A

Acceptance Letter

An offer of life assurance which sets out the terms upon which an insurer is prepared to accept the risk.

Accidental Death Benefit

Benefit payable on death in circumstances where the cause of death was accidental.

Accrued Charges

If the basis of cover is single or joint life and the number of units are insufficient to cover charges, then these will be carried forward (accrued) until the number of units is sufficient. For a dual life policy, if the units in the first or second life's unit account are insufficient, then these will be carried forward (accrued) until there are sufficient units in the relevant unit account to cover them.

Accumulated Contributions

The total of contributions paid by a member of a pension scheme during a given period, enhanced where appropriate by interest. In a money purchase or defined contribution scheme the term may also include the employer's contributions.

Active Member

A member of an occupational or company pension arrangement who is at present accruing benefits under that scheme in respect of current service.

Actuarial Assumptions

The set of assumptions as to rates of return, inflation, increase in earnings dividend increases, mortality etc used by the actuary in an actuarial valuation or other actuarial calculations.

Actuarial Basis

Commonly used to mean valuation method and/or actuarial assumptions.

Administration Charge

A charge made on most contracts to cover the costs of administering the contract. Usually a set monetary amount, deducted at regular intervals e.g. monthly. Also called a Policy Fee.

Age Admitted

The supply of original evidence of age by the policyholder in a form acceptable by the life office - passport or birth certificate.

Age Attained

Current age.

Agent

This is a term used for the financial adviser who recommends a contract to a client.

AIDS

Acquired Immune Deficiency Syndrome.

Allocation Rate

With certain products, the certain percentage (the allocation percentage) of each contribution is used to purchase units for the policyholder.

Annual Management Charge

A charge made on the units held under a unitised policy, usually made to cover the costs of managing the investment comprising the fund. The charge is usually expressed as a percentage of the value of the fund. See also Management Charge.

Annual Report

The means by which the trustees of a company pension scheme communicate financial and other information about the scheme to members, employers and other interested parties.

Annuitant

An individual who is in receipt of an annuity.

Annuity

An amount paid periodically by a life office to an individual (the annuitant) in respect of a lump paid to the life office, or resulting from a contract held with the office.

Application Form

The application submitted to the company by an individual or group of individuals proposing to take out a contract with the company. See also Proposal Form.

Assignee

The person to whom the ownership of an asset (e.g. a policy) is transferred.

Assignment

A transfer of ownership.

Assignor

The person who assigns an asset.

Additional Voluntary Contribution (AVC)

An additional contributions which can be made to a company pension scheme to increase potential benefits.

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B

Beneficial Owner

Person who is the owner of an asset.

Beneficiary

The person to whom the benefits from the policy are paid.

Bid / Offer spread

The difference between the bid price and the offer price for a unit-linked fund. This is usually 5%.

Bid Price

The price at which units are sold/encashed back to the company.

Bid Value

The number of units held within a fund multiplied by the bid price of the fund.

Bond

A single premium policy.

Broker

An independent financial advisor with whom the proposer has placed his business.

Buy-out-Bond

A policy purchased by the Trustees of a pension scheme in the name of the member in lieu of pension contributions invested before leaving a company's service.

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C

Cancellation of Units

On a unit-linked contract charges are made to cover the cost of the benefits provided. These charges can be collected by cancelling units of the equivalent value.

Charges

These are deductions made from policies (usually by cancellation of units on unitised policies) to enable the company to cover contract expenses.

CII

Chartered Insurance Institute

Claim

The request for payment of the policy benefits.

Clawback

When indemnity commission is paid but not earned as contributions ceased before the end of the initial period of the contract, a recall of the unearned commission is referred to as clawback.

Commencement Date

The date the insurance companies liability for a risk/policy comes into force.

Commission

The money a company pays an intermediary or adviser for selling their product. The amount paid is usually related to the level of contributions and term of the policy.

Commission Sacrifice

Where an intermediary chooses not to take some or all of the commission due. This often results in enhanced contract terms for the policyholder.

Company Paid Pension

A pension plan that the employer has established under trust on behalf of their employees (see Eligibility Requirements) subject to revenue limitations. The benefits could include: retirement benefits, death benefits and leaving service benefits.

Contribution

A single amount or regular instalment to be paid for a contract. See also Premium.

Cooling-off Notice

A notice issued to a policyholder at policy issue stage advising of the Cooling Off Period.

Cooling-off Period

A statutory period of time immediately following the purchase of a life policy when the policyholder may elect to change his mind and cancel the contract. Does not apply to all policy types.

Critical Illness Benefit

Benefit available with certain product types which provide a lump sum to be paid out in the event of the life assured suffering or contracting an illness specifically covered by the policy. See also Serious Illness & Dread Disease.

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D

Death Benefit

The amount payable under a contract on death during the term of the contract. See also Sum Assured and Life Cover.

Decreasing Term Assurance

Life assurance where the sum assured reduces gradually down to zero at the end of the term.

Deferred Period

A period of time, specified in the policy document, during which a Life Insured is totally disabled as a result of illness or injury. In the event of a claim, benefit becomes payable at the end of the deferred period.

Defined Benefit

A company pension arrangement where the benefit payable under the scheme is 'defined' in advance of the funding for the scheme.

Defined Contribution

Benefits are built up directly from the contributions paid i.e. employee and employer contributions plus net relevant earnings. In a money purchase contract, the contributions are subject to limits and the benefits are variable as compared to a defined benefit scheme where the converse applies. See also Money Purchase.

Dependant

A person who when a benefit becomes payable from your pension arrangement (i.e. on death or retirement) is financially dependent on the life assured.

Discharge

Lifting the life office of further obligation in return for payment under a policy.

Domicile

The country in which a person has, or is legally deemed to have, his permanent home.

Dormant Accounts

A policy deemed unclaimed in line with the unclaimed Life Assurance Policies Act 2003. Policy value can be reclaimed by the policyholder - contact Eagle Star.

Dread Disease Benefit

Benefit available with certain product types which provides a lump sum to be paid out in the event of the life assured suffering or contracting an illness specifically covered by the policy. See also Serious Illness and Critical Illness.

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E

Early Retirement

The commencement of retirement benefits prior to the normal selected retirement age.

ECG

Electrocardiogram. A recording of the electrical activity of the heart on a moving paper strip.

Echorcardiogram

The study of the movements of the heart by use of ultra-sound imaging.

Effective Date

The date on which a transaction is deemed to have been effective.

Eligibility Requirements

The conditions laid down by an employer which must be met before an individual can become a member of a pension arrangement.

Endorsement

Document which evidences an alteration to an existing policy. Once issued it becomes part of the overall policy document.

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F

Final Pensionable Earnings

The earning upon which an individuals benefits from a company sponsored pension arrangement will be calculated. This will either be pensionable earnings at a particular date or averaged over a number of years.

Final Remuneration

The earnings that the Revenue will use for calculating the maximum benefits that can be received by an individual at retirement from a company sponsored pension arrangement.

Fund

See Investment Fund.

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G

Grantee

The person(s) to whom a policy is granted, and who is the original legal owner of the policy.

Group

A number of policies established in respect of a specific group of individuals i.e. members of a group pension scheme.

Growth Rate

A percentage at which an investment is expected to increase in value.

GTT

Glucose Tolerance Test. As test carried out to check for diabetes.

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H

HIV

Human Immuno-Deficiency Virus.

HIV Test

A Saliva test to determine the presence of HIV antibodies in the body. (note a Blood test may be required in certain circumstances)

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I

IBA

Irish Brokers Association

IICB

Insurance Intermediary Compliance Bureau

IIF

Irish Insurance Federation

III

Insurance Institute of Ireland

Illustration

An example of the benefits available under the policy at the selected date, projected at a certain growth rate.

Increment

An increase in the benefits provided under a policy achieved by increasing the regular contribution or paying an additional single contribution. The increment will normally have the same maturity date as the original benefit.

Indemnity

A promise to reimburse the life office for any loss it makes by paying policy benefits where future claims from another party may possibly arise.

Indemnity Commission

Commission paid in advance at policy issue stage. No commission is earned renewal commission becomes due at the end of the initial period.

Indexation Option

An option whereby the life cover or the contribution can be increased each year, for example, in line with the Consumer Price Index or a fixed percentage.

Initial Commission

This commission is payable in respect of contributions due in the initial period.

Initial Period

The time period (usually expressed in months) for which contributions earn initial commission.

Insurable Interest

A legally recognised interest enabling a person to insure his own or the life of another.

Investment Fund

A fund managed by the life office that policyholders can choose to invest their contributions in. A range of such funds is usually offered.

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J

Joint Life

A contract with two lives assured. The benefit would be payable on the first death.

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K

Key Man

A person who is vital to the continued profitability of a company.

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L

Lapsed Policy

A policy under which the policyholder has stopped paying contributions and which has no value.

Last Survivor

A contract dependent on two lives (usually husband and wife) where the benefit is paid on the second death, or paid until second death if a Last Survivor Annuity. This is sometimes referred to as Joint Life (second death)

Late Retirement

The commencement of retirement benefits after the normal selected retirement age.

Leaving Service

An employee leaving the employment of their employer.

LFT

Liver Function Test. A test to determine the liver function.

LIA

Life Insurance Association

Life Assured

The person on whose life a policy is written.

Life Cover

The amount payable on death during the term of the contract. See also Sum Assured and Death Benefit.

Life Fund

An expression describing the amalgamation of insurance business which is neither pensions related nor general annuity business. The Life Fund is taxed on investment income plus realised capital gains, with deduction of expenses.

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M

Management Charge

A charge made on the units held under a unitised policy. Usually expressed as a percentage of the value of the fund. See also Annual Management Charge.

Material Fact

A fact which would influence an underwriter when deciding terms for a risk.

Maturity Date

The date at which the pre-selected investment term of a policy ceases.

Maturity Value

The value of the policy at the maturity date. This will include any bonuses that may be applicable on maturity.

Maximum Life Cover

The maximum amount of life cover benefit that may be included in a pension arrangement as per the guidelines outlined by the revenue commissioner.

Maximum Pension

The maximum amount of pension that may be received by an individual in respect of a company paid pension scheme as per the guidelines outlined by the revenue commissioner.

MER

Medical Examiners Report. A full physical examination carried out on the applicant by a Doctor.

Microscopic Urinalysis (MSU)

Examination of a drop of urine under high and low power for the presence of abnormalities.

Money Purchase

Benefits are built up directly from the contributions paid. In a money purchase contract, the contributions are subject to limits and the benefits variable as compared to a defined benefit scheme where the converse applies. See 'Defined Contribution'.

Morbidity Charge

Charge made to cover the expected cost of benefit payments due to illness or disability (the cost of a PHI benefit).

Morbidity Rate

A probability that the benefit due to illness or disability will be payable within a specified time period. Used in calculating the Morbidity Charge.

Mortality Charge

Charge made to cover the expected cost of benefit payments due to death.

Mortality Rate

A probability that the benefit due on death will be payable within a specified time period. Used in calculating the Mortality Charge.

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N

Net Relevant Earnings

The earnings upon which the tax relief on contributions to a personal and Money Purchase pension plans will be calculated.

NRA

Normal Retirement Age

NRD

Normal Retirement Date

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O

Occupational Rating

An extra premium charged due to the Life Assured being a greater than normal risk to the company due to their occupation e.g. a deep sea diver.

Offer Price

The price at which units are sold by the company.

On Risk

When a contract of insurance begins and the insurer assumes responsibility for the risk insured against: the point from which the insurer agrees to provide cover.

Open Market Option

The right to transfer benefits at retirement from a pension policy to an insurance company of the individual's choice to provide an annuity or other relevant retirement benefits approved under relevant legislation.

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P

Paid-Up Policy

A policy on which the premiums have been frozen and will remain so until maturity.

PB

Pensions Board

Pension Fund

The contributions received in respect of a life offices' pension business are allocated to the relevant company paid Pension Fund.

Pension Policy

A policy established for the purposes of saving money to be used to fund for retirement. These policies are governed under specific parts of legislation.

Pensionable Earnings

The earnings which are used for calculating contributions to a company pension scheme.

PFT

Pulmonary Function Test. A test to determine the respiratory function.

PHI

Permanent Health Insurance

PMAR/PMA

Private Medical Attendant’s Report. A report obtained from the applicant’s own doctor. The report is completed from information held in the applicant’s medical records.

Policy

A contract of insurance.

Policy Anniversary

The anniversary of the commencement date of the policy.

Policy Commencement Date

The date the insurance companies liability for a policy comes into force.

Policy Document

A legal document setting out the terms and conditions of the contract.

Policy Fee

See Administration Charge.

Policy Owner

The person who owns the policy and controls its use. See also Policyholder.

Policy Schedule

An integral part of the policy document which sets out the contributions due and benefits payable.

Policy Start Date

See Policy Commencement Date.

Policyholder

The person who owns the policy and controls its use. See also Policy Owner.

Premium

A single amount or regular instalment to be paid for a contract. See also Contribution.

Proposal Form

The application submitted to the company by an individual or group of individuals proposing to take out a contract with the company. See also Application Form.

Provisions

That part of the policy which contains the full terms and conditions of the policy.

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R

Reassurance

When a life office passes on some, or all of a risk to a Reinsurance Company.

Redirection

A facility offered under most unit-linked contracts to invest future regular contributions in a different fund than previously regardless of whether or not the existing units are also switched to that fund.

Reinstatement

If contributions have ceased under a policy or been reduced, then the plan may be reinstated subject to the conditions set out in the policy document.

Renewal Commission

This is paid after the end of the initial period as and when future contributions are paid. It is usually a percentage of the contribution.

Renewal Date

A date on which a contribution is due as set out in the Policy Schedule.

RFT

Renal Function Test. A test to determine the renal (kidney) function.

Risk

An insurer's liability in the event of a claim.

Risk Commencement Date

The date the insurance companies liability for a risk comes into force.

Risk Start Date

See Risk Commencement Date.

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S

Savings Plan

A contract designed to help individuals save.

Self Employed Pension

A pension policy set up in accordance with the terms of the Chapter II, Part I of the Income Tax Act 1967 and Part 774 of the Taxes Consolidation Act 1997.

Serious Illness Benefit

Benefit available with certain product types which provides a lump sum to be paid out in the event of the life assured suffering or contracting an illness specifically covered by the policy. See also Critical Illness Benefit and Dread Disease Benefit.

Single Life

A policy where the death benefit is payable on the death of the Life Assured.

Single Life Annuity

An annuity that has been set up on the basis of an individual only with no provision made for a spouse or dependants.

Smoker Status

Some contracts offer different premium rates for smokers and non-smokers.

Spouse's Pension

A pension payable under a company pension scheme to the spouse of the individual in the scheme following the death of the individual in the scheme. The maximum amount payable is 2/3rds of the member's expected pension at the normal retirement age.

Start Date

See Commencement Date.

Sum Assured

The amount payable under a policy on death. See also Life Cover and Death Benefit.

Sum at Risk

The amount, if any, in addition to the bid-price value of the fund that will need to be paid out on a death claim.

Surrender

The realisation of the benefits of a contract before it becomes a claim by maturity or death.

Surrender Penalty

The early surrender of a policy can result in less than the bid value of the units held as a result of outstanding charges.

Surrender Value

The cash value of the policy at any time before death, maturity or Normal Retirement Age. It will be calculated on a basis stipulated in the policy document.

Switching

A facility offered under most unit-linked contracts to switch some or all of the units already allocated from one fund to any other fund allowable under the terms of the contract. A small charge can be levied.

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T

Tax Free Lump Sum

The amount of tax free cash that an individual is entitled to take from the proceeds of a pension policy calculated in accordance with Revenue limits.

Tax Relief

A reduction in income tax liability resulting from incurring specified expenditure.

Term

The period under a policy between commencement of risk and maturity.

Term Assurance

A contract which pays an amount only if death occurs within a specified period (the term).

Top-Up

Where a single contribution is added to a plan after outset.

Transfer Value

The cash value of contributions paid at the date the transfer value is being calculated. Required usually in respect of an individual who is leaving service and may wish to transfer his retirement benefits to another employer’s pension fund.

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U

Underlying Investments

Assets held by an investment fund.

Underwriting

The process of assessing risk.

Unit

A share in a unitised investment fund.

Unit Growth Rate

On a unitised contract this is the rate at which the unit price increases over time.

Utmost Good Faith

A principle underlying all insurance contracts, that the proposer has a duty to disclose all material facts of which he is aware.

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W

Waiver of Premium Benefit

This benefit allows for the payment of contributions under a policy to be made by the insurance company during periods of absence of work due to illness or injury to the insured life, subject to certain conditions. See also disability.

Whole of Life Assurance

A contract where benefits are paid on death whenever it occurs.