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									          Merchants’ Finance Definitions

       Association of British Insurers

       stands for Annual Equivalent Rate and usually specifies the interest paid
       from current, deposit or savings accounts. This new term replaces CAR
       (Compound Annual Rate) which denoted much the same thing.

Acceptance letter
      An offer of life assurance, setting out the terms.

Access To Medical Records Act 1988
       The terms of this Act require an insurance company to obtain prior written
       consent from an individual before approaching any medical practitioner for
       a medical report pertaining to them. The individual has certain other rights
       including the right (subject to some restrictions) to see any report before
       it is submitted by the doctor.

Accidental Death Benefit
       A provision that may be added to a life insurance policy which provides
       payment of an additional benefit in the case of death resulting from an

Accidental Death and Dismemberment
       Loss of life or limbs through accident. Insurance against such eventualities
       is generally available.

Act of God
       An accident or event which happens independently of human intervention
       and due to natural causes such as storm earthquake etc. which no human
       foresight can provide against. Suggesting that an event was an "act of
       God" may be a defence in English law against a claim for liability since it
       may be held that it could not have been foreseen or safeguarded against.

Actively at Work
       A clause in a group insurance policy that requires a new member or one
       with an increase in cover, to be at work (or on holiday i.e. not absent due
       to sickness, industrial action, etc.) on the day of joining/day of increase.

Activities of Daily Living
        Everyday living functions and activities performed by individuals without
        assistance. These functions include mobility, dressing, personal hygiene
        and eating. The inability to undertake these activities may be used in
        some circumstances to define disability in insurance contracts.

       A professional trained in the technical aspects of insurance and its related
       fields, particularly in the mathematics of insurance, for example, the
       calculation of premiums and reserves. An actuary will use complex
       mathematical methods, often with the aid of computers, to provide
       analysis of claims data and other statistics. In certain circumstances
       insurance companies, pension schemes etc. are required to have
         documents, calculations etc. certified by an actuary. In this and other legal
         contexts the word means a qualified Fellow of the Institute or Faculty of

         Accidental Death and Dismemberment

Additional Borrowing
       Similar to a traditional current account overdraft. It is the extra money
       you can borrow on top of what you've already borrowed. Your Additional
       Borrowing = Your Agreed/Total Facility - Total Borrowing.

Additional Voluntary Contributions
       Pension contributions over and above the pension scheme member's
       normal contributions, which secure additional benefits for the member or
       his or her dependants.

       See: Loss Adjuster.

         Activities of daily living.

Advance Underwriting
      Describes a system used for underwriting members of some group
      schemes. Once an underwritten member is accepted for insurance at
      'ordinary rates', they may increase their cover by a predetermined
      percentage in any year without the need for further underwriting.

         Where an authorised adviser looks at your individual circumstances and
         advises on suitable products for your financial needs.

         Advanced Financial Planning Certificate - a professional qualification for
         financial advisers obtained by examination through the Chartered
         Insurance Institute. Holders are eligible for membership of the Society of
         Financial Advisers.

Age Allowance
       Increased personal allowance for Income Tax for persons aged over 65. A
       further increase is available to persons over 75.

         Someone who acts on behalf of another. Traditionally, insurance company
         salesmen have often been called agents. This has led to a certain amount
         of confusion since in some situations they are acting on behalf of the client
         and at other times they are acting on behalf of the insurance company:
         the distinction is not always clear.

All Risks
        Extension of the cover provided by household insurance to damage, theft
        if outside the home, etc. in respect of individual high value items.

Allocation rate
        This is the percentage of your payment that is actually invested (e.g.
        75%) after initial charges have been taken into account.
        Alpha is the term used to describe the risk adjusted outperformance of an
        investment. A large alpha indicates good performance relative to the

Alternative Dispute Resolution
       A means of resolving disputes without resort to the Courts. Particularly
       used in relation to disputes between pension schemes, trustees and

     Amount purchased or sold in Gift Fund Pools as a result of a contribution
     or miscellaneous activity.

        Access To Medical Records Act 1988.

       person who studies particular stock markets or industry sectors and makes
       buy or sell recommendations regarding the shares of specific companies
       within them. These are arrived at through a combination of research,
       economic statistics and, frequently, visits to the companies themselves.
       For example, in 1998 alone, Flemings' analysts have made over 3,000
       company visits around the world. (See also Fund Manager)

Annual Percentage Rate (APR)
      This rate takes into account all the costs, interest charges, arrangement
      fees etc. Theoretically it allows you to compare mortgages on a like for like
      basis. However, you need to be careful as different lenders calculate it in
      different ways.

Annual management fee
      A charge made every year for running your fund. It is usually a percentage
      of the amount you've got invested.

Annual Report
      A voluntary report published by a foundation or corporation describing its
      grant activities. It may be a simple typed document listing the year's
      grants or an elaborately detailed publication. A growing number of
      foundations and corporations use annual reports to inform the community
      about their contributions activities, policies, and guidelines. (This annual
      contributions report is not to be confused with a corporation's annual
      report to stockholders.)

Annual Volatility
      Volatility is one measure used to assess the risk of a portfolio as it helps to
      describe the likely range of returns achieved by the fund. In statistical
      terms it is the standard deviation of the return distribution. Greater
      volatility of monthly fund returns means that there is a wider range of
      likely returns in the future, or greater uncertainty regarding the fund
      return. Most investors would equate this greater uncertainty with greater

       The person entitled to receive payments from an annuity contract.

         A series of payments, possibly subject to increases, made at specified
         intervals until a particular event occurs. Most commonly an annuity will
         cease after a specified period or upon the death of the annuitant.

Annuity Certain
       A contract that provides payments for a specified number of years,
       regardless of life or death of the annuitant

Approved Scheme
      A pension scheme that is approved by the Inland Revenue under the
      relevant legislation. Members and their employers are able to obtain
      certain tax advantages in respect of contributions and/or benefits. (See
      Exempt Approved Scheme).

         1. Annual Percentage Rate. This is the compounded rate used to give a
         standard comparison of the amount of interest you are likely to pay on
         loans or outstanding credit card balances. 2. A statutory method of
         calculating the Annual Percentage Rate of charge to repay the total charge
         for credit over the period of the loan. 3. Allows customers to compare like
         with like when comparing costs between different lenders.

       profiting from the differences in price when the same security, currency or
       commodity is traded on two or more markets.

       A means of arriving at an acceptable agreement between two disputing
       parties. An independent person or body hears the arguments of both
       parties and makes a decision that is then binding on all concerned. Often
       conducted by members of the Institute of Arbitrators.

         another word for the investments which a unit trusts holds within its

      The transfer of one person's interest in a legal right or duty to another
      person or organisation.

Association of British Insurers
       An association representing some 450 insurance companies which account
       for over 95% of the business transacted by UK insurance companies. Is
       the forum through which UK insurance companies collectively liaise with
       Government Departments and other bodies. Brings insurance companies
       together to set industry standards and codes of practice.

         the Association of Unit Trusts and Investment Funds, which is the industry
         trade body of unit trusts and investment trusts management companies.

      Apportionment of loss on an equitable basis.

Average Annual Return
      Average Annual Return is used to compare returns over different periods
      on a consistent basis with the unit being years, hence per annum.
       Normally only returns over periods greater than one year are annualised.
       The average annual return is the rate that an investor would have earned
       in each year to achieve the total cumulative return over the period.

Aviation Hazard
       The extra hazard of death or injury resulting from participation in
       aeronautics, usually as other than a fare-paying passenger in licensed
       aircraft. For insurance, this often requires an extra premium or the
       exclusion of certain risks.

      A company or group offering a range of financial services to its customers.
      Usually applied to banks having subsidiary insurance companies.

       A business that holds money for its clients, lends money at interest and
       trades generally in money.

Bank Giro Credit (BGC)
      A one-off cash or cheque payment to an organisation or individual.
      Processing a payment made using a Bank Giro Credit takes three working

Bankers' draft
      A guaranteed payment delivered to your home address by registered post.
      If we receive the request before 4 pm we'll send the draft to you on the
      same day.

Base Rate
      the base interest rate determined usually by a country's central bank
      (such as the Bank of England) upon which all other lending or savings
      interest rates are based.

Basic State Pension
       The standard pension which individuals over retirement age receive from
       the state (subject to National Insurance contribution conditions). The Basic
       State Pension is a fixed amount, not connected to earnings.

Bed Breakfasting
      The former practice of selling shares one day and buying them back the
      following day so as to establish a realised loss (or gain) for tax purposes.
      The tax advantages were removed by the Finance Act 1997.

       The person who is or will be the ultimate recipient of a benefit. Examples
       could be someone named to receive a legacy under a Will or an individual
       nominated to receive benefit from a trust fund.

Benefit Basis
       The benefit structure of a group insurance policy or pension arrangement.
       It defines the type and level of benefits for each category of membership.
       For example, life assurance cover for one category of employees might be
       3 x salary and for another category of employees it might be 4 x salary
       (the categories must be clearly defined groups in terms of jobs carried out
       so as to ensure there is no illegal discrimination).
       The monetary amounts payable by the insurance company to a claimant,
       assignee, or beneficiary under the terms of an insurance policy.

Benefits In kind
       Benefits other than cash, provided to a person through their employment
       (for example, cars, or private medical insurance). These benefits are
       usually subject to tax. Inland Revenue rules normally allow their value to
       be included in the calculation of maximum pension benefits.

      A sum of money or other property available upon the donor's death.

Bid Offer
       Shares, units in unit trusts and other investment vehicles are bought at
       one price and sold at another. The higher price is called the 'offer price'
       since this is the price at which the unit trust company or other institution
       offers the security for sale. The lower price is called the 'bid price' and is
       the price at which the investor can sell the security back to the institution
       in question.

Bid-Offer Spread
       the difference between the prices at which you buy units from us and sell
       them back to us. The buying (offer) price is usually higher than selling
       (bid) price and the difference between them may vary within the limits of
       a formula laid down by the Financial Services Act 1986. Both offer and bid
       prices are quoted for each of our funds on the Daily Prices page.

Bid price
        The price at which you can sell a security or a unit in a unit trust.

        otherwise known as fixed-interest securities, bonds are basically IOUs
        which are issued by governments, financial institutions and companies.
        Generally, the issuer undertakes to pay investors a fixed rate of interest
        for a fixed number of years (e.g. 7% for 5 years). The fact that the
        interest rate is fixed makes bonds attractive because their return is so
        predictable. Bonds are traded in open markets, in the same way as
        shares. (See also Gilts)

        An amount added to a basic figure. For instance bonus is added each year
        to a with-profit life insurance policy, thus increasing the amount ultimately
        payable when a claim arises. See also: Dividend

Bridging Loan
       If a house purchase arrangement involves the sale of one property and the
       purchase of another it will normally be most convenient if the two deals
       are concluded simultaneously. If this is not possible and the purchase of
       the second property is to be concluded before the sale of the first is
       completed then additional financing may be necessary. This is a 'bridging
       loan' & it bridges the gap between the two transactions.

Building Campaign
       A drive to raise funds for construction or renovation of buildings.

Building Society
          A financial institution owned by its members (rather than by shareholders)
          which pays interest on deposits and lends money on the security of
          property to enable members to buy their own homes. The distinction
          between building societies and banks (which have historically offered a
          much wider range of financial services but often at a higher cost) is now
          much reduced and the main difference is often the question of ownership.

Bulk Transfer
       The transfer of a group of pension scheme members and their scheme
       assets from one occupational pension scheme to another.

Buy Back
      1) A payment made to reinstate into SERPS a person belonging to a
      contracted out pension scheme.

          2) Reinstatement of life assurance cover after a claim has been paid on
          critical illness under a policy that provides cover against critical illness and
          death. (Normally a policy of this type will cease on the claim being paid;
          the life assurance cover is then automatically cancelled.)

Buy Out
      The purchase of an insurance policy for a pension scheme member in lieu
      of benefits from the scheme following the termination of pensionable

       This is when you buy a property to rent it out rather than live in.

Cancellation Clause
       A provision in an insurance contract that permits the insurer or the insured
       to cancel a policy at any time before its expiration date.

       The largest amount of insurance or reinsurance available from a company.
       It can also refer to the largest amount .of insurance or reinsurance
       available in the marketplace

          A lump sum of money. This usually refers to the amount you invest in a
          fund at the outset - e.g. your original capital.

Capital Campaign
       An organized drive to raise substantial funds to finance major needs of an
       organization, including construction, renovations, or endowment.

Capital and Interest Mortgage
       Your monthly payments are partly to pay the interest on the amount you
       borrowed, and partly to repay the amount you borrowed. At the end of the
       mortgage, the capital and the interest is all completely repaid. It is also
       known as a repayment mortgage.

Capital Claims
       An organized drive to raise substantial funds to finance major needs of an
       organization, including construction, renovations, or endowment.
Capital Gains Tax
       A tax on the realised value of capital gains. Applies only to individuals (a
       company may be liable to Corporation Tax on such gains).

Capital Grant
       Grant to provide funding for buildings, construction, or equipment, rather
       than program or operating expenses.

Capitalised Value
        Used in relation to group life policies that provide a pension for the spouse
        or other dependant of a member. The capitalised value is used for
        underwriting purposes and is an approximation of the lump sum that
        would be required to secure the pension.

       A person who joins a mutual organisation (usually a building society or an
       insurance company) in the hope that the organisation may be converted to
       a limited company owned by shareholders and that in this event he will
       realise a substantial profit by receiving a cash amount or selling any
       shares allocated to him. (See also 'de-mutualisation')

Capped rate
      1. Like a fixed rate, but the rate is guaranteed not to go above a certain
      level for a set period of time. It can, however, move downwards. 2. An
      arrangement that caps your mortgage rate for a specified period of time.
      On the first day of the month following expiry of the capped rate period,
      the interest rate will change to the then prevailing Standard Variable Rate.

      A payment (either a fixed or a percentage of the mortgage amount)
      offered by some lenders as an incentive to borrow from them. Sometimes
      there are redemption penalties associated with these types of deals.

Cash Surrender Value
      The amount of money received when a policyholder surrenders a life
      insurance policy with cash value.

CAT standards
       CAT stands for low Charges, easy Access and fair Terms. The standards
       were brought in by the government as an incentive to offer savers an even
       better deal, and to make it easier for you to spot the best value ISAs.

      Conditions attached to an insurance quotation.

       To transfer all or part of a risk written by an insurer to a reinsurer.

       Capital Gains Tax.

Challenge Grant
       A grant that is made on the condition that other funding be secured, either
       on a matching basis or by some other formula, usually within a specified
       period of time, with the objective of encouraging expanded fundraising
       from additional sources.
CHAPS (clearing house automatic payment system) payment
      An electronic transfer of money between two bank accounts that will clear
      the payee's account on the same working day provided instructions are
      received before 3.15 pm.

      Companies can charge for financial services in different ways, some more
      straightforward than others.

        Chartered Insurance Institute. A body controlling professional standards
        (educational, ethical etc) in the insurance industry.

        Notification to an insurance company that payment of an amount is due
        under the terms of a policy.

Claims Experience
       The relationship of claims to premiums for a period. Usually expressed as
       a percentage or ratio.

Claims Reserve
       Amounts set aside by an insurer to meet costs of claims incurred but not
       yet settled.


           1. A practice whereby a pension scheme will offset an amount
                equivalent to the state pension against a target pension so as to
                arrive at the amount payable by the scheme.
           2.   If commission is paid to an intermediary by a financial institution
                for the introduction of business and this does not stay in force for a
                certain pre-determined period a part of the commission may be
                repayable to the institution. This is known as 'clawback'. The
                practice is more prevalent among insurance companies.

       An arrangement by which a number of insurance companies cover a
       particular risk.

Collective investment
        Investments such as unit trusts and investment trusts schemes

Commercial Lines
     Insurance for businesses, professionals, and commercial establishments.

     An amount paid by a financial institution to an intermediary for the placing
     of business. Normally calculated as a percentage of the amount paid (i.e.
     of the premium for an insurance policy or of the amount invested in a fund
     or used to purchase securities). Commission is also payable in a number of
     other situations where the payment for a service is a proportion of the
     value of the transaction (eg the provision of foreign currency, the sale of a
     house, etc).
Committed Funds
     A portion of a donor's budget that has already been pledged for future

     The giving up of part or the entire pension that would be paid at
     retirement in exchange for a lump sum. Applied to any exchange of a
     series of payments to which someone is entitled for a lump sum. In the
     case of approved pension arrangements the amount that is commutable is
     strictly limited.

Commutation Factors
     Factors used to determine the amount of pension to be given up in
     exchange for a lump sum benefit.

Community Funds
     A type of foundation formed by broad-based community support from
     multiple sources: trusts, endowments, individual contributions, private
     foundations, or corporate grants. A community foundation generally
     makes grants only within a specified geographic area and is governed by a
     board representing the community it serves. Some community foundations
     offer donor-advised funds to contributors.

Company representative
     A financial adviser who can only advise on their own company's products.

Compound interest
     Compound interest is interest earned on interest and makes a huge
     difference to the value of long term savings. Say you've invested £100,
     which is earning 10% interest each year.

       Year 1, you earn 10% on £100 = £110

       Year 2, instead of earning another 10% on your £100, you earn 10% on
       £110 = £121

       Year 3, you earn 10% on £121 = £133.10

       And so on, so longer you leave it, the more you benefit from

Compulsory purchase
     An annuity you buy with the fund built up in your personal pension
     scheme annuity

Compulsory Purchase Annuity
     Some approved occupational pension schemes produce a benefit at
     retirement that is expressed in cash terms rather than pension. The cash
     sum produced must then be used to purchase an annuity known as a
     'Compulsory Purchase Annuity' (but see Commutation).

       Provisions in an insurance contract that state the rights and duties of the
       insured and of the insurer.

       (in Scotland) A court order confirming the validity of a Will and the identity
       of Executors. The equivalent under English law is Probate.

Consequential Loss
      A financial loss occurring as the result of some other loss. Also known as
      an indirect loss. (eg a shop is destroyed by fire. The loss of the building,
      stock etc is a direct loss. The loss of ongoing profit because of the inability
      to continue trading is a consequential loss).

Continuation Option
       Allows employees to continue their group insurance coverage under
       certain conditions after their employment has terminated (much less
       common today).

Continuing Professional Development
       A formal procedure by which a professional body ensures that its members
       keep their expertise up to date with current developments. Applies to
       doctors, lawyers, accountants, financial advisers etc.

      A legally enforceable agreement between two parties

Contracted In
      This describes a member of an occupational or personal pension scheme
      who is also a member of SERPS (or the scheme itself).

Contracted Out
      This describes a member of an occupational or personal pension scheme
      who is not a member of SERPS (or the scheme itself).

Contributions Committee
       A corporate group organized to make grant decisions usually with the
       guidance of a corporate foundation or contributions administrator. Typical
       responsibilities include setting and interpreting policy, approving an annual
       budget, and reviewing grant requests.

Convertible Term Insurance
      Term insurance which can be changed into a permanent policy without
      further evidence of insurability or medical examination.

      The legal process involved with buying and selling of a property.

Cooling Off Period
       A period allowed in certain circumstances during which a person who has
       entered into a contract (for example, an insurance policy or a personal
       loan) may cancel it without incurring any penalty.

Corporate Bond
      Companies issue bonds to raise money and pay interest on the bonds.
      Usually bonds expire on a fixed date, when the company repays you. You
      can buy and sell bonds easily (like shares). Bond prices tend to change
      when interest rates change and are usually not as risky as shares because
      a company will pay off all it's debts (including bonds) before the
      shareholders get anything.

Corporate Contributions
       A general term referring to charitable contributions by a corporation.
       Usually used to describe cash contributions only, but may also include
       other items, such as the value of loaned executives, products, and

Corporate Foundation
      A foundation that receives its income from a profit-making company but is
      a legally independent entity. Usually this type of foundation carries the
      name of the parent company. Corporations may fund these foundations
      with a donation of permanent assets or with periodic contributions. (Also
      called a company-sponsored foundation)

Corporate Giving Programme
      (Also called a corporate contributions program - see above.) Funding that
      is distributed directly by a corporation, rather than through a foundation.
      Often such a program is handled by the Public Affairs or Public Relations

Corporation Tax
      A tax payable by companies on their profits.

Cost Adjusting Factor
       Used in relation to group insurance in reference to rate-adjusting factors
       calculated by actuaries and based on claims experience, occupation,
       location etc.

Cover Note
      A temporary certificate confirming that an insurance policy is in force.
      Used in motor insurance for taxation/registration purposes and in some
      other contexts such as life assurance to confirm that cover is effective on a
      temporary basis while further information is being gathered.

       Continuing Professional Development.

Credit Card
       A credit card gives you the power to buy goods or services now and pay
       for them later. It represents an approval by a bank or company to use
       their money. Credit card issuers are usually banks, even though the card
       may bear another company name or logo. The name of the issuer appears
       somewhere on the card.

       Trade names such as VISA and MasterCard are not actually card issuers.
       They are termed "membership associations." Banks use them for their
       payment processing services, policy setting and marketing assistance.
       Many different banks can package their own cards and different terms of
       credit using the logo and services of an association membership.

Critical Illness Policy
        A Critical Illness policy will provide a lump sum payment to the insured
        should he or she be diagnosed as having one of a number of specified
        illnesses, conditions or diseases.

Custom Excise
      A government department responsible for the collection of duties on
      imports, VAT and other taxes including Insurance Premium Tax.
Death Benefit
      A life insurance payment made upon the death of an insured person.

Debit card
       Debit cards look like credit cards or ATM (automated teller machine) cards,
       but operate like electronic cash or a personal cheque. When a purchase is
       made with a debit card, the amount is automatically deducted from the
       associated account. No credit is extended to the cardholder and hence no
       debt or interest charge is incurred.

       The rejection of an insurance application by an insurance company.

Declining Grant
       A multi-year grant that becomes smaller each year, in the expectation that
       the recipient organization will increase its fundraising from other sources.

Decreasing Term Insurance
      Life insurance which pays out a lump sum if you die within the term, but
      where the insurance sum assured reduces during the term. The earlier you
      die in the term, the bigger the payout your dependants get.

Deeds Fee
      An administration charge made by lenders when you repay the mortgage
      to release the deeds of the property. Also known as a sealing fee.

Deferred Annuity
       An arrangement by which a premium is paid in return for annuity
       payments that will commence at a future date.

Deferred Period

          1. In relation to Permanent Health Insurance (PHI) / Income
               Protection, refers to the period between the commencement of
               illness, and the date at which eligibility for payment of benefit
               under the insurance policy would commence.
          2.   In relation to a Deferred Annuity, refers to the period between
               payment of the premium and commencement of the annuity

Defined Benefit Pension Scheme
       Pensions scheme where the rules that define the benefits of the scheme
       are independent of the rules relating to contributions to the scheme. The
       benefit will usually be expressed as an amount of pension, often related to
       earnings and service.

        Deflation is the opposite to inflation and means that the money you have
        today will be worth more tomorrow. Unfortunately, it isn't as good as it
        sounds, because it makes people reluctant to spend, which is harmful for
        the economy. It is also very uncommon.

Demonstration Grant
       A grant made to establish an innovative project or program which, if
       successful, will serve as a model and may be duplicated by others.

     The procedure by which a mutual organisation owned by its members
     changes to a limited company owned by shareholders. This will often
     result in substantial windfall gains for the members (who are in effect the
     owners of a mutual organisation).

      An individual, a spouse or child or someone who depends on another for
      financial support and maintenance with regard to the normal necessities of

Deposit account
       An account with a bank or building society, which pays a variable rate of
       interest. Higher rates are often available if you are willing to give notice
       before withdrawing your money.

Deposit Premium
       The premium deposit paid when an application is made for an insurance

      The decrease in value of property over a period of time due to wear and
      tear or obsolescence.

       A collective name for futures, options and warrants.

Direct debit
       A procedure under which an organisation to whom a payment is due
       claims the amount directly from the bank account of its debtor.

        Physical or mental condition that prevents a person from undertaking
        'normal' duties of a job or the ordinary activities of life. For insurance
        purposes the word 'disability' will have a special and particular meaning
        which will be defined in the policy concerned.


             1. The duty of any person applying for an insurance policy to tell the
                insurer all relevant information affecting the risk.
             2. The duty of an intermediary to inform his client if commission is
                being paid (and, if so, how much) in respect of the business being

Discounted rate
      An arrangement which gives you a set reduction, or 'discount' off our
      standard variable rate for a specified period of time. At the end of the
      specified period your mortgage rate will change to the standard variable
      rate in force at the time. Sometimes there are redemption penalties
      associated with this type of deal.

Discretionary Entrant
        A member of a group insurance plan who did not have an automatic right
        to membership under the eligibility terms of the policy.

Discretionary Funds
       Grant monies which are distributed according to a donor's judgement of
       requests as they are received, rather than funds whose purpose is

     Loss of limb or sight.

        The payments of any investment income generated by a fund, usually
        made either half-yearly or quarterly. You can choose to have each
        distribution paid to you or to reinvest it in the fund for greater capital


           1. An amount returned to the holders of certain types of policy, by the
                insurance company, out of its earnings
           2.   An annual payment by a company to its shareholders out of
                accumulated profits

        See also: Bonus

        Individual or organisation that receives a grant. Also called a grantee.

        Individual or organisation that makes a grant. Also called a grantor.

Double Indemnity
      Payment of twice the policy normal benefit for specific kinds of losses
      under certain conditions.

Dread Disease Policy
      Also called Critical Illness Insurance Policy (see under that heading).

Earned Premium
      The portion of an insurance premium for which protection has already
      been provided by the insurer.

Earnings Cap
       Since 1989 there has been an upper limit on the amount of salary that can
       be taken into account when calculating pensions arising from and
       contributions payable under an approved arrangement. This is known as
       the 'earnings cap'. In the current year (1999-2000) the amount is

Earnings per share
       A widely used indicator of the return on equity investments. Any figure
       quoted represents the total amount of a company's earnings (after
       deductions) divided by the number of ordinary shares it has issued. (See
       also P/E)

Effective Date
        The date on which insurance under a policy will begin.

Eligibility Date
         The date at which an individual becomes eligible for benefits.

Eligibility Period
         A specified period of time during which potential members of a group
         insurance scheme may join without evidence of insurability.

Eligibility Requirements
         Requirements imposed for eligibility for coverage, usually in a group
         insurance or pension plan.

Eligible Employees
        Employees who meet the eligibility requirements for insurance set out in a
        group policy.

Employee Benefits
      Benefits offered to an employee by an employer and usually paid for at
      least in part by the employer. Life, Health and Critical Illness insurance
      obtained by an employer on a group basis are examples of employee

Employee Declaration
      A medical questionnaire issued to member of a group insurance scheme
      when the members benefit level requires the member to provide evidence
      of good health. This is usually the first stage of the Medical Underwriting

      An amendment of an insurance policy that alters the provisions of the

     A life assurance policy related to a mortgage designed to pay off the
     amount originally borrowed at the end of the mortgage term. An
     endowment policy will pay you a fixed amount on a set date or if you die
     before that date, in other words it's both a way of saving and life
     insurance. People often use endowments to repay interest only mortgages.
     The drawback of them is that it is often unclear how much you are having
     to pay in charges and the plans are often very rigid, so if you start an
     endowment and then decide to cancel it, you might not get back what you
     paid in.

Endowment Mortgage
     You only pay interest to the lender, but you also have to pay a monthly
     premium for an endowment policy that you take out with an insurance
     company. The endowment policy is designed to produce a lump sum either
     at the end of your mortgage term or at your death if earlier, to repay the
     capital you borrowed. You must remember though that the amount paid
     out is not guaranteed and may not be sufficient to repay the capital
         Executive Pension Plan.


            1. A shareholding in a limited company. By extension, 'equities' is
                 generally used to mean the whole range of shares traded on a
                 Stock Exchange
            2.   The amount by which the value of a house exceeds the total of the
                 loans secured by mortgage(s) thereon.

       Another word for stocks and shares.

Equity release
       A type of remortgage where you own your home outright but wish to use
       it as security for new borrowing.

       Refers to the increase in benefit (usually annual) payable during the
       payment term of an insurance claim that is not settled via a lump sum
       payment. For example, claims under an Income Protection Policy might
       escalate annually in line with the Retail Price Index.

         Strictly, an interest in land, but generally used to mean the total (land,
         chattels, investments, etc) owned by an individual.

Ethical Investments
        Shares or similar investments (for example, holdings in unit trusts) in
        companies supposed to conform to a particular set of moral or ethical
        principles. Different ethical values have led to a proliferation of funds of
        this nature with different principles & for example, some will avoid
        investing in arms manufacture, and others will avoid tobacco companies.
        There is ongoing debate as to whether the following of such principles
        adversely affects the investment performance of ethical funds.

         The European Single Currency.

Ex Gratia Payment
       Latin for "from favour." A payment by an insurer to an insured for which
       there is no liability under the contract.

Exchange of contracts
      The point at which the buyer and seller have legally committed themselves
      to the sale and purchase of the property.

Execution only
       Where a customer buys a financial product without receiving advice on its

         A fixed amount of money which the insured agrees to contribute toward
         the cost of a claim under an insurance policy.
       Conditions or circumstances listed in the policy, for which the insurer will
       not provide benefits.

Executive Pension Plan
       An individual occupational pension arrangement that is normally used for
       senior employees / executives. The rules of an occupational pension and
       not those of a personal pension govern an Executive Pension Plan.

Exempt Approved Scheme
     An Inland Revenue approved pension scheme, which is established under
     an irrevocable trust and hence qualifies for tax advantages relating to
     contributions, income and capital gains from investments.

Expense Ratio
      The ratio of insurance company operating expenses to premiums.

Experience Rating
       Process of determining the premium rate for a group risk, wholly or
       partially on the basis of that group's claims experience to date.
Express money transfer
       This is a foreign currency payment to an individual or organisation
       delivered electronically to a bank. It takes around 2-5 days, depending on
       the currency and destination.

Facultative Reinsurance
       A type of reinsurance in which the reinsurer can accept or reject any risk
       presented by an insurance company seeking reinsurance.

Family Foundation
       A private foundation created to make charitable contributions on behalf of
       a particular family. The board is often limited to family members.

Family Income Policy
       A form of term insurance. If the death of the insured occurs during the
       term an income will be paid from the date of death to the end of the term.

Federated Fund Drive
      A centralised campaign whereby one organisation raises money for its
      member agencies. The United Way campaign and the Community Works
      are examples.

Final Salary Scheme
       A particular form of defined benefit pension scheme (see under that
       heading). Benefit is calculated based upon the final salary of the member
       and years of service.

Financial Planning Certificate
       A professional qualification for financial advisers obtained by examination
       through the Chartered Insurance Institute. Holders are entitled to be
       Registered with the Society of Financial Advisers.

Financial Services Authority
       The single regulatory authority for the UK financial services industry.
Fiscal Policy
        influencing the direction of an economy through the use of taxation (See
        also Monetary Policy)

Fixed rate
       A guaranteed rate that is normally set just below the standard variable
       rate and is guaranteed for a certain period of time. If the standard variable
       rate falls below the fixed rate you will still have to pay the fixed rate. Once
       the fixed rate period ends you will normally pay the lender's variable rate.
       Sometimes there are redemption penalties associated with this type of

Flexible Benefits
        A program where employees can select from a range of benefits offered by
        their employer in order to meet their own specific needs.

Flexible mortgage
        A feature of some mortgages that gives you freedom to change the
        amount and frequency of your mortgage payments.

Flow-through Funds
       Contributions to a foundation that are used primarily for direct grant
       making, rather than for endowing the foundation permanently. Most
       corporate foundations depend on these funds each year rather than on
       income produced from endowment funds.

          the popular name for the FT-SE 100 Share Index, the UK stockmarket's
          main benchmark index, which measures the daily share price performance
          of Britain's top 100 public limited companies, ranked by their size (See
          also Market Capitalisation)

Foreign draft
       This is similar to a bankers' draft, but is in a foreign currency. Foreign
       drafts take around 5 days to arrive depending on where it is sent.

      A private non-profit organisation with funds and a program managed by its
      own trustees and directors, established to further social, educational,
      religious or other charitable activities by making grants. A private
      foundation receives its funds from, and is subject to control of, an
      individual family, corporation or other group of limited number. In
      contrast, a community foundation receives its funds from multiple public
      sources and is classified in the US by the IRS as a public charity.

          Financial Planning Certificate.

Fixed Rate
       The interest rate is fixed for a set period.

Free Cover Level
       The maximum amount of benefit for which an insurance company is
       prepared to insure a member of a group insurance scheme without the
       member needing to provide evidence of good health.

        If you buy a property which is freehold it means that both the land and the
        property is yours, unlike leasehold where the land would not belong to

Free Standing Additional Voluntary Contributions
       A scheme whereby an individual can make payment into an independent
       arrangement to supplement an occupational pension scheme as longs as
       the anticipated benefits from the two schemes together are less than the
       maximum permitted under the rules laid down by the Inland Revenue.

Friendly Society
       Similar to a mutual insurance company. A Friendly Society, registered
       under the terms of the Friendly Societies Act 1974, is owned and operated
       for the benefit of its members. There are limits on the amounts which can
       be invested by members but tax privileges are available to policies within
       those limits. Some Friendly Societies now operate with separate sections
       for 'tax-exempt' and 'ordinary' business.

        Financial Services Authority.

        Free Standing Additional Voluntary Contributions.

        This is an index compiled by the Financial Times and is made up of all the
        companies listed on the UK Stock exchange (currently around 835). The
        purpose of the index is to provide a benchmark of the performance of the
        stock market as a whole. This benchmark is often used to measure the
        effectiveness of a fund manager.

        An annuity which is payable for a fixed period regardless of whether the
        annuitant survives, and thereafter only while the annuitant is alive.
        Annuities guaranteed for 5 years are very commonly used in conjunction
        with pension arrangements.

        general term for any investment vehicle which pools together the money
        of many small individual investors and invests it in certain markets and
        securities according to a defined set of investment aims and objectives.
        Covers such investments as unit trusts, investment trusts and pension

Fund Manager
      A fund manager is employed to invest money for (amongst other things)
      unit trusts and investment trusts. Fund managers aim to outperform their
      chosen index by buying shares, which they think will do particularly well.
      They can also choose to keep a percentage of their fund in cash if they're
      not optimistic about the outlook for the stock market. Naturally, fund
      managers get paid to do this, so charges for an actively managed fund
      tend to be higher than for an index tracker.

      usually refers to the underlying economic factors affecting a particular
      market, country or sector and will include such aspects as industrial
      output, wages and raw materials costs, currency strength or weaknesses,
      trade balance and so on.
       short for Futures Contract, which is an obligation to buy or sell a specific
       amount of a commodity, currency or financial instrument at a particular
       price on a stipulated future date. The price is established between buyer
       and seller on the floor of an exchange, such as the London International
       Financial Futures Exchange (LIFFE), using an 'open outcry' system. The
       contracts themselves may be traded with third parties. (See also Options)

        An abbreviation for 'gilt-edged securities'. These are bonds, loans etc
        issued by the UK government or UK local authorities and are generally
        considered to be one of the safer forms of investment. Although the
        interest rate on the underlying value and the price at maturity are
        guaranteed, the price will vary during the lifetime of a gilt; so there is
        some element of risk.

        Gift inter-vivos. A gift made during a person's lifetime as opposed to a
        legacy, which passes on death.

        Guaranteed Minimum Pension.

        Group Personal Pension.

Grace Period
       The specified period after a premium payment is due, in which the
       policyholder may make such payment, and during which the protection of
       the policy continues.

Granny Bond
      A bond issued by the UK government with enhanced interest or tax
      privileges but restricted in availability to persons of pensionable age.

        The award of funds to an organisation or individual to undertake charitable
        or tax-exempt activities.

      Individual or organization that receives a grant. Also called a donee.

      Individual or organization that makes a grant. Also called a donor.

        A gross interest rate or dividend is one that doesn't take into account the
        tax you'll have to pay on that income.

Gross Premium
       The actual premium paid by the policyholder before any tax relief or
       discount is taken into account.

Group Contract
      A contract of insurance made with an employer or other entity not formed
      for the purpose of obtaining insurance that covers a group of persons
       identified by reference to their relationship to that entity. Several different
       types of insurance may be arranged on this basis, including life, critical
       illness, income protection, private medical, etc.

Group Critical Illness Scheme
      A scheme that will pay a cash lump sum to members diagnosed as
      suffering from one of a range of specified illnesses and conditions.

Group Health Insurance
      Health insurance written on a number of people under a single master
      policy, issued to their employer or to an association with which they are

Group Income Protection
      Group Income Protection Insurance (also known as Permanent Health
      Insurance, or PHI) gives sick and injured employees a replacement
      income, and provides the means for the employer to retain staff even
      when they are not contributing to the business. The benefit (typically)
      becomes payable when the company's sickness scheme ends and
      continues as long as the employee's absence lasts, right up to normal
      retirement age.

Group Life Insurance
      Group Life is designed to pay a benefit, in either lump sum form or as a
      dependants' pension, on the death of the member.

Group Permanent Health Insurance
      An alternative name for Group Income Protection.

Group Personal Pension
      An arrangement between a provider and an employer to offer personal
      pensions to employees. Charges may be lower because of the numbers
      involved, and the employer may also agree to contribute. A GPP is not an
      occupational pension scheme.

Guaranteed growth bonds
      Fixed term investments, typically between 3 and 5 years, where you
      invest a lump sum and are guaranteed either a minimum return or that
      you won't lose capital.

Guarantee Period

          1. The period for which an insurer will guarantee a quoted rate prior
              to it being accepted.
          2. The period for which a guaranteed annuity will continue regardless
              of the survival of the annuitant

Guaranteed Income Bond
      A single premium insurance contract providing payments at regular
      intervals for a fixed period at the end of which the premium is returned.

Guaranteed Minimum Pension
      The minimum pension which an occupational pension scheme must
      provide as one of the conditions of contracting out in respect of pre April
      1997 service.
Health Insurance
       Insurance against financial losses resulting from sickness or accidental
       bodily injury. Included under this definition are accident insurance,
       disability insurance and accidental death and dismemberment insurance.
       Private Medical Insurance (to provide for the cost of private - ie not within
       the National Health Service - medical treatment also comes under this
       general heading).

      a strategy used to offset investment risk. Usually makes use of futures or

Higher Rate Tax
       Under U.K. income tax regulations, bands of personal income are taxed at
       different rates. The highest rate of income tax is currently set at 40% and
       for 1999/2000 it is payable on taxable earnings above £28,000.

Home Income Plan
      Home income plans allow elderly homeowners to use the equity tied up in
      their home to purchase an income and thus increase their standard of
      living. Homeowners can release this capital without having to sell their

       With a reversion plan, the home is sold to an insurance company that then
       pays a regular income to the owner. On the death of the owner, the house
       becomes the property of the insurance company.

       With an annuity plan, the proceeds of a new mortgage on the property are
       used to purchase a regular income via an annuity. On the death of the
       homeowner, the mortgage debt must be repaid.

       Independent Financial Adviser.

       Inheritance Tax.

        An estimation of the returns you might get from an investment, based on
        standard growth rates and taking charges into account. The actual returns
        you get may be higher or lower than this.

Immediate Annuity
     An annuity under which payments commence straight away, in contrast to
     a deferred annuity, under which the payments do not commence until
     later (possibly many years later).

       The Investment Management Regulatory Organisation which regulates the
       management of our unit trusts.

Income Draw-Down
        An option available to members of small self-administered pension
        schemes, personal pension schemes and recently extended to occupational
        scheme members with money purchase benefits or AVC's. An annuity does
        not have to be purchased at retirement and can be delayed up to age 75.
        In the meantime the individual can 'draw down' income from his pension
        investment. This can be a high-risk approach to pension provision and is
        subject to PSO regulation.

Income Policy
      A Life Insurance contract that provides income on a monthly or other
      periodic basis, as opposed to a policy which pays proceeds in a lump sum.

Income Protection Insurance
      Income Protection Insurance (also known as Permanent Health Insurance
      or PHI) provides a monthly income during periods of long-term illness or

Income tax
      This is tax you pay on the income you earn each year above a certain
      amount. As well as your salary, income tax is also charged on interest and
      dividends you receive. The amount of tax you pay depends on the amount
      of money you earn and on your allowances.


            1. Payment to reimburse a specific quantifiable monetary loss or
               expense incurred
            2. (Of commission) Paid in full at commencement of a contract on the
               assumption that this will remain in force for at least a certain
               minimum period. If the contract is terminated within this period
               part of the commission may be required to be refunded.

Independent Financial Adviser
      A broker or other intermediary authorised to sell or advise on the policies
      offered by any insurance company, as well as other financial service

Independent Foundation
      A private foundation that is no longer controlled by the original donor or
      donor's family.

        A means of continually measuring the movement of a particular set of
        statistics over periods of time. Most unit trust fund managers measure
        their fund's performance against that of an appropriate 'benchmark' index
        with the aim of at least matching its progress or, better still, beating it.

Index linked
       Insurance where the level of cover increases in line with an index of prices
       or earnings.

Index tracking
       An index tracking fund aims to follow a particular index as closely as
       possible. It does not aim to beat it. It invests only in the companies that
       make up that index. Index tracking removes the need to employ fund
       managers, which means charges tend to be lower.

      A method by which benefits are increased at periodic intervals by a factor
      derived from an index of prices or earnings.

Individual Savings Account
       A means of saving which gives exemption from tax on benefits. Savings
       can be through cash, stocks and shares or insurance but must be arranged
       through one or more 'ISA manager(s)'. There are limits to the amounts
       which can be contributed.

Industrial Insurance
       Whole of life and endowment insurance with relatively low value (under
       £1000 sum assured). Historically, the premiums were collected by an
       insurance company agent at the policyholder's home. However, these may
       now be paid by monthly bank transfer. The legislation governing this type
       of insurance is less formal than for 'ordinary branch' and if an insurance
       company transacts both types of business it is required to keep them

        The amount in percentage terms by which prices rise or fall year on year.
        In the UK, the primary measure of this is the Retail Price Index (RPI); the
        underlying rate of inflation is the RPI with mortgage repayment figures
        stripped out.

In Force Business
       Life or Health Insurance that is current and for which premiums are being
       paid or for which premiums have been fully paid.

Inheritance Tax
       This tax is payable at the time of death, on any items (money or
       otherwise) where ownership changes on death or within 7 years before.
       There is no inheritance tax on the first portion of the deceased person's
       estate and transfers between husband and wife are exempt. There are
       other exemptions and the rules governing these can be complex.

In-kind Contribution
       Support in the form of goods or services rather than a cash contribution.

Inland Revenue
       The Inland Revenue is the government department responsible for the
       assessment and collection of direct taxation on income, capital gains,
       stamp duties, corporation tax and inheritance tax.

Inland Revenue Limits
       Limitations on benefits and contributions applied to an approved
       occupational pension scheme in return for tax relief.

Instant access
       Accounts where you don't lose interest even though you withdraw money
       without giving the bank notice. The One account gives you instant access
       to your funds. All you have to do is write a cheque, arrange a transfer or
       use your Switch or VISA cards.
Insurable Interest
       A principle of insurance that states that someone may only take out
       insurance if they stand to suffer a financial loss from an event covered by
       a policy.

       An agreement under which individuals, businesses, and other
       organisations, in exchange for payment of a sum of money (a premium),
       are guaranteed indemnity for losses resulting from certain events or
       conditions specified in a contract (policy).

Insurance Premium Tax
       UK tax imposed on most non-life insurance premiums.

       A person or organisation covered by an insurance policy.

       The party to the insurance contract who promises to pay losses or
       benefits, usually an insurance company.

      A person or organisation that offers advice and arranges policies for
      clients. Under UK regulations, intermediaries must be either (1) "Tied",
      whereby they represent only one company in the case of life business or a
      limited number of companies for general business, or (2) "Independent",
      whereby there is no limit on the number of companies with which they can

Interest only method
       One of two ways used to pay off your mortgage, the other being the
       Repayment method. Your monthly payments are solely used to pay off the
       interest you owe on your borrowings. This means, you'll have to make
       provision to pay off the amount you actually borrowed at the end of your
       mortgage term, for example using an ISA, a pension or an endowment.

Internal Revenue Code
       The laws governing taxation in the United States, administered by the
       Internal Revenue Service.

Internal Revenue Service
       (IRS) The federal agency in the United States with responsibility for
       regulating public charities and foundations, as part of its authority under
       the Internal Revenue Code.

       Dying without having made a Will. If a UK resident dies intestate there are
       rules as to the distribution of the estate, which have to be followed
       whether or not they coincide with what the deceased person would have

Investment Income
      The portion of a company's or an individual's income which is derived from
      its investments, including interest and dividends on stocks and bonds.

Investment Management Regulatory Organisation (IMRO)
       A regulatory body which governs the way investors money is handled and

Investment Trust
      Unlike a unit trust, which is 'open-ended', an investment trust is
      effectively a company which, for a management fee, invests the pooled
      money of small investors in securities for stated investment objectives. An
      investment trust is 'closed-end' in that it has a fixed number of shares that
      are traded like stock, often on many different exchanges. Visit the
      Flemings website for more details.

       Insurance Ombudsman Bureau See: Ombudsman.

Irrevocable Trust
       A trust arrangement that cannot be revoked by the creator.

       Stands for Individual Savings Accounts which the Government introduced
       on 6th April 1999. ISAs replaced PEPs and TESSAs - no further
       investments are allowed into the latter, though you can retain existing
       investments within them tax-free. ISAs offer similar tax-free benefits to
       PEPs but you can hold a wider range of investments.

Joint Funding
       A grant project supported by more than one donor, each of whom may
       provide monies for a specific component of the overall project or who may
       contribute to a common pool of funds.

Joint Life Annuity
        An annuity contract that pays a benefit throughout the joint lifetime of two

Key Person Insurance
      Insurance designed to protect a business against the loss of income
      resulting from the disability or death of an employee in a key position.

Knock for knock
       An arrangement between motor insurance companies where each
       company pays for its own clients' claims and does not cross claim from the
       other company, even if the driver at fault is insured with the other

Land registration
       A record, held by the Land Registry, which lists the registered owner of a
       plot and whether there are any legal charges upon it.

       Life Assurance Premium Relief.
        The termination of an insurance policy due to non-payment of premium(s).

Lapsed Policy
      A policy terminated for non-payment of premium(s).

Late Entrant
       These are individuals who wish to join a group insurance scheme beyond
       the date at which they were automatically eligible for membership.

      If you buy a property that is leasehold it means that you own the property
      but not the land the property is on, unlike freehold where you would own

Legal charge
       The legal document held by the Land Registry that identifies who has a
       claim on your property. The main lender will normally be identified as the
       first charge (i.e., have first claim to the property) but there may also be
       other charges registered (i.e., second, third, etc.).

Level Premium
       Rating method in which the premium level remains the same throughout
       the life of the policy.

Level Term Insurance
       A type of term policy where the cover remains the same from the effective
       date until the expiration date.

Life Annuity
       A contract that provides an income during the remaining lifetime of the

Life Assurance Premium Relief
        Income tax relief on life assurance premiums. The March 1984 Budget
        stopped this relief for new policies, but life policies that commenced before
        this date can continue to receive the relief. Relief is granted by means of a
        deduction from the premium, which is paid to the insurance company net
        of this deduction. The insurance company later claims the balance from
        the Inland Revenue so the amount paid and, if appropriate, invested on
        behalf of the policyholder is the full gross figure as shown in the policy

Life Insurance
        Any insurance relating to a risk depending on human life.

        This includes contracts providing payment on the insured person's death,
        endowments providing payment either on survival to a specified date or on
        earlier death and annuities which are paid throughout the annuitant's
        lifetime but cease on death.

Limited Price Indexation
       Occupational pension schemes are required to provide Limited Price
       Indexation on all pensions benefits accruing after 5 April 1997. The annual
       LPI increase is 5% per annum or the increase in the Retail Price Index, if
          The London-based insurance market, best known for marine and aviation
          cover. The name is taken from Edward Lloyd who owned the coffee shop
          in Tavern Street from where the market began in 1689.

      The extent to which an individual is charged more than the "standard" or
      "average" rate for their insurance.

Long Term Care Insurance
      A health-insurance variation designed to cover the costs of long term care
      at home or in a nursing home.

Long Term Disability Insurance
      Insurance to provide a reasonable replacement of a portion of a person's
      income lost through serious illness or injury.

Loss Adjuster
       A Loss Adjuster is an independent third party who may be used by an
       insurance company to assess the value of a claim, particularly if there is a
       disagreement between the insurer and the insured.

Loss Assessor
       A Loss Assessor is a professional who can be employed by a claimant to
       value a loss and present the insurance company with a supporting case for
       this valuation. Loss assessors are most often encountered in respect of
       claims under home contents or buildings insurance.

Low cost endowment
      A savings plan which includes decreasing term insurance. It pays out at
      the end of the term, and also if you die within the term. Usually used to
      pay off an interest only mortgage.

Lower Earnings Limit
      The minimum amount that must be earned in any period before National
      Insurance contributions are payable.

          Loan to Value. This is the amount of the mortgage expressed as a
          percentage of the value of the property, or the price you are paying for
          the property. So a £60,000 mortgage on a £80,000 property would mean
          a LTV of 75%.

Lump Sum
      A settlement whereby the beneficiary receives the entire proceeds of a
      policy at once rather than in instalments.

Managed Fund
      A pooled investment fund which is actively managed. Often, investment is
      only possible through a linked life insurance policy issued by the insurance
      company which is managing the fund.

Market Capitalisation
      the value of a company as measured by the total stockmarket price of its
      issued and outstanding shares. This is calculated by multiplying the
        number of shares by the current market price of a share. It is also widely
        used as a definition of company size - hence, big corporations are usually
        referred to as large cap stocks (See also Small Caps)

Matching Gifts Programme
       A corporate contributions program that will match contributions made by
       employees, retirees, and their spouses to qualifying nonprofit
       organizations. Specific guidelines regarding the type of organizations
       included, donor eligibility, and the dollar amount which will be matched
       are established by each corporation.

Matching Grant
       A grant or gift made with the specification that the amount donated must
       be matched from other sources on a one-for-one or some other prescribed

Maturity Date
       The date on which a payment becomes due at the end of the term of an
       endowment policy or a fixed term security or loan.

Maturity Value
       The amount payable to the insured at the maturity date of an endowment

        Medical Examiners Report. A report by a doctor who is required to
        examine the individual concerned especially for the purpose. Used for
        underwriting purposes.

        Motor Insurers Bureau.

Micropal Star Ratings
       Independent investment funds analysts Micropal continually monitor all of
       the UK's unit trusts, measuring the balance between each fund's
       performance over three years against the up or down movements in its
       unit price (i.e. the volatility). They then award stars on a scale from 0 to
       5, with the highest number going to those funds with the lowest volatility -
       and therefore risk - in relation to their overall performance. Five stars is
       the top award.

        Mortgage Interest Relief at Source. The mortgage lender will reduce the
        monthly payment required from a borrower by the amount of tax relief
        applicable to the interest on the loan. The lender can claim the balance
        from the Inland Revenue.

Monetary Policy
      influencing the direction of an economy through control of the money
      supply (See also Fiscal Policy)

Money Purchase Scheme
      A pension scheme providing benefits determined by the contributions
      made in respect of a member and the investment return on those
      contributions. At retirement the accumulated fund is used to purchase an
      annuity. All personal pensions (and some occupational schemes) are
      'money purchase schemes'.
       Relative incidence of disease and accidents in a well-defined class or
       classes of persons.

Morbidity Table
       Actuarial statistics showing the frequency and duration of a sickness.

Mortality Table
       A statistical table showing the probability of death (death rate) at each


         A loan used to buy your house, where your house is used as security until
         you've paid off the loan (usually after a fixed period). There are three
         main types of mortgage:

               A repayment mortgage - you pay off the loan by instalments of
                capital and interest so that after the agreed period you have paid
                off all the loan
               An interest only mortgage - you pay only interest on your
                mortgage and make other arrangements to repay the capital, like
                an endowment policy.
               A flexible mortgage allows you to make overpayments and take
                payment holidays.

Mortgage deed
      This is the legal document that you sign to say that the lender has a legal
      charge over your property.

Mortgage Indemnity Premium (MIP)
      Insurance that covers the lender in case your property is repossessed and
      the lender cannot get the money.

Motor Insurers' Bureau
       The Motor Insurers' Bureau is a body funded by motor insurance
       companies, which deals with claims for injury compensation when the
       driver at fault is not insured, or cannot be traced.

         A commercial organisation owned by its members (as opposed to being
         owned by shareholders). Examples are Building Societies and some life
         insurance companies.

National Insurance
       A form of taxation which you pay as you earn, used to fund certain state

National Insurance Contributions
       An additional form of "tax" paid by most employers, employees and self-
       employed people. The money collected is (broadly) used to pay for social
       security benefits.

         Class 1 Contributions are paid by employers and by employees with
         earnings above the lower limit.
       Class 2 Contributions are paid by the self-employed at a weekly flat rate.

       Class 3 Contributions are voluntary and are paid by those who do not earn
       enough to require Class 1 or Class 2 contributions to be made.

       Class 4 Contributions are paid by the self-employed.

National Savings
       The Department of National Savings is part of the Treasury and sells
       investment, savings and deposit products to raise extra finance for the
       government. The products are designed as medium to long-term vehicles
       and are sold "over the counter" at post offices.

       Interest received from a bank or building society account after basic rate
       tax has been deducted. If you're a higher rate taxpayer, you will have to
       pay more tax.

Net Income
       Income distributions are paid with a 20% tax credit. If you are liable to
       lower rate or basic rate income tax, you will have no further liability to
       tax. If you are a higher-rate taxpayer, you will have an additional income
       tax liability. If you are a non-taxpayer, you may be able to use the tax
       voucher supplied at the time of the distribution to support a tax
       repayment claim. Wherever you see a gross income figure quoted, it
       means that no tax has been deducted (e.g. as with a PEP investment).

Net Relevant Earnings
       A definition of 'pensionable income' used in determining the maximum
       contributions to a retirement annuity or personal pension scheme that
       qualify for tax relief.

      Insurance cover for property or equipment where an item lost or
      destroyed is replaced by the equivalent new item without deduction for
      age or wear and tear of the old item and regardless of price inflation.

No Extended Tie In
      This means that at the end of your fixed, capped or discounted rate
      period, you will not have to pay an early redemption charge if you pay off
      your mortgage early.

      A contract that the insured has the right to continue in force so longs as
      premiums are paid. The insurer cannot make changes to or revoke the
      insurance during this time.

      A term applied to employee benefit plans or insurance schemes when the
      employer pays the full cost and the employee is not asked to contribute.

Non-profit - Nonprofit
      (Also Not for profit and sometimes Charitable). A term describing the
      Inland Revenue (in Britain) and the Internal Revenue Service (in the US)
      designations of an organisation whose income is not used for the benefit
      or private gain of stockholders, directors, or any other persons with an
       interest in the company. A nonprofit organisation's income must be used
       solely to support its operations and stated purpose.

Normal Retirement Age
      The age at which an employee holding a particular position normally
      retires from service.

Normal Retirement Date
      The normal date of retirement applicable to a member of an occupational
      pension scheme and specified in the rules of the scheme.

Occupational Disease
      Impairment of health caused by continued exposure to conditions inherent
      in a person's occupation or a disease resulting from the nature of an

Occupational Pension Scheme
      A pension scheme set up by an employer for employees. It is run by
      Trustees and usually provides life insurance as well as pension benefits.
      The pension earned by the employees is usually based on a percentage of
      final salary or on the amount paid in (money purchase basis). An
      occupational pension can either be contributory (where members
      contribute to the fund) or non-contributory, which is entirely paid for by
      the employer.

Occupational Split
      Used in relation to group insurance with reference to the occupational split
      of the company's workforce E.g. 50% clerical / 50% manual.

       Pronounced as "oiks", this stands for Open-Ended Investment Companies.
       Although not dissimilar to unit trusts and investment trusts, an OEIC is
       basically a company which can be self-contained or it can form an
       "umbrella" over a range of individual funds (sometimes referred to as sub-
       funds). Instead of units, an OEIC issues shares and these can be of
       different classes - for example, for income accumulation, for income
       distribution, or classes where income is paid gross or net of lower-rate
       income tax. Save & Prosper's New Europe Fund is an OEIC.

Offer price
       The price at which you can buy a security or a unit in a unit trust.

Offshore Funds
       Collective investment funds that are based overseas, often in 'tax havens'
       or other locations with particular tax advantages.

     An independent official to whom grievances can be aired, free of charge.
     Ombudsman is a Swedish word meaning citizen's representative. The
     Insurance Ombudsman Bureau aims to increase confidence in Insurance
     by offering an independent resource for resolving disputes between
     insurance companies and their customers.

Open-ended investment company
      An investment company that works in a similar way to a unit trust except
      that an OEIC is a limited company. Most OEICS operate as umbrella funds,
       where the OEIC is authorised and can then set up multiple sub-funds
       without the need for individual authorisation of each sub-fund.

Operating Support
       Contributions toward an organisation's day-to-day, on-going expenses,
       such as salaries or wages, utilities, office supplies, etc.

Opinion status enquiry
       A reference given by a bank or building society to confirm a customer has
       run their account responsibly.

Opting Out
       The decision by an employee to leave or not join an occupational pension
       scheme provided by his/her employer.

       an agreement to buy or sell at a specific price at a specific date in the
       future. There are basically two kinds of option: a call option gives its
       buyer the right to buy a specified number of shares at a particular price
       before a specified date. The opposite of a call option is a put option, which
       gives the buyer the right to sell a specific number of shares at a particular
       price within a specified time period. In practice, call and put options are
       rarely exercised; instead, investors buy and sell options before their
       expiration, trading on the rise and fall of premium prices.

      When the amount of money withdrawn from a bank account is greater
      than the amount actually available in the account the excess is known as
      an 'overdraft' and the account is said to be 'overdrawn'. If agreed in
      advance by the bank this is essentially a form of loan facility. If not agreed
      in advance by the bank penal charges may be incurred.

       Price/Earnings Ratio. Calculated by dividing the market price of a
       company's ordinary shares by its earnings per share figure.

       The ratio reflects the market's expectation of the future earnings of a
       company in relation to its current earnings; in other words, its
       performance potential.
Paid Up Insurance
       Insurance on which all required premiums have been paid.

Paid Up Scheme
       A pension scheme where contributions have ceased, but which has assets
       that are held and used by an administrator in accordance with the scheme

Partial Disability
        A disability which is less than total (according to the particular definition
        relating to the contract in question) but still sufficient to hamper the
        individual in his or her occupation.

       Pay-As-You-Earn method of income tax collection.

Payment holiday
       A feature offered by some mortgages that allow you to miss monthly
       payments on your mortgage. Payment holidays are particularly useful if
       you have some other major expense - like a new baby or a wedding - to
       cater for!

Payout Requirement
      Private foundations are required by law to pay out at least five percent of
      the fair market value of their assets each year in grants and administrative

       A continuing income that is usually associated with the post-retirement
       period of a person's life.

Pension Scheme
       A vehicle by which an individual can make pension provision. This may be
       either collective or individual and with or without the involvement (by
       means of contributions or otherwise) from the individual's employer.

Pension Schemes Office
       A division of the Inland Revenue which oversees the approval of pension
       schemes for tax relief purposes.

Pensionable Earnings
       The earnings on which benefits and/or contributions for a pension scheme
       are calculated.

Pensionable Service
       The period of service with an employer that is used in calculating pension
       benefits from an occupational pension scheme.

       Personal Equity Plan. Introduced in 1987 by the then Chancellor Nigel
       Lawson, over 3 million people in the UK invested in a PEP before they were
       replaced by ISAs in April 1999. Although you can no longer open invest in
       a new PEP you can still transfer your existing PEPs.

Per Capita
       Per person, by or for each individual

Per Mille
        Per Thousand. The Premium Rate for some types of group insurance is
        quoted per £1000 of benefit.

Permanent Health Insurance
      Permanent Health Insurance will pay you an income if you become ill for a
      long period or if you become disabled and can't work.

Permanent Total Disability
      Disability from which the individual is unlikely to recover at any time in the
      future. Some insurance contracts may specify that permanent is to be
      taken as meaning 'extending to normal retirement date'.

       A term used to refer to the length of time insurance remains continuously
       in force with a company.
Personal Equity Plan
      A Personal Equity Plan allows individuals to enjoy the profits from
      stockmarket-related investment free of income tax and capital gains tax.
      PEPs were introduced in 1987 but from 6 April 1999, new investment in
      PEPs is no longer possible. However, existing PEPs can continue in
      existence and for up to five years.

Personal Investment Authority
      A Self-Regulating Organisation (SRO) set up under the Securities and
      Investment Board (SIB) with responsibility for regulating retail financial

Personal Lines
      Insurance designed for individuals rather than businesses or organisations.

Personal Loan
      An amount of money borrowed from a bank or other lender by an

Personal Pension Plan
      1. A pension plan which produces income and possibly a tax-free lump
      sum on retirement or death. Personal pensions commenced in July 1988
      and are designed to allow anyone who is either employed but not a
      member of an occupational pension scheme or self-employed to make
      provision for a pension in retirement. Personal pensions can be used to
      'contract out' of the State Earnings Related Pension Scheme. Employers
      can normally contribute to the personal pension of an employee.
      Employees who are members of an occupational scheme cannot contribute
      to their own personal pension plan. 2. Personal pensions are a way of
      making your own pension provision if you are not a member of an
      employer's scheme. The return from a personal pension or part of it can
      be used to pay off the capital sum of a mortgage at the end of the
      mortgage term usually 25 years or, sometimes, earlier. They have the
      benefit of being tax efficient but to find out if they are suitable you should
      discuss with your financial adviser

Philanthropic Advisor
       An individual or firm which provides counseling and evaluative services to
       donors before and after grantmaking decisions.

         The Personal Investment Authority, which regulates the way in which
         financial products are marketed, promoted and sold.

         Public Limited Company. Denotes any company which has share capital of
         at least a fixed amount.

         Private Medical Attendant's Report.

       The requirement for a financial adviser to be either 'tied' to one financial
       product provider, or completely independent. A provision of the Financial
       Services Act.

       The legal document issued by the insurance company to the policyholder,
       which states the terms and conditions of the insurance, it may also be
       called the policy contract or the contract.

Policy Reserves
        The measure of the funds that a life insurance company holds specifically
        for fulfilment of its policy obligations.

Policy Term
        The period of time for which an insurance policy provides coverage.

       The person or organisation who owns an insurance policy.

Pooled Investment Fund
       A vehicle for bringing together the investments of many people or
       organisations and using the combined funds to obtain economies of scale
       and investment management skills not available to individuals. Examples
       include unit trusts, investment trusts, etc.

       All the interest rates in this range are portable. This means that if you
       move home during the discounted or fixed rate period, you can enjoy the
       same rate, on the amount outstanding on your original loan, for the
       remainder of the discounted or fixed rate period. Conditions apply - please
       ask for details.

Pound cost averaging
      Pound cost averaging is a benefit of making regular savings in the stock
      market, especially when the market is volatile. In practice it means that
      you can get more for your money by investing in smaller, regular

Pre-existing Condition
       Any physical or mental conditions that exist prior to the effective date of
       insurance coverage.

      The single or regular periodic payment made to an insurance company in
      respect of an insurance policy.

Pre-tax Net Income
       A corporation's annual net income before it has paid taxes. In the USA,
       The Internal Revenue Service currently allows corporations to deduct
       charitable contributions as much as 10 percent of their pre-tax net

Private Foundation
       A foundation that receives most of its income from, and is subject to
       control of, an individual or other single or limited source. See Foundation.
       Also in the US, the technical IRS term for an organisation which is tax-
       exempt under Section 501(c)(3) and classified as a private foundation
       under the Internal Revenue Code. In the US, a private foundation is
       referred to as 'having a 501(c)(3) status'.

Private Operating Foundation
       A legal classification for an endowed organisation which uses its income to
       operate a charitable activity, such as a school or camp, rather than to
       make grants.

Private Medical Attendant's Report
       A report from an individual's own doctor ('Private Medical Attendant')
       which does not require a medical examination to be carried out. Used for
       underwriting purposes.

Private medical insurance
       Pays towards private medical treatment if your condition is covered by the

Processed Date
       The date the contribution was credited to the account by the Charitable
       Gift Fund (USA).

       The process by which the Will of someone who dies while living in England
       or Wales is validated. A local Probate Office will issue a Grant of Probate to
       validate a will and authorising the executors to administer the estate. This
       Grant has the status of a decree of the High Court. Hence anyone dealing
       in good faith with the executors named in the Grant has legal protection
       against any other party claiming to represent the deceased.

Professional Indemnity Insurance
       Protects professionals against liability claims resulting from negligent

Pro Rata Premium
       A rate charged for a period of insurance cover shorter than the normal
       period. For example, if an insured had cover for one quarter of a year, the
       Pro Rata premium might be only one quarter of the annual premium.

       Pension Schemes Office.

Public Charity
       In the USA, charitable organisations (those designated under Section
       501(c)(3) by the Internal Revenue Code) that qualify as public charities,
       private operating foundations, or private foundations. A public charity as
       defined in Section 509 (identified by the Service as "not a private
       foundation") normally receives a substantial part of its income, directly or
       indirectly, from the general public or from government sources. The public
       support must be fairly broad, not limited to a few individuals or families.

Public Company
       A company listed on the stock exchange and hence one whose shares are
       available for public investment.

Public Foundation
        A nonprofit organisation that receives at least one-third of its annual
        income from the general public (including government agencies and
        foundations). Public foundations may make grants or engage in charitable

Purchased Life Annuity
        An income for life purchased from an insurance company. That part of the
        annuity that is deemed to be return of capital is tax-free but any balance
        is treated as interest and is subject to income tax.

Qualifying Policy
       A life insurance policy which has been certified by the Inland Revenue as
       complying with the 'Qualifying Policy Regulations'. Proceeds on maturity or
       death will not give rise to a tax charge.

Qualifying Service
       The period for which an employee must be employed by a company before
       becoming eligible to join a group scheme. Also refers to the service to be
       taken into account to entitle a member of a pension scheme to 'short
       service benefit'.

       most UK funds are grouped into specific sectors as defined by AUTIF, with
       each sector being divided into four quarters or quartiles. The midway point
       is known as the median; all funds want to see their performance stay
       above the median but the real target is to be consistently in the top
       quartile (i.e. the top 25% of all funds in that particular sector). To use a
       soccer analogy, The top quartile is like being in the premiership and is the
       place to be.

       The illustration provided to show the costs of insurance cover. The
       quotation document forms the basis of a new contract or the renewal of an
       existing one. It contains details of the conditions, benefits, caveats and
       premiums for the policy.

        The pricing factor upon which an insurance premium is based, it is the cost
        of a given unit of insurance.

Rate Review
      Used in group insurance to describe the review of premium rate at the end
      of a rate guarantee period.

        Describes coverage issued at a higher rate than standard, usually due to
        impairment of the insured life.

Received Date
       The date the contribution was credited to the account by the Charitable
       Gift Fund for tax purposes.

     For all our mortgages, if you pay off the whole or any part of the loan
     before the end of the mortgage term, you will have to pay a redemption
     charge. This will be the amount specific to the mortgage product specified
     on the relevant web page and in our brochures. There will also be an
     Administration fee at redemption. If you decide to redeem your Standard
     Variable Rate mortgage, you would only pay an administration fee. Fees
     applied in addition to any interest charges at the time the mortgage is
       redeemed are charged to cover our reasonable administration costs. These
       include retrieving and checking the Deeds and Documents, formal sealing,
       recording of documents sealed and secure postage. (Please note that with
       some products, for example the Base Rate Tracker products, certain
       specific criteria apply allowing part repayment without a charge.)

Redemption amounts
     The amount that would be redeemed if you held the assets for their full
     term - to their redemption date.

Redemption penalties
     If you want to pay off your mortgage early, you may have to pay a fee
     during the early years of the loan. The fee may be equivalent to a certain
     number of months' interest, or it could be a percentage of the loan. Some
     lenders only charge a redemption penalty during the time of the special
     deal they offer. Others may tie you in for a number of years afterwards. If
     you think you may want to repay early, check what conditions apply
     before you decide which type of mortgage you want

Redemption yield
     An estimate of the total long term returns, including income and capital,
     on fixed income investments like corporate bonds and gilts.

Redundancy protection insurance
      Insurance that continues to meet mortgage payments, usually for a
      limited period, if you are made redundant.

       The practice whereby one insurer transfers part or all of the risk it has
       accepted to another insurer (the reinsurer).

      This is when you switch your mortgage from your current lender to
      another one. You take out a new mortgage to repay your current one. You
      may be able to get a better rate that saves you money.

Renewable Term Insurance
     Term insurance providing the right to renew at the end of the term,
     without evidence of insurability. The premium rates may increase at each
     renewal as the age of the insured is increasing.

     An agreement to continue insurance beyond any original term. For group
     insurance it is often used to refer to the annual update of membership
     details and production of annual accounts.

Repayment (Capital & Interest) method
      One of two ways used to pay off your mortgage, the other being the
      Interest only method. Your monthly payments are used not only to pay
      the interest on your borrowings but also a proportion of the actual amount
      borrowed. At the end of the term, both the borrowing and interest on this
      borrowing would have been paid in full.

Repayment Mortgage
      Your monthly payments are partly to pay the interest on the amount you
      borrowed, and partly to repay the amount you borrowed. At the end of the
        mortgage, the capital and the interest is all completely repaid. It is also
        known as a capital and interest mortgage

Repayment plan
      A schedule you agree with us for repaying your One account borrowings
      over the mortgage term. Your monthly One account statement will help
      you to keep track of whether you are ahead or behind your repayment

      This is when a borrower fails to pay back their loan in accordance with the
      Terms and Conditions of that loan and the lender exercises their legal
      charge over the borrower's property by taking legal ownership.

       Termination of an insurance contract by the insurer on the grounds of mis-
       statement by the insured.

      The sum set aside by an insurance company as a liability to fulfil future

Restricted Funds
       Grants which are made for a clearly specified purpose and can be used for
       none other.

       The amount of risk retained by an insurance company and not reinsured.
       Also used in reference to the portion of premium that is used by the
       insurance company for administration costs.

       A process by which a reinsurer obtains reinsurance from another company.

Reversionary bonus
       A bonus added to the value of your With Profits policy each year.

       An amendment to an insurance policy that modifies the policy by
       expanding or restricting its benefits or excluding certain conditions from
Rights Issue
       A means whereby a company may raise capital from its own shareholders.
       It does this by offering additional newly-issued shares to the shareholders
       at a discount on the price at which they will later be offered to the public,
       usually on the basis of a certain amount of new shares for every old share
       held. Most rights issues are handled by investment bankers who also
       underwrite the issue by agreeing to buy any of the newly-issued shares
       which are not taken up by shareholders.

Running yield
      An estimate of the annual rate of interest paid out by fixed income
      investments like corporate bonds and gilts. It doesn't take into account
      any increases or decreases in the capital value of the investment.
Salary Definition
       Used in group insurance to agree the definition of employee salary to be
       applied in calculation of insured benefit.

Sealing fee
       A charge made by some lenders when they release their legal charge over
       the deeds.

       Another name for stocks and shares but also applies to any approved or
       registered financial instrument, such as bonds.

Securities & Futures Association (SFA)
       A regulatory body which polices investment businesses like stockbrokers.

Securities and Investments Board
       The overall regulator of financial services set up under the Financial
       Services Act 1986.

Seed Money
      A grant or contribution used to start a new project or organisation.

     The option to take a proportion of the investment and leave the rest
     invested, i.e. to take 10% of your pension and leave the other 90% still

Self Administered Scheme
       Occupational pensions scheme where the assets are invested and
       managed by the trustees or an in-house investment manager.

Self Insured Scheme
        A program financed entirely by the employer for insuring employees
        instead of purchasing coverage from an insurance company.

Self Regulating Organisation
       A body authorised by the Securities and Investment Board to regulate and
       supervise investment business or financial service activities.

Self-select PEP
       A general PEP where you can choose which funds you'd like to invest in.

         If you're employed, part of your National Insurance contributions go
         towards the State Earnings Related Pension Scheme, which is paid on top
         of your basic state pension when you retire. You can choose to contract
         out of SERPS, in which case the Government will pay the money that
         would have gone into SERPS into a personal pension of your choice.

         See: State Earnings Related Pension Scheme.

         Shares are issued by a company to raise money. Unlike bonds, which are
         a straightforward loan, shares give you ownership of part of the company.
         Most shares are listed on a stock exchange, which makes them easy to
         buy and sell, although dealing costs may be expensive, which is another
       attraction of investing in a unit trust as the costs are shared with lots of

       Securities and Investments Board.

Sickness and accident
       Pays you a benefit if you're unable to work through sickness or accident.
       Normally pays out for a set period, i.e. one or two years.

Simplified Administration
        The system most often used to administer group insurance. Designed to
        keep administration overheads to a minimum. Normal changes in
        membership and benefit need only be advised to the insurer on a periodic
        (usually annual) basis.

Single company PEP
       A tax efficient investment where you invest in the shares of only one

Single Premium Costed
       A method of cost calculation used for group insurance schemes with a
       small number of members (typically less than 20). The overall premium is
       based on the costs calculated in detail for each member and based on age,
       sex and other factors.

Single Premium Policy
       A Life Insurance policy paid for in advance by one single premium rather
       than in periodic premiums.

Small Caps
       Another name for smaller companies, as measured by their market
       capitalisation. Our definition of a smaller company is one which has a
       market capitalisation of less than US$500 million, which is still quite
       sizeable by most standards. Usually a switch discount of up to 3% off the
       offer price is given.

       Society of Financial Advisers. A professional body linked to the Chartered
       Insurance Institute. Membership is open to those who have passed the
       Institute's examinations for the Advanced Financial Planning Certificate.

Special presentations
       A service to inform a customer paying in a cheque that the payer's bank
       will make the payment. This does not reduce the time taken for the
       cheque to clear - this will still take three working days.

       Self Regulating Organisation.

       Small Self-Administered Scheme. A self-administered occupational pension
       scheme with usually less than 12 members.

Stakeholder Pension
      The name given to the new personal pension, which will be introduced by
      the government in two years' time. The details are not yet finalised, but it
       promises to be one of the biggest shake-ups of the pensions industry for

Stamp Duty
      A tax levied on certain legal transactions, these include share dealing and
      the purchase of property.

Standard Variable Rate
      A lender’s standard mortgage rate. This goes up and down with interest
      rates generally.

Standing Order
       Pre authorised payment in which the customer gives instructions to their
       bank to pay fixed sums at regular intervals or on defined dates.

State Earnings Related Pension Scheme
       The earnings related part of the state pension scheme, which provides
       benefits which are additional to the basic state pension.

State pension
       The basic state pension is paid to everyone. The level of pension you get
       depends on the amount of National Insurance contributions you pay over
       your working life.

Stock Exchange
       A forum for the trading of stocks, shares and other securities. The London
       Stock Exchange is the main stock exchange in the United Kingdom.

Stop-Loss Insurance
      Protection purchased against the risk of large losses or a severe adverse
      claim experience.

Substandard Risk
      Where the risk of a claim against a policy is higher than average.

Successor Election
      The designation, in writing by a donor, of a person to be assigned the
      rights and duties associated with the donor's account at the Charitable Gift
      Fund upon the donor's death. Successors are eligible only after the deaths
      of all donors named on the account. The donor designates an individual as
      the successor, or the donor may choose to recommend that one or more
      charitable organizations receive the proceeds of any remaining units in the
      account upon the donor's death.

      Where you cancel an investment or policy and usually receive a reduced
      payout, due to the impact of charges.

Surrender Value
      The amount of money paid to the policyholder by the insurer when certain
      types of life policy are discontinued before the full benefit becomes

       Refers to moving an investment (or part of it) out of one fund and into
       another. When you switch you sell at the bid price and sell units in the
       new fund at the offer price.
Switch card
       A card linked to the UK Switch network. If you pay for goods and services
       with a Switch card, the money leaves your account straightaway. You can
       use your One account Switch card in just about every cash machine in
       Britain and tens of thousands of Cirrus machines worldwide, and to pay for
       goods abroad wherever you see the Maestro sign.

Tax credit
       The amount which an ISA manager can reclaim from the Inland Revenue
       in respect of share dividends received. This is 10% of the amount received
       until April 2004, when it will no longer be available.

Tax Exempt Organisation
      A nonprofit or not-for-profit, charitable organisation which, because it
      engages in charitable activities, does not have to pay taxes. An
      organisation must submit evidence of its charitable work and fulfil other
      requirements to receive tax-exempt tatus.

Temporary Absence
     A period during which a member of a group insurance scheme can be
     away from work and continue to be covered by the insurance.

        The period of time for which a policy or bond is issued.

Term Insurance
      Provides a lump sum on the death of the life or lives assured during a
      specified period of time (term). If no death occurs during the term, then
      the policy will lapse, with no redemption value.

Terminal Bonus
      Additional bonus which may be paid when a claim arises under a with-
      profit policy, either at maturity or on death of the policyholder.

        Tax-Exempt Special Savings Accounts (TESSAs) are five-year savings
        accounts that do not incur tax charges on the interest paid. It has not
        been possible to open a new TESSA account since April 1999. However,
        TESSAs in existence before that date can continue up to the end of their
        5-year term.

       A term signifying one who has made a valid Will.

The Fed
      abbreviation for the United States Federal Reserve Bank, America's central
      bank and its equivalent to the Bank of England.

Third Party
       Someone other than the policyholder or insurer who is involved in an
       insurance claim.

        A legal right or document proving legal right.
Title Deed
        This is the legal document that not only identifies the owner of a property
        but also other details about the property and the land it is built upon. This
        will be kept by the lender until your borrowing and interest on that
        borrowing has been repaid.

Total Borrowing
       the total amount you've actually borrowed on your account. Your Total
       Borrowing = Agreed/Total Facility - Additional Borrowing.

Total Disability
       Inability to undertake either occupational duties or aspects of normal day
       to day life. In an insurance policy providing cover against this contingency
       the definition applying to that contract is normally spelled out in detail.
       The exact definition may vary considerably between policies.

Total Return
       the combination of capital growth and reinvested income at the end of any
       given period. Total return performance figures are always stated on an
       offer-to-bid price basis.

Transfer Value
       Instead of receiving a preserved pension when leaving an occupational
       pension scheme, a member has the right to transfer its value to a scheme
       operated by a new employer or a personal pension plan. The transfer
       value is the amount that is transferred. (N.B. An occupational pension
       scheme is not bound to accept a transfer value)

        A legal arrangement whereby assets are held by one or more appointed
        persons (trustees) for the benefit of others (beneficiaries). Normally a
        trust is established by a legal document known as a Deed but a trust may
        be established by other means. Use of a trust can be an effective way of
        reducing one's liability for tax. This is a complex area of law and specialist
        legal advice should normally be sought by anyone dealing with a trust.

        The concept of a trust is not recognised in all legal systems.

Trust Deed
       A legal document which establishes and governs the operation of a trust.

       (1) A board member of a foundation. Trustees are responsible for setting
       foundation policy and making fund decisions. (2) An individual or
       corporation named or appointed to administer the terms of a trust

Unapproved Scheme
      An occupational pension scheme that is not approved by the Inland
      Revenue and which cannot benefit from the same favourable tax
      treatment as an approved scheme.

      A technician trained in evaluating risks and determining rates and
      coverage for them. The term derives from the practice at Lloyd's of each
       person willing to accept a portion of the risk writing his name under the
       description of the risk.

      Where an insurance company takes into account known facts like your
      age, sex and health, in order to assess the likelihood of you making a
      claim on the policy. Your insurance premiums are calculated after taking
      these factors into consideration.

Underwriting Bar
      The amount to which the benefits pertaining to a member of a group
      insurance scheme may increase without the need for further underwriting.

Underwriting Decision
      A decision made by insurance underwriters based on evidence supplied. In
      group insurance, it is often used to refer to decisions pertaining to
      individual members based on medical evidence.

Unearned Premium
      That portion of a premium already received by the insurer for which
      protection has not yet been provided.

Unit linked endowment
        A fixed term savings plan with an element of life cover. Your savings go
        into an underlying fund of investments like shares and the eventual return
        you get depends on the performance of these investments.

Unit Rated
       A Unit rate is often used in determining the premium for large (more than
       20 lives) group insurance schemes. In this basis of costing, the Unit Rate
       is applied to the total benefits provided under the scheme. The rate is
       determined with reference to banded membership data and other
       underwriting adjustments. For group life insurance the rate is usually
       expressed per £1000 of death benefit and for dependants pensions per
       £100 of insured pension.

Unit Trust
       A trust set up as a pooled investment fund. The portfolio of investments is
       unitised in order to allow investors to buy and sell units.

Unrestricted Funds
       In the context of funding, those grants which do not specifically stipulate
       how the money is to be spent by the grantee.

Upper Earnings Limit
      The maximum earnings on which National Insurance contributions are
      payable by employees.

Utmost Good Faith
      The principle of insurance which requires a proposer to give all relevant
      information to the insurer.

       Carried out by a professional surveyor to establish how much the property
       is worth and whether it is suitable to lend a mortgage on. There are 3
         types of valuation that can be done, a basic valuation, homebuyers report
         or full structural survey.

Value added tax (VAT)
       An indirect tax payable by adding it onto the value of most goods and

Variable rate
       A rate that can move up or down at any time. Usually linked to changes in
       the Bank of England Base Rate.

VISA card
      A card linked to the VISA network worldwide. Payments made using your
      One account VISA card are added to your account the following Thursday.
      You can use your One account to pay for goods and services or to
      withdraw cash anywhere in the world you see the VISA sign.

         the degree by which share prices in a particular stockmarket or sector go
         up or down. Usually measured by the movement in a particular index.

Voluntary Scheme
       A pension or other benefit scheme in which the members choose the
       extent and levels of benefits provided. These are normally schemes in
       which members pay the contributions or premiums. For example, a trade
       union or other affinity group may offer membership of a scheme providing
       life assurance cover.

         An agreement attached to the policy and accepted by the insured, to
         eliminate a specified pre-existing physical condition or specified hazard.

Waiver Of Premium
      A provision that sets certain conditions under which an insurance policy
      will be kept in full force by the company without the payment of

      A security issued by a company, allowing you the right to acquire ordinary

Whole of Life Insurance
      A life insurance policy providing payment on death, whenever this occurs.
      Premiums may be payable throughout life, or for a shorter period.

         A legal document specifying how an individual's property is to be dealt
         with on his or her death and appointing Executors to carry out these

With Profits
       (Of life insurance policies) Entitled to a share of the insurance company's
       profit. Each year a bonus is added to the guaranteed sum insured to
       reflect the company's profit. Usual practice is to 'smooth' such bonuses so
       that a comparatively unsuccessful year will not necessarily lead to a lower
       bonus but a succession of poor years will be reflected by a gradual
       reduction of bonus rate (and conversely for a series of successful years).

Without Profits
      (Of life insurance policies) Not entitled to any bonus. The sum payable will
      only ever be the amount guaranteed in the policy however profitable the
      insurance company may be.

With profits endowment
       A fixed term investment with life cover. The guaranteed sum insured is
       increased by bonuses, representing a share of the profits of the life fund.

Written Premiums
       The total premiums on all policies written by an insurer during a specified
       period of time.

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