• It will take no more than 2 minutes
  • Compare 100's of life plans from the UK's top insurers
  • We'll select the best advisor to get you their cheapest quote

UK Life Insurance Glossary

Life insurance may seem full of terms and jargon that are not just unfamiliar but downright incomprehensible. Here's a short list of the commonly used terms and what they really mean (in words we could understand).

Accidental Death Benefit: This is a rider (See rider) that pays an additional amount if the cause of death is an accident.

Age at Issue: The age of the Insured at the time the policy becomes effective.

Beneficiary: The persons (named in a policy) who stand to receive the benefit amount when the Insured dies. The Insured usually will name loved ones as beneficiaries but he can also opt to name an organization as his beneficiary.

Cash Surrender Value: For some kinds of policies, this is the amount of money that the Insured will get in the event that he terminates the policy before it matures or before the death of the Insured.

Contestable Period: This is a period during which the policy (or any claims related to it) may be contested by the Insurance Company. If the Insured has given false statements or has withheld some information in his application or medical examination, the Insurance Company may cancel the policy or contest a claim. The contestable period is usually two years.

Conversion: An option made available for some policies that allows the Insured to trade his existing life insurance product with a different life insurance product. The advantage of a conversion provision is that it allows the Insured to do the conversion without going through underwriting requirements. This means that the premium ratings used for the first policy will also be used for the new policy which may mean savings since the Insured may be charged with a higher premium rating due to changes in his health and also his age. The most common conversions involve term life policies converted into permanent life policies.

Death Benefit: This is the basic amount that the Insured's beneficiaries will get when the insured dies.

Decreasing Term insurance: A term life insurance policy that decreases its level of coverage over time.

Evidence of Insurability: This shows that a person is a reasonably good or acceptable candidate for insurance. This usually involves taking a look at the person's healthy, age, occupation and other factors. This helps the Insurance Company set the premium rating for the applicant. If the Insurance Company thinks that based on the Evidence of Insurability a person is most likely to have a claim within a short period of time, it may deny the application.

Exclusions: The instances listed in the policy where the Insurance Company will not pay any benefits if it happens. For instance, suicide is excluded during the contestable period. If the Insured committed suicide within that specified period, the Insurance Company will not pay the claim.

Face Amount: This is the amount that the Insurance Company will pay when the Insured dies within the policy period or, in some kinds of policies, when the policy reaches the end of its effective period. There may be additional amounts due for other riders or for dividends.

Free-Look Period: This is a period where the Insured can look over the newly issued Policy Contract. By law, the Insured can ask to cancel the policy within the free-look period and the Insurance Company is required to give a full refund of the premiums paid.

Grace Period: The period after a policy premium payment is due and is unpaid where the Insurance Company will keep the policy effective. This means that if the Insured fails to pay the premiums, he has this many days to pay or else the policy may be considered as "lapsed". If the policy has a net cash surrender value, the policy may exhaust this value in the effort to keep the policy in force after no premium payments are made. But once the cash surrender value is depleted, the policy will lapse.

Decreasing Term insurance: A term life insurance policy that increases its level of coverage over time.

Insured: The person being covered by the policy. In the event of his death, the Insurance Company will pay the life insurance proceeds.

Irrevocable Beneficiary: The kind of beneficiary that has certain rights to the policy. If the policy has irrevocable beneficiaries named, the policy owner will not be allowed to make any changes to the list of beneficiaries (or some aspects of the policy) without the consent of the irrevocable beneficiary.

Lapse: When no premiums payments are made and there is no cash value that can be drawn to pay the premiums, the policy will lapse. This means that it will no longer pay when the life insurance dies after the policy has lapsed.

Maturity Date: This is the period where the policy contract ends. For some kinds of policies, if the Insured outlives the policy, he will get a specified amount at the maturity date.

Non-medical insurance: Insurance where the applicant does not have to undergo medical examination and still get a policy.

Policy: This is the contract between the Insured (or policy owner) and the Insurance Company. This lists the benefits, terms and conditions involved in the coverage.

Policy Loan: If the policy has a cash value, the Policy Owner can apply for a loan against the cash value. Any outstanding policy loan will be deducted from the death benefit or when the policy matures. If the Policy Owner decides to surrender the policy, the outstanding amount of the policy loan will be deducted from whatever amount he will get at the time he terminates the policy.

Policy Owner: The one who owns the policy. The policy owner pays the premiums and enjoys certain rights towards the policy. He has the right to make changes to the policy such as applying for loans on the policy or changing the list of beneficiaries.

Premiums: The amount paid for the insurance. These may be paid on an annual, semi-annual, quarterly or monthly basis and may last for a certain number of years. Premiums are based on several factors, such as the health of the Insured, his occupation and other underwriting factors.

Rider: This is an additional benefit that acts as an add-on to the basic death benefit. If you opt for a rider, the premiums will increase.

Surrender: Giving up the policy before it matures. The Policy Owner can decide to surrender the policy and get the current cash value that the policy has or to choose a non-forfeiture option. (Non-forfeiture options allow the Policy Owner to "get something out of the policy" in the event the he can no longer pay for the premiums, i.e. a paid up policy for a lower face amount).

Term Insurance: A kind of life insurance policy that provides coverage for a limited term. The premiums are low because there is no cash value accumulated. Once the policy terminates (due to non-payment or because it has reached the end of its effective date), the policy will no longer provide coverage and there are no refunds on the premiums paid.

Universal Life. A life insurance policy that accumulates cash value and also gives the Policy Owner the option to adjust certain aspects of the policy – such as the amount of coverage, the amount of premiums paid and the frequency of the payments.

Variable Life: A life insurance policy that accumulates cash value and allows this to grow based on the performance of the account where the cash value is invested. This can allow the Policy Owner to get more interest earnings but also allows the possibility that earnings may be lower due to the poor performance of its fund.

Whole Life: A life insurance policy that provides cover for exactly that – his whole life.

Other insurance websites: online life insurance quotes, life insurance cover, life assurance quotes, critical illness cover, life assurance.