Association of British Insurers.(www.abi.org.uk)
The ABI is a trade association of British Insurance Companies. It has more than
400 members, who provide over 97% of the insurance business in the UK.
Those insured under the terms of an insurance policy.
The money paid to the policyholder when a claim is made.
The selling price or cash-in value of your unit holdings.
Relates to a with-profits policy. The amount of money added
to the benefit payable under the policy. The amount is dependent upon the profits
made by the insurance company. Added bonuses cannot be taken away.
A term insurance policy which gives you the option to convert your
current policy to a whole-life or endowment insurance policy, without having to
take further medical examinations.
A policy that pays out a lump sum on the diagnosis of life threatening illnesses
indicated in the terms of the plan.
A term insurance policy in which the cover is reduced by a specific
amount each year, decreasing to nil at the end of the term. The amount you pay into
the policy in most circumstances will stay the same throughout the term. This type
of insurance is commonly used to cover a repayment mortgage, as they are designed
to pay the outstanding debt in the event of your death. There is no
surrender value for this policy.
Combines saving with some protection. If you have a unit-linked
endowment insurance plan, your money is invested in an insurance company's Insurance
Bonds. The plan is designed to pay the policyholder a sum of money after an agreed
number of years (or on the death of the policyholder); the exact amount received
depending upon the growth of the funds invested in.
Type of term insurance policy. Your dependants would receive a
regular income until the end of the policy term, if you were to die during the term.
A lump sum life insurance policy, which invests in a with-profits
fund. As the name suggests, the insurance company will guarantee to pay you a fixed
amount at a stated time. Guaranteed Bonds can be income or growth.
Type of term insurance policy. The cover and the amount you pay
into the policy are increased by a specific percentage each year calculated on the
original sum insured. Designed as a way to increase your life
cover as your earnings increase.
A unit-linked product that can invest in, for example, equities, property, fixed
interest securities and cash. When you invest, your money is used to purchase 'units'
in an Insurance Bond. Many endowment insurance policies,
whole life insurance policies and investment bonds
are invested in Life Funds as this type of insurance combines protection with saving.
Your policy returns are directly linked to the value of the fund's underlying investments,
which means there is generally no guarantee to the value of your policy when it
matures. Some Life Funds can be With Profits.
Combines investment with some life cover. The payments you make into an insurance
policy or investment bond, usually a lump sum, are invested in the insurance company's
with-profits or unit-linked funds (Life Funds). Different types of bonds include
the guaranteed bond and unit-linked single premium
bond. Not to be confused with a company or government bond, an investment
that offers a fixed rate of interest and an area where your chosen Life Funds may
An agreed date when an endowment policy ends and the proceeds,
including any bonuses, are payable.
A life insurance company that is owned by its with-profits policyholders.
The price at which fund units are bought.
The amount of money paid into an insurance policy.
A life insurance company that issues its profits to its shareholders.
The proceeds from an insurance policy can be paid free of income tax and capital
gains tax providing the policy adheres to the rules set out by the Inland Revenue.
A term insurance policy that gives you the option of renewing at
expiry, without the need of further medical checks.
Where a single lump sum is paid for an insurance policy.
The amount of money that is guaranteed to be paid under an insurance policy, before
any bonuses are added
Not applicable to all life insurance policies. The amount paid by the insurer if
the policyholder stops paying into the policy before the agreed date, for reasons
other than death.
An additional sum of money paid, usually on With Profits policies,
on death of the policyholder or at maturity. The amount is dependent upon the profits
made by the insurance company.
Can also be called a Unit-Linked With Profits Fund. This is
a type of Insurance Bond that can invest in UK and overseas shares, property, fixed
interest securities and cash. When you invest in this fund through an insurance
policy, you buy 'units'. When an annual bonus is declared,
you can either receive more units or it is added to the unit price on a daily basis.
Due to the addition of bonuses the unit price does not reflect the value of the
Also called Unitised. If your insurance policy is unit-linked, some of your money
is used to purchase 'units' in a fund. The value of your policy at maturity
is dependent upon the growth of the fund in which the policy is invested. Generally
refers to policies that offer protection and saving such as endowment
insurance, whole life insurance and investment
A single lump sum life insurance policy where your investment is spread over a number
of Life Funds.
Provides protection with or without investment. As the name suggests, this insurance
pays a guaranteed sum on the death of the policyholder, it covers you for the whole
of your life. This insurance can be without-profits, with profits or unit-linked.
In other words you can choose insurance that pays out on death a guaranteed sum
only, the sum plus any bonuses that have been added, or the
sum plus any additional value from the growth of the funds invested in.
When a policy reaches maturity or the policyholder dies, the amount paid out is
the basic guaranteed sum only. You would not be entitled to any bonuses.
Relates to insurance policies that combine investment with protection. This type
of policy is entitled to a share of the profits made by the insurance company. The
profits are in most cases added to your insurance policy as an annual bonus, when
added they cannot be taken away. In practice With Profits are used to smooth out
the fluctuations in the stockmarket; the company retains some of the profits made
in the good years to supplement the years in which returns are bad. See also
Unitised With Profits Fund and Terminal Bonus.
An insurance policy where your lump sum is in most cases invested in a
Unitised With Profits Fund (which is listed under the Insurance Bonds section).
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