Jargon Buster

Accident, Sickness and Unemployment Insurance - This is an insurance Policy that provides a tax-free monthly income if you are unable to work as a result of sickness, incapacity or Unemployment/redundancy, and pays out for a maximum of 12 (as shown on your certificate of insurance), in the event of a claim.

With Unemployment cover, there is an 'initial exclusion period' at the start of a Policy where you cannot claim, this can vary in length dependant upon the company you choose, and is shown on your certificate of insurance.

Application - This is a declaration of information made by a person who is applying for a Policy, product or service.

An Application for an insurance Policy provides information and is used to declare the amount and type of cover that you are applying for. It is also used by the insurer to assess the Risk of the applicant.

You should be very careful to ensure that all information is disclosed accurately when applying for insurance as a Policy may not pay out in the event of a claim if a non-disclosure is found.

Benefit/Cover amount - This is the amount of Cover provided on an insurance Policy. This amount is paid out in the event of a valid claim and is shown on your certificate of insurance. It is the maximum Benefit that you will receive for each month you are claiming, up to a maximum of 12 months as shown on your certificate of insurance.

Chronic Condition - This is a medical condition, (sickness, disease or injury) which has at least one of the following characteristics:

• It continues indefinitely, for an unlimited period;
• It is constant and is controlled rather than cured;
• It has symptoms which recur and have required consultation, treatment or care in the past; or
• It requires long-term monitoring or treatment, consultations, check-ups, examinations or tests.

Contract Worker - Employed on a contract for a specific term or undertaking for at least 12 months duration.

Employed - This means your employer deducts PAYE tax and national insurance (N.I.) contributions from your gross income and your work is of a permanent nature - or you work under a fixed term contract or sub contracting basis and your sole source of income comes from that contract.

You must have been in continuous work for 6 months before your first claim for Unemployment (this is waived if you were in continuous work for 6 months before the Policy start date)

Terms for contract workers vary between underwriters and you should always check the Policy Wordings for further details.

Employed/Employment/Work - Permanent paid employment, including self-employment, of at least 16 hours per week.

Exclusions - These are conditions that are put on an insurance Policy and shows when the Policy will not pay out. Exclusions could be placed on insurance for medical conditions, hazardous activities and pursuits or for scenarios such as being outside of the country or at war.

There are some specific conditions are not covered for any applicant, details can be found in the Policy Wordings.

Any Chronic Condition that you suffer from before the start date of your Policy will be excluded from your Policy.

Any pre-existing condition that you suffer from in the 12 months before the start date of your Policy will by excluded from your Policy until you have been clear of symptoms, treatment and check-ups for a minimum of 24 months.

Gross Monthly Income - This is the amount you earn in a month, as stated on your pay slip(s) before deductions (Tax & National Insurance).

If you are Self-Employed, this will be worked out from the monthly average of the annual income you declared to HM Revenue & Customs on your self-assessment return for the tax year preceding the start date of your Policy, the date of any increase in your Cover, or the start date of a claim.

Income Protection - This is a Policy that pays out a monthly income to the insured if he/she is unable to work due to Accident, Sickness or Unemployment (Involuntary Redundancy) for a specified number of days, also known as the 'deferment' or 'waiting' period.

Income Protection is available for both Employed and Self-Employed. It can also be available for contract workers, however it is strongly recommended that you seek advice for the latter.

You can Cover up to a maximum of 50% of your gross, however the Benefit is paid free of tax.

Initial Exclusion or Qualification Periods - This refers to the period of time you will have to wait before you can start to receive claim Benefits. 'Initial Exclusion Periods' or 'Qualifying Periods' are frequently used for Income Protection insurance and Mortgage payment protection policies whereby you cannot make a claim until the Policy has been live for a specified time period. 'Initial Exclusion Periods' or 'Qualifying Periods' are almost always set for Unemployment and redundancy policies, as this helps to avoid people taking out a Policy and claiming for an expected redundancy.

The 'Initial Exclusion Period' or 'Qualification Period' will be specified on your certificate of insurance.

Money in Lieu of Notice - This is when you receive payment from your employer instead of working your notice period. You will still pay Tax and National Insurance on this money just as you would with your normal wages. You cannot register with the Job Centre Plus until your Lieu of Notice period is complete. Your Lieu of Notice period is usually written into the terms of your contract of employment.

Monthly Benefit - This is the total amount of monthly Cover you have selected under the Policy in order to provide sufficient Cover to help to protect your monthly outgoings and is shown on your certificate of insurance.

Mortgage - This is a loan taken out through a recognised bank or building society on the residential property that you occupy.

Non Disclosure - This refers to a person not declaring required information on an Application form for an insurance Policy. With many insurance policies, you will complete an Application form in which it is your duty to answer all questions truthfully and disclose any relevant information that is requested. If information is omitted, i.e. not disclosed, it could mean that a Policy would not pay out in the event of a claim.

If you are unsure as to whether something is relevant, always include it.

In the event of a claim being rejected due to non-disclosure, the Policy will be lapsed and the Premiums paid are usually refunded.

Occupation - This is the job, career or profession that you do for a living. It is a term used to briefly describe the work, tasks and activities that you do for your job. Many people's Occupations change during the course of their lives and are often guided by their education, personality, past work experience and training.

Any changes in Occupation or other material facts should be notified to the underwriter as soon as possible.

Policy Documents/ Policy - These include the policy wordings and your schedule of insurance.

Policy wordings - This is usually in the form of a pre-printed booklet and forms part of your policy documents along with your schedule of insurance.

Premium - This is the amount payable for an insurance Policy and is paid monthly to keep the contract running. The Premium payable differs between insurance policies and can often be determined by age and cover type, (Accident & Sickness only, Unemployment only or Accident, Sickness & Unemployment. combined).

Redundancy pay - This is a lump sum paid to you by your employer when you are made redundant. You can still register with the Job Centre Plus if you have received Redundancy Pay.

Redundancy Pay will not affect your ability to claim on our payment protection insurance Policy.

Reviewable Premium - This is a term which specifies that insurance Premiums will be reviewed at pre-determined times from a Policy start date. This Policy can be reviewed annually.

With Reviewable Premiums, your payments may increase, stay the same or decrease after the company makes the review. Review of Premiums can be based on the number of future claims and their costs for reinsuring policies.

Risk - This is a term used by insurance companies, whereby the chance of the person insured claiming on an insurance Policy is evaluated.

If a person is deemed to be a high Risk, it can mean that the insurance Policy is offered with an exclusion (specified situations will not be covered) or is declined.

Schedule of Insurance - This is the part of the policy documents where the Policy is made personal & specific to you and together with the policy wordings they form the policy documents.

Self-Employed - This means you are classed as schedule D for income tax purposes and you are required to make Class 2 National Insurance contributions.

You are also classed as self-employed if you are a proprietor, a controlling director or you are a relative of a proprietor or controlling director of the business you work for.

A Proprietor means you own (alone or with others - except as a shareholder), the business you work for. A controlling director means you own more than 20% of the issued shares of the business you work for.

Terms/Terms & Conditions - These are the conditions on which the Policy is offered by the underwriters. The Terms & Conditions of the Policy are also known as Policy Wordings.

Underwriting - This is the process that insurance companies use to assess Applications. The information provided in an Application allows underwriters to determine if the applicant will be accepted for their desired Policy and if so whether they are accepted on special Terms, i.e. with any Exclusions.

Unemployed - This means you are entirely without work due to one of the following reasons:

Employed: your employer has totally and permanently terminated your job due to circumstances entirely beyond your control;

Self-Employed: the business you work for has totally and permanently ceased to trade due to circumstances entirely beyond your control, or the control of any co-director or partner in the business and you have notified the Inland Revenue, (and companies house if you are registered with them) that you have ceased to trade;

Or, you have ceased to work to become a full-time carer for a member of your immediate family and are in receipt of Carer's Allowance.

Unemployment - This means you are Unemployed and you are not receiving any form of payment or reward from your previous employment or self-employment.

Waiting period/excess period - This is the time period that you have to wait before a claim is paid. Sometimes the policies will pay back to day one of the claim, so long as you have been off for the full Deferment period. Other times it will only pay back to the end of the Deferment or Waiting period.

The different options for the waiting periods/excess periods are:

• 30 days waiting, paying back to day one
• 30 days waiting, first payment on day 61 pays back to day 31
• 60 days waiting, first payment on day 91 pays back to day 61
• 90 days waiting, first payment on day 121 pays back to day 91
• 180 days waiting, first payment on day 211 pays back to day 181

If you choose a longer deferment period your premiums are usually cheaper as a result.

Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

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