Life insurance glossary
Plain-English definitions of 41 UK term life insurance terms: cover types, premiums, underwriting, trusts and claims.
Life insurance terms
- Term life insurance
- Life cover that pays out if you die within a set number of years, then ends.
- Level term cover
- Cover where the payout stays the same from the first day to the last.
- Decreasing term cover
- Cover where the payout falls over time, usually in line with a repayment mortgage.
- Increasing term cover
- Cover where the payout rises each year to protect its value against inflation.
- Sum assured
- The amount of money the policy agrees to pay out on a valid claim.
- Premium
- The regular payment you make to keep the policy in force.
- Guaranteed premiums
- Premiums fixed at the start that the insurer cannot raise during the term.
- Reviewable premiums
- Premiums the insurer can reassess and change at set review dates.
- Underwriting
- The insurer’s process of assessing your health, lifestyle and history to set your terms.
- Standard rates
- The insurer’s normal price, offered when your application shows no extra risk.
- Premium loading
- An increase on the standard premium to reflect a higher assessed risk.
- Exclusion
- A specific cause of death or circumstance the policy will not pay out for.
- Non-disclosure
- Leaving out or misstating information on your application — the main reason claims fail.
- Beneficiary
- The person or people who receive the payout from a life policy.
- Writing a policy in trust
- Legally placing the policy outside your estate so the payout is faster and usually free of inheritance tax.
- Trustee
- A person you appoint to manage a policy held in trust and pay out to your beneficiaries.
- Probate
- The legal process of confirming a will and releasing someone’s estate after they die.
- Inheritance tax
- A 40% tax on the part of an estate above the available thresholds when someone dies.
- Joint life policy
- One policy covering two people, usually paying out once on the first death.
- Single life policy
- A policy covering one person, paying out once if they die during the term.
- Family income benefit
- Cover that pays a regular tax-free income until the end of the term instead of one lump sum.
- Critical illness cover
- An add-on or standalone policy that pays out if you are diagnosed with a specified serious illness.
- Terminal illness benefit
- An early payout, included in most term policies, if you are diagnosed as terminally ill.
- Waiver of premium
- An add-on that pays your premiums for you if illness or injury stops you working.
- Guaranteed insurability options
- The right to increase cover after certain life events without new medical questions.
- Mortgage life insurance
- Term cover sized and shaped to clear your mortgage if you die.
- Relevant life policy
- Life cover for an employee or director, paid for by their company as a business expense.
- Over-50s life insurance
- Whole-of-life cover with guaranteed acceptance for ages 50–80, usually with a waiting period.
- Whole of life insurance
- Cover with no end date that pays out whenever you die, as long as premiums are kept up.
- Smoker rates
- Higher premiums for anyone who has used nicotine, including vapes, within the last 12 months.
- GP report (GPR)
- A medical report the insurer requests from your doctor during underwriting.
- Medical screening
- A nurse or doctor examination some applications require before cover is offered.
- Postponement
- When an insurer delays a decision, usually until treatment or investigations finish.
- Lapse
- When a policy ends because premiums stopped being paid, leaving no cover in place.
- Contestability period
- The early period of a policy when insurers investigate claims most closely.
- Claim
- The request made to the insurer for the policy to pay out after a death.
- Death in service benefit
- A lump sum, often two to four times salary, paid by an employer if you die while employed.
- Indexation
- Linking the cover amount to inflation so its real value does not erode over time.
- Estate
- Everything you own when you die, minus what you owe.
- Intestacy
- Dying without a valid will, so the law decides who inherits.
- FCA-authorised intermediary
- A firm authorised and regulated by the Financial Conduct Authority to arrange insurance.