5 min read
Life insurance jargon explained
- Term life insurance
Provides a fixed cash lump sum pay-out if you pass away during the term of the policy. Comes in the form of either level term or decreasing term options - Whole of life insurance
Lifelong protection that provides a pay out when (not if) you pass away, (as long as premium payments are up to date) - Joint life insurance
Covers two lives simultaneously, however only pays out once, normally on the first death. Usually around 25% cheaper than paying for 2 single policies - Family income benefit (or FIB)
FIB is a term-based policy providing ongoing, tax-free, monthly payments instead of a cash lump sum as with traditional life insurance. - Critical illness cover (or CIC)
CIC is a tax-free, lump sum pay out if diagnosed with a life-changing illness. Can be added to a life insurance policy for an additional cost or sold as a standalone product by some providers - Terminal illness cover
Claim early if you're predicted to die of a terminal illness within 12 months. Comes as standard all term life insurance policies purchased through Reassured - Impaired life insurance
Cover for higher-risk individuals including health and lifestyle implications. Reassured offer a dedicated inhouse impaired risk team, who are on hand to help those who've previously been declined - Sum assured
The pay out amount from an insurance policy is called the sum assured - Non-disclosure
Failure to provide complete and honest information during application. Lying on your life insurance application form could invalidate your policy and a pay-out may not be issued when you pass away - Life assurance
Life assurance provides a pay out when you die. Whole of life insurance is an example of life assurance - Guaranteed Insurability Option
Ability to change policy details (increase sum assured) without additional underwriting - The Financial Conduct Authority (FCA)
Financial services regulatory body. - Waiting period (or qualifying period)
The period in which cover must be active before protection is valid. The waiting period is usually 12 or 24 months and is present on the vast majority of over 50 plans - Waiver of premium
Premium payments paused if you're out of work, usually for for 26 weeks or more but varies between insurers - Write life insurance in trust
Signs over the rights of your policy to a trustee upon your death, (similar to an executor of a will). By doing this the proceeds from your policy avoid forming part of your estate and thus may not be subject to 40% inheritance tax and probate. At Reassured our customer services team can help guide you through the trust process and help with the application (on eligible policies)
9 min