QFA Loans flashcards
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35 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Term assurance
- Life cover paying a lump sum only if the insured dies within a fixed term. There is no maturity payout if the insured survives.
- Insurable interest
- A legal requirement that the policyholder would suffer genuine financial loss from the event insured, such as death of a person whose income they depend on.
- Decreasing term assurance
- Cover where the sum insured falls over the policy term, commonly arranged to run alongside a capital repayment mortgage so the benefit tracks the outstanding balance.
- Free-look period
- A short statutory window after policy issue during which the policyholder may cancel and receive a refund of premiums paid, without penalty.
- Defined contribution pension
- A pension where contributions are invested and the retirement fund depends on investment growth and charges, rather than a promise based on salary and service.
- Pension commencement lump sum
- The tax-free cash normally available when benefits are taken, typically capped at a percentage of the fund and subject to a monetary limit.
- Qualifying years
- Years of National Insurance contributions or credits that count toward entitlement to the state pension, with a minimum number required.
- Auto-enrolment
- A legal duty on employers to enrol eligible jobholders into a workplace pension, with minimum contributions shared between employer and employee.
- Annual allowance
- The cap on tax-relieved pension contributions in a tax year; contributions above it may attract a tax charge on the individual.
- Compound interest
- Growth where interest is added to capital and itself earns interest in later periods, producing accelerating returns over time compared with simple interest.
- Real return
- The return on an investment after adjusting for inflation, showing the change in purchasing power rather than the nominal money return.
- Diversification
- Spreading investments across assets so that poor performance in one holding is offset by others, reducing unsystematic risk but not market-wide risk.
- Net asset value
- The total value of a fund's assets minus its liabilities, divided by the number of units to give the price at which units are bought or sold.
- Condition of average
- A claims adjustment reducing payout in proportion to underinsurance, applied where the sum insured is less than the full value of the property.
- Policy excess
- The first amount of each claim that the policyholder must bear, after which the insurer pays the remaining covered loss.
- Subrogation
- The insurer's right, after paying a claim, to pursue recovery from the third party responsible for the loss and to stand in the insured's legal position.
- Indemnity
- The principle that insurance restores the insured to the financial position held before the loss, neither better nor worse off.
- Business interruption cover
- Commercial cover replacing lost gross profit and additional working costs when trading is disrupted by an insured peril during the indemnity period.
- Employers' liability insurance
- Compulsory cover for most employers against claims from employees for injury or disease arising out of their employment.
- Professional indemnity
- Cover for claims alleging negligent advice, error or omission in the provision of professional services, including associated legal defence costs.
- Fidelity guarantee
- Commercial cover reimbursing the business for loss of money or property caused by the fraud or dishonesty of its own employees.
- Indemnity period
- The maximum length of time over which business interruption losses are paid, chosen to reflect how long it takes to restore normal trading.
- Moratorium underwriting
- A PMI approach where medical history is not assessed at application; conditions treated or advised in a look-back period are excluded for a set time.
- Critical illness cover
- Insurance paying a tax-free lump sum when the insured is diagnosed with a specified condition that meets the policy's precise medical definition.
- Deferred period
- The waiting time after incapacity begins before income protection benefit becomes payable, often matched to sick-pay entitlement.
- Cash plan
- Health insurance reimbursing fixed sums toward routine costs such as dental, optical and therapy treatment, rather than full private hospital fees.
- Loan-to-value ratio
- The mortgage amount divided by the property value, expressed as a percentage; higher ratios generally attract higher interest rates.
- Interest-only mortgage
- A housing loan where payments cover interest alone, leaving the original capital to be repaid at term end from a separate repayment vehicle.
- Early repayment charge
- A lender fee charged when a fixed or discounted mortgage is redeemed or overpaid beyond limits before the agreed period ends.
- Mortgage indemnity guarantee
- An insurance premium paid by the borrower that protects the lender against loss on high loan-to-value lending if the property sells for less than the debt.
- Home reversion plan
- An equity release arrangement where the provider buys all or part of the property at a discount to market value in return for a lump sum or income.
- No-negative-equity guarantee
- A promise that the amount repayable on an equity release plan will never exceed the sale proceeds of the property, protecting the borrower's estate.
- Annual percentage rate
- A standardised measure of the total cost of credit, including interest and fees, expressed as an annual rate to allow comparison between lenders.
- Payment protection insurance
- Cover making loan or credit repayments for a limited period if the borrower is unable to work through accident, sickness or unemployment.
- Guarantor loan
- A credit agreement where a third party promises to meet repayments if the principal borrower defaults, allowing lending to higher-risk applicants.