Assured – Policyholders insured under specific terms.

Benefit – Amount given to the policyholder or the beneficiary when the claims are made.

Bid Price – Unit holdings cash-in value or selling price.

Bonus – Additional amount given over and above the policy profits. It is paid under the policy along with the benefit. The insurance company decides this amount depending on their profits. Bonuses, once added, are paid on guaranteed basis.

Convertible Term Insurance – Such a policy allows the policyholder to convert an existing policy into an endowment or whole life insurance policy. It does not require undergoing any extra examinations for medical issues.

Critical Illness Insurance – When a policyholder suffers any of the pre-defined life-threatening illnesses then for the diagnosis expenses this policy provides a lump sum amount.

Decreasing Term – In this type of term policy, the death benefit goes down every year depending on the plan selected by the policyholder.

Endowment Insurance – The pre-defined amount is paid when the policyholder dies, but only if the death occurs within the specified period. The amount is also paid when the pre-defined period of time ends.

Family Income Benefits – Lump sum is not paid in this term insurance, rather for a fixed period, the dependents or the insured are paid the set amount.

Guaranteed Bond – The interest and principal are guaranteed in this bond by an entity that is not the issuer. This bond can be growth or income.

Increasing Term – The amount and the cover paid into the policy increase every year by a set percentage. The calculation is done on the original insured sum. In this, the life cover increases as the policyholder’s earnings go up.

Investment Bond – The life cover is combined with the investment. The lump sum amount paid towards the investment bond or policy is paid into the insurance company’s unit-linked (Life Funds) or with-profit funds. There are many types of bonds including single premium bonds that are unit-linked as well as the guaranteed bond. It is not a government or company bond where fixed rate interest is offered.

Life Fund – Investment funds that are usually unit-linked. These funds are generally run by Pension Companies or Life Assurance. These funds are for individuals who hold life insurance policy. The fund held in the assets is divided into many units. Investors receive units according to their investment contributions towards the Life Fund.

Maturity – The date when the endowment insurance policy completes and the benefits including bonuses are given to the policyholder or the beneficiary.

Mutual – With-profits policyholders own this type of life insurance fund.

Offer Price – The purchase price of the fund units.

Premium - Money paid by the insurance holder towards his or her policy.

Proprietary - The life insurance company that pays profit to the shareholders.

Qualifying Policy – The savings plan usually available for 10 years and based on the life insurance. To avail tax-free status for the final payout, it must pass qualifying criteria.

Renewable Term - Even if there is no evidence of insurability then this type of term insurance can be renewed.

Single Premium Policy – When for a policy, the payment is made as one lump sum amount.

Sum Insured – Money that is assured to be paid in a policy. It does not include any bonus.

Surrender Value – It does not apply to every type of insurance policy. This money is received by the policyholder when the person stops coverage.

Term Life Insurance – It provides protection only to the policyholder. If the policyholder dies within the pre-defined years, only then the beneficiaries receive the life insurance. No payment is received by anyone if the insured person lives beyond the term. It is considered the most affordable life insurance for people.

Whole Life Insurance – The cash value in this policy adds up and the policyholder gets the death benefit. It remains valid during the lifetime of the policyholder. The policy continues only till the agreement terms and until the premiums are paid. One can select a policy that pays a lump sum amount on the policyholder’s death. The other options include receiving the insured amount with the bonuses, or the insured amount and profits earned through investments made in funds.

Terminal Bonus – When the maturity or death claim is paid then the amount for this bonus is determined. The policy must have been in-force for the minimum years as stated in the agreement. The amount is based on the insurance company’s profits.

Unitised With Profit Fund – It is also referred as a Unit-Linked Profit Fund. This Life Fund is allowed to invest in overseas or UK market in cash, fixed interest securities, property and shares. The policyholder basically buys the’ units’. When the company declares the annual bonus, the policyholder can choose to have it combined with the unit price everyday or receive more units. Because bonuses are added, the underlying investments value may not reflect the correct unit price.

Unit-Linked – It is also referred as Unitsed. In a unit-linked policy, part of the amount is used to buy ‘units’ in funds. The policy value at maturity is based on the fund growth where the policy investment is made. It is used to refer to policies that provide savings as well as protection, such as investment bonds, endowment insurance and whole life insurance.

Unit-Linked Single Premium Bond – The investment in this insurance policy is distributed over many Life Funds.

Without Profits – No bonuses are paid in this policy. If the policyholder dies or policy reaches maturity then only the basic assured amount is paid.

With Profits – In some types of policies, protection is combined with the investment. These policies provide parts of profits obtained through insurance company’s profits. Amounts from premiums are invested in the with-profit funds. Reversionary bonuses are paid every year depending on the growth of investment in the fund. The fund value may get an extra terminal bonus on maturity and/or death of the insured person.

With Profits Bond – In this type of policy, total investment of the lump sum is made in the Unitised With Profit Fund (usually listed in the Life Funds section).