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Life Insurance Glossary of Terms

At Compare Cover, we're committed to helping you make informed decisions about your life insurance. We know that some life insurance terms can be confusing, which is why we've put together this at-a-glance life insurance glossary to help you cut your way through the jargon. Simply scroll down our alphabetical list of life insurance terms to find the definition you need. Where the life insurance glossary refers to an element of the cover it should be noted that not all policies will include all mentioned benefits and the exact definitions of those benefits could vary by provider.

A

Accidental Death Benefit

A benefit which is included by some providers which gives you some cover whilst your life insurance application is being underwritten. It means that a payment could be made in the event that the policy holder dies as the result of an accident after the application has been submitted and before the policy has started.

B

Beneficiary

An individual who is entitled to to receive a life insurance payout in the event of the policyholder's death.

C

Certificate of Insurance

An official document issued by an insurance provider that serves as proof of insurance cover.

Claim

A formal request to the life insurance provider for a payout because the policyholder has died (for a life insurance claim), or in the event that they have been diagnosed with a specified critical illness (for a critical illness cover claim).

Claims Handler

A life insurance provider employee who reviews and processes claims.

Cover

The sum of money which the policy will pay out in the event of a claim.

Critical Illness Cover

A form of insurance whereby if the policyholder is diagnosed with a specified critical illness within the term of the policy, the insurance provider will make a payout. Critical illness cover can either be bought on its own, or as an additional benefit to standard life insurance. Through Compare Cover we only sell critical illness cover alongside life insurance. For more information, visit our What is Critical Illness Cover page.

D

Death Benefit

The amount paid out by the life insurance provider in the event of a policyholder's death.

Death in Service Benefits

A benefit that some businesses provide their employees with, which guarantees that, if the employee dies while still employed by the company, the employer will pay a lump sum to the deceased's dependants.

Decreasing Term Life Insurance

Also known as ‘mortgage protection life insurance', decreasing term life insurance is a type of life insurance in which the amount of cover decreases over time, usually in line with the amount owed on a standard repayment mortgage. For more information, visit our Mortgage Protection Life Insurance page.

Dependant

An individual who relies on you for financial support, such as a spouse, partner or child.

E

Estate

The total value of an individual's assets, including all money, land, buildings, homes and personal property.

I

In Trust

By writing a life insurance policy in trust, you ensure that the death benefit is paid into a trust, as opposed to your estate. This means it generally will be paid to your beneficiaries much faster, and may not be liable for inheritance tax. For more information, visit our Life Insurance and Inheritance Tax page.

Inheritance Tax

A tax that is payable on a deceased individual's estate. For more information about how this affects life insurance visit our Life Insurance and Inheritance Tax page.

J

Joint Life Insurance

A type of life insurance in which one policy covers two individuals but is limited to only paying out on the first claim. For more information, visit our How to Choose Life Insurance page.

L

Level Term Life Insurance

This is a type of life insurance in which the amount of cover remains the same over the entire term of the policy. For more information, visit our Level Term Life Insurance page.

Lump Sum Payment

A one-off payment, in which the entire amount due is paid out in one go.

P

Policy

A contract between the policyholder and the insurance provider containing all the terms and conditions of an insurance arrangement.

Premium

The amount that a policyholder must regularly pay to their insurance provider in order to continue cover. Premiums can either be guaranteed (they will not change over the term of the policy) or reviewable (liable to change over the term of the policy). All premiums quoted on Compare Cover are guaranteed.

Probate

The legal process in which a will is proven to be valid.

Q

Quote

An estimate of how much an insurance provider will charge you for a particular type of policy and level of cover. Click here to get an online life insurance quote today. Life insurance quotations take into account your age, smoker status and the type, policy length and amount of cover you require. Insurance companies will ask for your detailed medical history before the policy is put in force and may adjust the premium if your health, lifestyle or family history shows you to be a higher risk.

S

Secondary Beneficiary

Also known as ‘contingent beneficiary'. A named individual who will receive the payout on a life insurance policy in the event that the primary beneficiary has died.

Single Life Insurance

A type of life insurance policy in which one policy covers one individual.

T

Term

The length of time for which a term life insurance policy is in force. The policy will only pay out during the term which is chosen when the policy is taken out.

Term Life Insurance

A type of life insurance in which cover will only last for a specified length of time (or ‘term').

Total and Permanent Disability

A benefit offered by some providers which will pay out in the event that the insured, due to sickness or injury is permanently unable to carry out either the occupation for which they are trained (own occupation) or any occupation.

W

Waiver of Premium

An optional chargeable extra that can be added on to a standard life insurance policy, which means that, should the policy holder no longer be financially able to pay their premiums, cover will continue nonetheless. Waiver of premium may not always be available to all applicants depending on their occupation.

Whole of Life Cover

A type of life insurance in which cover lasts until the policy holder's death.

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