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Life Insurance Jargon Explained

Insurance Jargon Buster by Business Cover Expert

Are you getting confused with certain terms when talking about your business life insurance? At Business Cover Expert, we help to explain insurance jargon and common insurance terms so that you can find the right sort of cover for you. Check out our glossary below and brush up your understanding of business insurance jargon and feel more comfortable when discussing your needs.

Life Insurance

A policy against an individual that provides a lump sum payout when the individual insured dies or is diagnosed with a terminal illness.

Life Assurance

A guaranteed payout when you die. The key difference between life assurance and insurance is the duration of the policy term. In other words, life insurance pays out upon death within a set policy term whereas life assurance will pay-out when the policyholder dies.

Business Life Insurance

A broader term covering life insurance for individuals within a business. It covers Relevant Life Cover, Key Man Insurance, Shareholder Protection and Partnership Protection.

Cover

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

Premium

The amount that a policyholder must regularly pay to their insurance provider in order to be covered.

Guaranteed Premium

A guaranteed premium does not change over the term of the policy and the monthly cost remains the same until the end of the policy term.

Policy Holder

The person who legally owns the policy and is named in the policy documents

Key Person

A Key person or key man is a person integral to the success of the business. If they were to leave unexpectedly it could cause a detrimental effect to the business operations or profits. Key Man Insurance protects against this circumstances by providing a lump sum pay out to the business to cover any recruitment, training or loss of profits during this time.

Beneficiary

This is the individual(s) chosen to receive the lump sum pay-out when the individual insured dies. It is normally the individual’s spouse or family.

Claim

A formal request sent to the insurance provider for the payout because the policyholder has passed away or in the event that they have been diagnosed with a terminal or critical illness, dependent on the policy. 

Inheritance tax

A tax that is payable on a deceased individual’s estate.

Dependent

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

Single-life

Refers to an insurance policy that only covers one individual.

Estate

The total value of an individual’s assets normally at the time of death, including all money, land, buildings, homes and personal property.

Trustee

An individual responsible for distributing the lump sum payout to the chosen beneficiaries. Both the trustees and the beneficiaries are chosen when the policy is written in trust.

Underwriting

The process a life insurance company goes through to determine whether it will accept an application for life insurance and the premium rate that will be charged.

Shareholder Protection

A type of business life insurance that protects a business should one of the shareholders die unexpectedly. It pays a lump sum to the business to enable them to buy back the proportion of the business that belongs to the individual.

Partnership Protection

Similar to shareholder protection, Partnership Protection covers the life of a partner or owner. It enables the remaining partner to buy the share of the business, pay back any outstanding loans and keep the business running in the event of an unexpected death.

Relevant Life Cover

Life insurance aimed at businesses looking to cover their employee’s death in service benefit. This type of policy also benefits from tax efficiency as it counts as an allowable business expense.

Critical Illness Cover

This insurance policy covers an individual when they are diagnosed with a specific critical illness within the term of the policy. It can be added to a life insurance policy or bought on its own.

Terminal illness cover

Provides an early payout from your life insurance if you are diagnosed with a terminal illness with less than 12 months to live. Once a claim has been made, the policy will end and another claim cannot be made when the policyholder dies.

Trust

A legal document that outlines who will be responsible for distributing a payout to the beneficiaries. creating a legal document that states who will be responsible for distributing your pay-out to your beneficiaries. By placing the policy into a trust, it, therefore, means that there can be an avoidance of paying inheritance tax.

Death in service

A benefit provided by businesses to their employees which will pay a lump sum to the deceased’s dependents should they die during their employment with the company.

Quote

An estimate of how much an insurance provider will charge you for a particular type of policy and level cover. Your quote will take into account your lifestyle, health, age and occupation as well as the policy length and amount of cover you need. For more information, request a free quote today with Business Cover Expert.

We’ve covered the most common insurance jargon terms to help you weigh up your business life insurance options. This is to help you make the best decision on which policy will be right for you. In other words, having a little more clarity on certain terms can help you to fully understand the insurance policies available for you and your business. If you’re looking for business life insurance for yourself or another individual, get in touch today.