Critical Illness Glossary

All the common terms concerned with Critical Illness Insurance

• Acceptance Terms
• Applicant
• Application
• Assurance
• Beneficiary
• Children's Cover
• Claim
• Cover
• Critical Illness
• Current Costed
• Decreasing Term
• Direct Debit
• Estate
• Exclusion
• Family Income Benefit
• Financial Underwriting
• Gp's Report
• Guaranteed Insurability
• Guaranteed Premiums
• Indexation
• Inheritance Tax
• Insurable Interest
• Insurance
• Insurance Company
• Interest Only Mortgage
• Joint Life First Death
• Joint Life Second Death
• Level Term
• Life Assured
• Life Buy Back
• Life Ins
• Life Insured
• Life of Another
• Loading
• Medical Underwriting
• On Risk
• Policy Owner
• Policyholder
• Premium
• Probate
• Rating
• Reinstatement Option
• Repayment Mortgage
• Renewable Premiums
• Reviewable Premiums
• Separation Option
• Single Life
• Standard Rates
• Sum Assured
• Teleunderwriting
• Term
• Term Assurance
• Term Insurance
• Terminal Illness
• Total and Permanent Disability (Tpd)
• Trust
• Trustees
• Underwriting
• Waiver Of Premium

Acceptance Terms

Once an insurance company has completed the underwriting they will issue acceptance terms. This is formal confirmation of whether they agree to provide the requested cover and at what premium level. Top of Page.

Applicant

This is the person applying for the insurance policy.
It can be different from the life assured, for example a husband could apply for life insurance on his wife. Top of Page.

Application

This is the process of applying for life insurance. Top of Page.

Assurance

Assurance is a term very similar to insurance, however assurance is when you protect yourself against something that will definitely happen one day, such as death. Top of Page.

Beneficiary

This is the name of the person who is set to get the proceeds of a life insurance policy that has been written into a trust. Top of Page.

Children's Cover

This term applies to critical illness cover where your children are also covered under your policy. Top of Page.

Claim

This is the process where you apply for a payout from an insurance policy. Top of Page.

Cover

The term commonly used to describe the amount or type of cover provided under an insurance policy. Top of Page.

Critical Illness

A type of insurance that pays out in the event the life assured is diagnosed with a number of critical illnesses, such as heart attack, cancer, stroke etc. Top of Page.

Current Costed

Also known as Renewable premiums.
This is where the premiums are set every year based on the prevailing market conditions at the time (including age of the policyholder). As a result premiums will usually rise every year. Top of Page.

Decreasing Term

a type of term assurance where the sum assured reduces to nil over the policy term. Top of Page.

Direct Debit

The method of payment most life insurance companies insist on for payment of the premiums. Top of Page.

Estate

A term used to describe all the assets and belongings of a person, usually when they have died. Top of Page.

Exclusion

This is where the insurance company agrees to provide cover but wishes to exclude some parts of it.
For example a person with a family history of heart disease may be granted critical illness cover but with an exclusion that it wont pay out in the event of heart attack. Top of Page.

Family Income Benefit

A type of term assurance where the sum assured is paid out as a series of monthly/annual payments rather than a one off lump sum. Top of Page.

Financial Underwriting

A process whereby the insurance company make sure that the amount of cover applied for is reasonable given the financial circumstances of the life assured. Top of Page.

Gp's Report

A written medical report provided by the life assureds doctor in response to a request by an insurance company. Top of Page.

Guaranteed Insurability

A clause in many term assurance policies that gives you the right to increase the cover without further underwriting on certain life events such as marriage, moving home, birth of a child etc. Top of Page.

Guaranteed Premiums

Premiums that are guaranteed not to change during the term of the plan. Top of Page.

Indexation

An optional extra that means the sum assured and premium automatically rise every year in line with inflation or by a fixed amount. Top of Page.

Inheritance Tax

A tax that could be levied on the payout.
This may be avoided by writing the policy into a trust. Top of Page.

Insurable Interest

Where one person has a financial interest in another.
This needs to be determined when a policy is first taken out. The applicant must have a financial interest in the life assured i.e. be worse off financially if the life assured were to die. Top of Page.

Insurance

Insurance is a term very similar to assurance, however insurance is when you protect yourself against something that might happen one day, such as illness. Top of Page.

Insurance Company

The company that is providing the insurance cover. Top of Page.

Interest Only Mortgage

A mortgage where the borrower does not repay any of the original capital borrowed, they only repay the interest due each month. Top of Page.

Joint Life First Death

Where a life insurance policy is arranged on two or more lives and pays out in the event of the first of them to die. E.g. Husband and wife both insured by the same policy but there would only ever be one payout and that would be on the first of them to die. Top of Page.

Joint Life Second Death

Where a life insurance policy is arranged on two or more lives and pays out in the event of the second of them to die. E.g. Husband and wife both insured by the same policy but there would only ever be one payout and that would be on the last of them to die. Top of Page.

Level Term

A type of life insurance where the sum assured remains level throughout the term. Top of Page.

Life Assured

The person whose life is covered by the insurance policy.
It can be different from the applicant, for example a husband could apply for life insurance on his wives life. Top of Page.

Life Buy Back

An option within some critical illness policies that allows a policyholder to buy back life insurance cover once they have claimed under their critical illness cover. Top of Page.

Life Ins

An abbreviated term for life insurance. Top of Page.

Life Insured

Another term for life assured. Top of Page.

Life of Another

Where the applicant (owner) of the life insurance policy is not the same as the life assured. E.G. where a wife applies to insure her husband. If the husband dies then the pay out would go straight to the wife. Top of Page.

Loading

Similar to Rating.
After completing the Underwriting the insurance will issue acceptance terms.
If the insurance company wants you to pay a higher than standard premium for the cover this is referred to as a loading or rating. Top of Page.

Medical Underwriting

A process whereby the insurance company asses the life assured to make sure they are fit and healthy enough to be offered insurance cover. Top of Page.

On Risk

The period when an insurer has commenced the insurance cover. Top of Page.

Policy Owner

This is the person or organisation who has applied for the cover and owns the proceeds.
It can be different from the life assured, see Life of Another. Top of Page.

Policyholder

Another term for Policy Owner. Top of Page.

Premium

The regular payments made to the insurance company in return for the insurance cover. Top of Page.

Probate

The process where a deceased persons estate is collated, valued, assessed for Inheritance Tax and then distributed according to the Will. Top of Page.

Rating

Similar to Loading.
After completing the Underwriting the insurance will issue acceptance terms.
If the insurance company wants you to pay a higher than standard premium for the cover this is referred to as a loading or rating. Top of Page.

Reinstatement Option

An option under a joint life plan that allows one life assured to reinstate their cover when the other life assured has made a valid claim. Top of Page.

Repayment Mortgage

A mortgage where the borrower not only pays back the interest every month but also repays part of the capital every month. Top of Page.

Renewable Premiums

Also known as current costed premiums.
This is where the premiums are set every year based on the prevailing market conditions at the time (including age of the policyholder).
As a result premiums will usually rise every year. Top of Page.

Reviewable Premiums

Premiums that are reviewed periodically and may change during the term of a plan. Top of Page.

Separation Option

An option that allows for a joint policy to be split into two separate plans where, for example, a couple have split up or divorced. Top of Page.

Single Life

A life insurance policy that only covers one life is referred to as 'single life', as opposed to joint life. Top of Page.

Standard Rates

The normal premiums rates published by an insurer.
The rates that would be payable by a person or normal health for insurance cover. Top of Page.

Sum Assured

The technical term for the amount of cover in £'s.
The amount that would be paid out in the event of a valid claim under an insurance policy. Top of Page.

Teleunderwriting

A process where the insurer could call you to obtain information relevant to your application. Top of Page.

Term

The length of time a policy will last for. Typically expressed in years between 2 and 40. Top of Page.

Term Assurance

Life insurance which provides cover for a specific term (years). Top of Page.

Term Insurance

Another word commonly used to describe Term Assurance. Top of Page.

Terminal Illness

The sum assured is paid out early in the event the life assured is diagnosed as having usually less than 12 months to live. Top of Page.

Total and Permanent Disability (Tpd)

An option that is usually included as standard with Critical illness Cover whereby the cover would be paid out if you are totally and permanently unable to work. Top of Page.

Trust

A legal process where a life insurance policy is given away so the proceeds can be paid direct to the beneficiaries.
Often used to speed up payment of the proceeds, as probate is avoided, and can help avoid Inheritance Tax. Top of Page.

Trustees

The parties to a trust that are responsible for making sure the life insurance proceeds are distributed in accordance with the deceased's persons wishes. Top of Page.

Underwriting

The process whereby an insurance company asses the risk of providing insurance cover to the life assured. It is where the insurer decides if the life covered qualifies for standard rates or not. Top of Page.

Waiver Of Premium

An option that means the premiums will be waived by the insurance company if the policyholder is unable to work due to accident or sickness. Top of Page.

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