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Insurance Glossary

Insurance Glossary

Category: Insurance

Updated: 19/10/2016
First Published: 18/10/2016

Accidental Death Benefit

This may be a stand alone policy or an addition to a life insurance policy that pays out a higher amount if your death is caused by an accident.

Buildings Insurance

Insurance that covers your property and its fixtures and fittings from various risks such as fire, flood and possibly subsidence. If you have a mortgage, your lender will require a valid Buildings Insurance Policy to be in place.

Care, Custody, or Control (CCC)

A term generally associated with several forms of liability insurance, which eliminates coverage with respect to damage to property in the insured's care, custody, or control. Coverage for this exposure is available under other, more specific forms of insurance, such as motor truck cargo and garagekeepers insurance. In some cases, CCC has been determined to entail physical possession of the property; in others, any party with a legal obligation to exercise care with respect to property has been deemed to have that property in its CCC.

Claim

This is when you want to benefit from your insurance because an incident that is covered by the policy has arisen. For example, if your pet is hurt in an accident, you would claim on your pet insurance policy.

Contents Insurance

This type of policy protects all belongings that you keep in your home. This can amount to a significant sum, and contents insurance will cover the value of these in the event of fire, theft or flood damage. You can pay extra to protect your belongings against accidental damage or when away from your property.

Cover Note

This is a temporary certificate that shows an insurance policy is in place, before the official policy documents are produced.

Critical Illness Cover

This insurance pays out a lump sum if the holder is diagnosed with an illness covered by the policy during the policy term. Critical illnesses include life threatening or life changing conditions such as cancer, heart attack, strokes or permanent disability. Policies from different providers can cover different illnesses.

Decreasing Term Assurance

Life Insurance that pays out only if you die during the term of the policy, which is agreed at outset. With Decreasing Term Assurance, the sum insured reduces throughout the policy. This is designed to be used alongside a repayment mortgage to always cover the outstanding amount. there is no cash-in value at any time.

Excess

This is an amount of money that you have to pay as the first part of any claim. This is so the insurer can avoid tiny claims. Most motor insurance polocies will have a compulsary excess amount which you will always be subject to, and a voluntary excess. The higher the voluntary excess you choose, the lower your premium will be.

Exclusions

Most insurance policies will have a number of exclusions. these are specific things that are not covered by the policy. They may include things like flood damage if you live on a flood plain, or damage caused in a car accident if you are over the legal alcohol limit.

Health Insurance

Health insurance protects you in the case of sickness or injury by meeting the costs of private healthcare. this can allow you to get treatment sooner than is possible on the NHS.

Income Protection Insurance

This tyoe of insurance provides a replacement income if you are unable to work. normally the maximum amount covered is between 50% and 60% of your income, because it is paid tax free. Different types of income protection policies can cost different amounts, depending on whether you cover yourself against not being able to do just your current job (which is cheapest), or any job (which is more expensive). The replacement income is normally paid out until normal retirement age.

Insurance

An insurance policy provides compensation following a loss. The purpose of insurance is to place you back in the same position as you were before a loss. this will normally be via payment of an amount of money that equates to the loss. This is simpler for insurances that cover items (such as contents insurance0 than it is for life or sickness.

Landlord Insurance

This type of insurance covers landlords for a variety of risks including their buildings and contents.

Level term Assurance

Life Insurance that pays out only if you die during the term of the policy, which is agreed at outset. The sum insured stays the same throughout the policy, and there is no cash-in value at any time.

Life Insurance

Insurance that pays out a lump sum (or in some cases a regular income) in the event of your death. There are several types of life insurance. See "Level Term Assurance", "Decreasing Term Assurance", and "Whole of Life Insurance".

Motor Insurance

This is a legal requirement if you drive a car, van, lorry, motorbike etc on UK roads. basic cover is to compensate other drivers if you damage their property (such as their car) in an accident that you are responsible for, or for fire damage or theft of your vehicle. More comprehensive insurance will protect the value of your own property too, even if you are at fault. Specific types of cover are available for all sorts of different vehicles such as motorbikes, vans, caravans and motorhomes.

No Claims Discount

This is a reduction in your premium because you haven't made a claim in recent years. this demonstrates you are a 'good risk' for the insurer, so you pay less for the cover. You can also pay extra to protect your No Claims Discount if you qualify for the maximum amount (usually five years without a claim).

Payment Protection Insurance

This protects policyholders from missing repayments on loans due to losing income because of accident, sickness or unemployment. Cover is available for debts such as credit cards, personal loans and mortgages. It has had very bad press over the last few years, but could still be valuable.

Pet Insurance

Protects against the costs associated with vets bills should your pet become ill or injured. Usually only cats and dogs can be covered, but more specialist policies are available for more exotic pets.

Premium

The amount paid for insurance cover.

Renewal

Many types of insurance, including motor and home insurance, only last for periods of one year. Renewal is the process of setting up your policy for another year. Many people use renewal as an opportunity to get a cheaper deal with a different insurer.

Sum insured

The amount covered by an insurance policy. The policy will not pay out more than the sum insured, so it is important that the level of cover you request is sufficient.

Travel Insurance

Travel insurance provides valuable protection against costs that might be incurred when you are travelling. These can range from cancellation of your trip, to lost baggage, or being brought back to the UK if you are ill or hurt whilst away. You can purchase either single trip cover or annual cover which can work out cheaper if you travel often.

Underwriting

The process by which a company looks at relevant, known facts in order to assess the likelihood of you making a claim on an insurance policy. The aspects considered will be different depending on what type of insurance policy it is. For example, a motor insurer will want to understand details of your vehicle and driving experience, while a life insurer will consider your age and health.

Whole of Life Insurance

This type of insurance guarantees the payment of a lump sum of money on your death, whenever it occurs. it is commonly used to pay bills that will arise on your death, such as funeral expenses, or a known Inheritance Tax liability.

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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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