o A beneficiary is the person that will receive the money or other belongings from a trust, will or Life Insurance policy.
o If a policy goes through cancellation, this means that the policy ends before it is due to expire. There might be a requirement to leave notice that you are going to cancel the policy. This means that if you wanted to cancel the policy, you’d have to wait a set period of time before the policy will actually be cancelled.
o A claim is when you meet the terms of an insurance policy, thus triggering a claim. For example, Life Insurance insures your life and will pay out once you have passed away. If one of your beneficiaries claimed on the insurance, you would need to have passed away for the claim to be valid.
o A person that you support financially: this could be your own children, your parents or even your partner. Usually these are the people that you will put as beneficiaries on your insurance policy.
• In Trust
o Putting a Life Insurance policy into trust means that the claim will not be subjected to inheritance tax, which could seriously reduce the amount your insurance should pay out. You will need to assign a trustee who will be responsible for the money if the beneficiaries are not old enough to take the claim straight away (for example, if they are under 18).
o Indexation is a way to avoid the effects on inflation on your insurance policy. For example, if you left £100,000 for your family on your Life Insurance policy this may be enough to pay for their accommodation for a while in the present. But over time, the price of accommodation will rise, but the £100,000 will stay the same unless you have indexation on the policy. Indexation will mean that the amount of money that can be claimed will change to always be enough to pay for accommodation for your family no matter the state of inflation.
o Inflation is the general increase in prices, and the fall in the value of money. For example, £5 was a lot of money 100 years ago, in 1915, but today that would only just stretch to buy a cheap dinner for 1. Over time, the value of money decreases. You may think that leaving £100,000 for your family will be enough to support them, but when you consider inflation in the future you may realise that this won’t be enough. To avoid this, you should consider indexation.
o Investment means to put money into something, and invest in it, with the idea of gaining from it in the future. For example, Critical Illness Cover is an investment as you put money into now, so that you can gain support later when you need it most.
o A pension is a regular payment given to people who cannot work. This could be because they are too old to work, or have some form of disability. This may be paid by the government, but this is not always the case.
o A policy is the legal document that states all the terms and conditions of the Life Insurance you are investing in. If you renew your Life Insurance then a new policy may not have to be issued, but that will depend on the insurer.
o Premiums are the monthly or annual payments you make to the insurer to pay for your Life Insurance policy. The amount you pay at each premium, and the length of term that you pay the premiums for will be decided before the insurance policy is taken out.
o Renewal is the process of continuing the same insurance policy with the same insurer after the original determined period of time has ended.
o The underwriter is the person from the Insurance company who will go over your application and either decline or accept the policy on behalf of the insurer.