The basics of any policy
Start here if you are new to protection insurance. These are the words that appear on almost every quote and policy schedule.
Your schedule lists the specific details for your own policy, so keep it with your other important papers.
- Policyholder: the person who owns the policy and usually pays for it.
- Life assured: the person whose death or illness triggers a payout. Often the same as the policyholder.
- Sum assured: the amount the policy pays if you make a valid claim.
- Term: the length of time the cover lasts, such as 25 years.
- Premium: the regular payment you make to keep the cover in force.
- Beneficiary: the person or people who receive the payout.
Types of life cover
Different policies suit different jobs. These definitions help you match the cover to the need, such as a mortgage, a family or a future tax bill.
- Level term: cover where the payout stays the same throughout the term.
- Decreasing term: cover where the payout falls over time, often in line with a repayment mortgage.
- Increasing term: cover where the payout rises each year to help keep pace with inflation.
- Whole of life: cover that lasts for the rest of your life, as long as you keep paying.
- Joint life: one policy covering two people, which usually pays once on the first death.
- Family income benefit: cover that pays a regular income rather than a single lump sum.
Words used in applications
When you apply, the insurer assesses your health and lifestyle. These are the terms you may see in emails or letters while it does.
- Underwriting: the insurer's assessment of your application and the risk of a claim.
- Disclosure: the information you give the insurer about yourself in your answers.
- Loading: an increase to the normal premium because of a higher risk.
- Exclusion: a condition or activity the policy will not pay out for.
- GP report: a summary of your medical history your doctor writes for the insurer, with your consent.
- Postponement: the insurer asks you to reapply later, often after a test or recovery.
Critical illness and income protection terms
Critical illness and income protection policies bring a few extra words. Getting these right helps you compare policies fairly.
- Critical illness cover: a policy that pays a lump sum on diagnosis of a listed serious illness.
- Terminal illness benefit: an early payment of life cover if you are expected to live less than 12 months.
- Deferred period: the time you must be off work before income protection starts paying.
- Own occupation: an income protection definition that pays if you cannot do your own job.
- Benefit period: how long income protection keeps paying on a claim.
- Total permanent disability: cover that pays if you can never work again, as defined by the policy.
Trusts, premiums and extras
These terms cover what happens around the policy: how premiums behave, how the payout reaches your family and the extras you can add.
If you meet a word that is not here, ask us and we will explain it.
- Guaranteed premiums: premiums that stay the same for the whole policy.
- Reviewable premiums: premiums the insurer can change at set review dates.
- Trust: a legal arrangement that holds the payout for your chosen beneficiaries.
- Trustee: a person who manages the trust and pays out the money.
- Waiver of premium: an option that pays your premiums if you cannot work through illness or injury.
- Cooling-off period: the window after you take out a policy when you can cancel for a full refund.