Insurance Glossary Of Terms

Understanding protection insurance can feel complicated, especially when insurers, advisers, and financial providers use technical terminology throughout the application and claims process.

Whether you’re looking for life insurance, critical illness cover, income protection, or family income benefit understanding the language used can help you make informed decisions about protecting your finances and loved ones.

This comprehensive protection insurance glossary explains common insurance and protection terms in plain English, helping you better understand how protection policies work.

Plain-English Insurance Terms Explained

Accidental Death Benefit: An additional payout provided if the policyholder dies as the result of an accident.
Actuary: A specialist who calculates insurance risk, premiums, and claim probabilities using statistics and financial modelling.
Adviser: A qualified insurance or financial professional who recommends suitable protection products based on individual circumstances.
Age-Banded Premium: A premium structure where insurance costs increase as the policyholder gets older.
Annual Review: A yearly assessment of an insurance policy to ensure the level of cover remains suitable.
Application: The process of applying for protection insurance, including health, lifestyle, occupation, and financial questions.
Assured: Another term for the person covered under an insurance policy.

Beneficiary: The person, people, or organisation who receive the insurance payout after a valid claim.
Benefit Amount: The amount paid by the insurer when a valid claim is approved.

Cancer Cover: Protection included within many critical illness policies covering specified forms of cancer that meet insurer definitions.
Child Cover: Optional protection providing a payout if a child covered under the policy is diagnosed with a specified critical illness.
Claim: A formal request made to an insurer asking for payment under the terms of the policy.
Claim Exclusion: Specific situations, conditions, or circumstances not covered by the insurance policy.
Critical Illness Cover: Insurance that pays a lump sum if the policyholder is diagnosed with a specified serious illness covered by the policy, such as cancer, heart attack, or stroke.
Conversion Option: A feature allowing a policyholder to change or upgrade cover without further medical underwriting.

Decreasing Term Insurance: A type of life insurance where the payout reduces over time, commonly used alongside repayment mortgages.
Deferred Period: The waiting period before income protection payments begin after illness or injury prevents someone from working.
Dependants: People who rely financially on the policyholder, such as children or a partner.
Direct Debit: A payment method commonly used for monthly insurance premiums.
Disclosure: The legal obligation to provide accurate and complete information during an insurance application.

Eligibility: The criteria applicants must meet to qualify for insurance cover.
Exclusions: Conditions or situations specifically not covered by an insurance policy.

Family Income Benefit: A type of life insurance that pays a regular tax-free monthly income to beneficiaries instead of a lump sum if the policyholder dies during the policy term.
Financial Underwriting: The process insurers use to assess whether the amount of cover applied for is financially justifiable.
Fixed Premium: A premium that remains the same throughout the policy term unless the policy is changed.
Free Cover: Temporary insurance cover provided while a full application is being processed.
Fracture Cover: An optional benefit paying a fixed amount if the policyholder suffers certain fractures or injuries.
Full Medical Underwriting: A detailed health assessment completed before a policy is accepted.

Guaranteed Insurability Option: A policy feature allowing cover to increase after major life events, such as marriage or having children, without further medical checks.
Guaranteed Premium: A premium structure where monthly payments stay fixed for the duration of the policy.

Health Questionnaire: Medical questions completed during an insurance application to help insurers assess risk.
High-Risk Occupation: A job considered more dangerous by insurers, potentially affecting premiums or acceptance.

Income Protection Insurance: Insurance designed to provide a regular monthly income if illness or injury prevents the policyholder from working.
Increasing Cover: Insurance where the level of cover rises over time, often linked to inflation.
Indexation: An option allowing premiums and cover amounts to increase annually to help keep pace with inflation.
Insurable Interest: A legal requirement confirming that financial loss would occur if the insured person died or became seriously ill.
Insurer: The insurance company providing the policy and paying valid claims.

Joint Life Policy: A policy covering two people, often partners or spouses, under one insurance plan.

Level Term Insurance: Life insurance where the payout amount remains fixed throughout the policy term.
Life Insurance: Insurance providing a payout if the insured person dies during the policy term.
Living Benefit: A policy feature allowing claims while the policyholder is still alive, such as terminal illness cover.
Lump Sum: A one-off tax-free payment made following a successful insurance claim.

Medical Underwriting: The insurer’s assessment of medical history, lifestyle, and health risks before offering cover.
Moratorium: A period during which pre-existing medical conditions may not be covered.
Mortgage Protection Insurance: Insurance designed to help cover mortgage repayments if the policyholder dies, becomes seriously ill, or cannot work due to illness or injury.
Multiple Claim Policy: A policy allowing more than one claim for different illnesses or conditions.

Non-Disclosure: Failure to provide accurate or complete information during an insurance application, which may invalidate a claim.
Non-Smoker Rates: Reduced premiums available to applicants who meet insurer non-smoking criteria.

Occupation Class: A risk category assigned by insurers based on a person’s job.
Own Occupation Cover: A type of income protection that pays out if the policyholder cannot perform their specific job role due to illness or injury.

Permanent Health Insurance (PHI): An older term for income protection insurance.
Policy: The legal contract between the insurer and policyholder outlining cover, exclusions, and benefits.
Policyholder: The person who owns and pays for the insurance policy.
Premium: The monthly or annual payment made to maintain insurance cover.
Pre-Existing Condition: A medical condition the applicant already has before taking out insurance.
Premium Waiver: A feature allowing premiums to be waived if the policyholder becomes unable to work due to illness or injury.
Probate: The legal process of administering a deceased person’s estate.
Protection Insurance: A broad term covering life insurance, critical illness cover, income protection, and related financial protection products.

Quote: An estimate showing the expected cost of insurance cover based on personal information provided during an enquiry.

Renewable Policy: A policy allowing cover to continue or renew after the original term ends.
Reviewable Premium: A premium structure where insurers can increase costs at specified review points.
Risk Assessment: The insurer’s evaluation of medical, occupational, and lifestyle risks during underwriting.

Second Medical Opinion: Access to an independent medical specialist review included with some protection policies.
Serious Illness Cover: Another term sometimes used for critical illness cover.
Single Life Policy: An insurance policy covering one individual only.
Smoker Rates: Higher insurance premiums applied to smokers or recent nicotine users.
Sum Assured: The amount payable upon a successful claim.
Suicide Clause: A policy condition limiting claims if death occurs by suicide within a specified initial period.

Terminal Illness Cover: A feature included with many life insurance policies allowing early payout if diagnosed with a terminal illness and limited life expectancy.
Term Policy: Insurance providing cover for a specified number of years.
Trust: A legal arrangement allowing life insurance payouts to be paid directly to beneficiaries without forming part of the estate for probate purposes.
Trust Form: The legal document used to place an insurance policy into trust.

Underwriting: The process insurers use to assess risk and decide whether to offer cover and at what premium.
Unemployment Cover: Insurance designed to help with repayments or provide income if someone loses their job involuntarily.

Variable Premium: A premium that can increase or decrease over time.

Waiver of Premium: An optional policy feature where premiums are covered by the insurer if the policyholder cannot work due to illness or injury.
Whole of Life Insurance: Life insurance designed to remain in place for the insured person’s entire lifetime rather than for a fixed term.