or Illness.  Also known as Income Protection Insurance.
  20. Indexation: The indexation option that some insurers offer allows policyholders to ‘index link’ the value of sum assured.  Every year the insurer will review UK inflation and the RPI (Retail Price Index) to gain an understanding of the value of the pound.  The Insurer will assess the sum assured against these to ensure that the level of cover remains the same ‘pro-rata value’ in the future.
  21. In Force: This describes the status of your Life Insurance Policy. If it is in force, it means that your premiums are being paid and that you are protected and fully covered by the policy.
  22. Insurable interest: Life insurance policies require you to have an insurable interest in the person named in the policy. This means that you would suffer some kind of financial harm if that person were to die. This is a life insurance policy that you take out for somebody else. You have to prove that the death of that person would impact you financially. This is usually something that people do for their partners for example.
  23. Intestate: This refers to a person that has passed away without making a will. If this has happened, the government is responsible for distributing their estate/belongings.
  24. Joint Life: This covers two people rather than one on one combined policy.
  25. Joint Life First Death: If you have taken out a joint life insurance policy, ‘First Death’ means there will be a payout after the first person passes away.
  26. Joint Life Second Death: This means there will be a payout after both people pass away rather than the first person.
  27. Lapsed Policy: If you don’t pay your full premium, your policy and the benefits that come with it will stop and may be terminated.
  28. Level Term Assurance: This is one of the more basic forms of Life Insurance. It’s where the customer pays a premium for a certain length of time and the insurer pays a lump sum should they die during the policy term.
  29. Living benefits: Some life insurance policies provide benefits while you’re still alive. Some of the most common living benefits are accelerated death benefits, long-term care benefits and policy loans.
  30. Life Assurance: This term is also known as ‘Life Insurance’. It provides certain levels of protection for your loved ones for if you die during the term of the policy.
  31. Life Insurance: Also known as Life Assurance.
  32. Life Insurance Quotes: This is the initial estimated price of an insurance product offered to a customer.
  33. Long-term care insurance: Long-term care insurance steps in if you can no longer care for yourself for an extended period of time. It can cover nursing home, adult day care or home health care costs. There are several different policy options for long-term care.
  34. Mortgage Protection Assurance: See ‘Decreasing term Assurance’.
  35. Permanent life insurance: Permanent life insurance pays a death benefit just like term life insurance. But unlike term life insurance, permanent life insurance provides lifelong protection for as long as you pay the premiums. It also accumulates cash value on a tax-deferred basis. You can use this money to buy a home, supplement your retirement income, cover an emergency expense and more. It’s a great option if you’re looking to build your wealth while also protecting your family financially.
  36. Policy Documents: These documents will be sent to you once you have taken out insurance. They will include the details of your policy schedule and policy terms and conditions. It is important you keep them safe.
  37. Preferred rates: A preferred rate is a less expensive rate for life insurance. It’s offered to applicants who are at a lower risk of dying. Some of the factors life insurers consider when offering preferred rates are a person’s health history, smoking habits, gender and lifestyle.
  38. Premium: A premium is the payment an insurance company requires in order to keep your policy in force. Depending on the policy, you might pay your premium annually, quarterly, monthly or some other frequency.
  39. Retail Price Index (RPI): This measures the change in the price of goods and services purchased by consumers for the purpose of consumption.
  40. Reviewable Premium: When you take out Critical Illness cover, you can choose from two options reviewable premiums and guaranteed premiums. A reviewable premium means your policy is guaranteed for an introductory period and then reviewed on a regular basis after that.
  41. Rider: A rider is an additional amount of coverage you can add to your main insurance policy. It gives you extra coverage for your exact needs. Common insurance riders are long-term care riders and accelerated death benefit riders. (Check out the definitions of long-term care insurance and accelerated death benefits above.)
  42. Sum Assured: This is the amount of cover you are insured for.
  43. Surrender: If you surrender your policy, it means you want to cancel it. There can be a charge for this and if there is cash value in your policy, the charge will be taken from that.
  44. Term life insurance: Term life insurance is the most common and affordable type of life insurance. It provides coverage for a specific amount of time (the term). The term is usually 10, 20 or 30 years. Your beneficiaries receive a payout (known as a death benefit) if you pass away during the term.
  45. Terminal Illness Cover: See ‘Critical Illness Cover’ above.
  46. Terminal Illness Benefit: This is like Critical Illness cover, the difference is it provides a payout should the insurance holder be diagnosed with a Terminal Illness within the terms of the policy.
  47. Total and Permanent Disability Cover: This type of Life Insurance Policy provides a payout should the policyholder become permanently disabled during the policy term.
  48. Trust: You can put your life insurance policy in a trust; this means that you may be able to avoid inheritance tax on the payout.
  49. Underwriter/Underwritten: An underwriter is a qualified professional who assesses the risks of an applicant. They will determine how much your premium is and how much the policy could pay out.
  50. Underwriting: Underwriting is the process an insurance company uses to decide two things: if they want to offer you a policy and at what rate. A professional called an underwriter does the underwriting. When it comes to life insurance, the underwriter looks at factors like a person’s age, health, lifestyle and more to make those decisions.
  51. Waiver Of Premium: This can be offered as a policy add-on. It means that you may be able to continue with your life insurance policy without further premiums if you become unable to pay due to sickness, injury or unemployment.
  52. Whole of Life: This is known as ‘Permanent Life Insurance’ because you are covered until the time of your death – whenever this occurs.

These are some Life Insurance and Mortgage terms, and if you would like further help or if you have any questions you’re welcome to contact us.

Prime Financial Solutions and Mortgages Ltd

If you need help with Life Insurance Jargon or any of the following, Prime can help – telephone 01942 665 436:

FOR THE BEST UK BROKER SERVICES FOR LIFE INSURANCE & MORTGAGES

Getting past jargon and terms for life insurance and mortgages can be a major task. It can help when you understand more. When you choose Prime, you’re choosing a company that works hard on your behalf to get you great options in what can be a very complex and time consuming processes.

At Prime we have an exceptional FCA approved team of life insurance & mortgage specialists who work for you. Quotes are free. We provide excellent one to one services tailor made to your own individual needs and we make your time with us hassle free – we do all of the heavy lifting.

Prime is proud of the reputation it has built over many years, and this is largely reflected through the positive reviews we receive on a regular basis from customers in Wigan, Greater Manchester and across UK, in person, on Trust Pilot and Google online.

Prime Financial Solutions and Mortgages Logo

Perhaps there is more jargon that you don’t understand, or perhaps you have questions for us? Our dedicated team of experts can answer any and all of your questions – just let us know.

Getting life insurance or a mortgage agreed is a major step forward in life. With a life policy or a critical illness policy in place you can ensure your family is taken care of if there is sudden terminal illness or your life should end. You can find out more about us and what we do here and if you need help with anything else, Prime can help. Click here to Get a Life Insurance Quote or use our quick contact form to get in touch. Our friendly dedicated team is available by telephone 01942 665 436 during office hours.

Share:

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on linkedin
LinkedIn
Prime

Related Posts

The following are some of the mortgage lenders and insurance companies that we compare quotes from:

aig uk, prime financial solutions and mortgages ltd
aviva uk, prime financial solutions and mortgages ltd
legal and general uk, prime financial solutions and mortgages ltd
lve uk, prime financial solutions and mortgages ltd
royal london insurance uk, prime financial solutions and mortgages ltd
vitality uk, prime financial solutions and mortgages ltd