QFA Loans key terms

A contract in which the insurer pays a lump sum to named beneficiaries when the insured person dies, or on a set date if earlier, in return for regular or single premiums.

The amount the insurer pays out under a life policy when the life assured dies while cover is in force, subject to any exclusions or deductions stated in the contract.

The person or entity named in a life policy or trust to receive the death benefit. Naming a beneficiary can speed payment and may keep proceeds outside the estate.

Cover that pays only if death occurs during a fixed period. It has no investment element and no payout if the insured survives to the end of the term.

Cover that remains in force for the insured's entire lifetime, so a death benefit is paid whenever death occurs, provided premiums are maintained and the policy has not lapsed.

The amount an insurer pays if the policyholder cancels a policy with a savings element before maturity. It is often less than the total premiums paid.

The money a policyholder pays an insurer to keep cover in force. It reflects the risk insured, the sum assured, the term and the insurer's expenses and assumptions.

The maximum amount the insurer agrees to pay under a policy, before any adjustments such as bonuses, indexation or deductions for outstanding loans against the policy.

The insurer's process of assessing a proposed risk using health, lifestyle and financial information, then deciding whether to accept it, charge more, exclude conditions or decline it.

A specific event, condition or circumstance listed in a policy that the insurer will not cover, such as suicide within a set period or death from a pre-existing condition.

The written contract setting out the cover provided, the exclusions, the premium, the duties of the policyholder and the procedure for making a claim.

A workplace retirement plan set up by an employer, sometimes jointly with employees, that builds retirement benefits from employer and often employee contributions, usually held in trust.

A retirement savings arrangement an individual opens directly with a provider, receiving tax relief on contributions, with the fund used to provide income at retirement.

A contract that converts a lump sum into a series of regular income payments, often for life, with the amount depending on age, interest rates and the option chosen.

The portion of a pension fund that can normally be taken as a tax-free cash sum when benefits are first drawn, with the remainder used to provide taxable income.

The accumulated pool of contributions and investment returns held to provide retirement benefits. Its size at retirement determines the income and cash options available.

Money paid into a pension or savings plan by the member, an employer or both. Contributions may attract tax relief and are usually subject to annual limits.

A deposit product held with a bank or building society that pays interest on the balance and normally allows withdrawals, with funds usually protected up to a deposit guarantee limit.

The percentage a saver earns on a deposit or an investor receives on a fixed-income product, usually quoted on an annual basis and sometimes with tax deducted.

A loan made by an investor to a government or company that pays periodic interest and returns the principal at maturity, with the price affected by interest rates and credit risk.

The chance that an investment's value or income will fall, or will not keep pace with inflation, so the investor receives less than expected or loses capital.

Spreading money across different assets, sectors or regions so that a loss in one holding is offset by others, reducing the overall risk of the portfolio.

A scheme that repays savers up to a set limit if a bank or building society fails, giving depositors confidence that a defined portion of their money is safe.

The insurance principle that a person should be restored to roughly the same financial position after a loss as before it, and should not profit from the claim.

The maximum amount an insurer will pay under a non-life policy. If the sum insured is set too low, claim payments may be reduced in proportion to the shortfall.

The first part of any loss that the policyholder must bear themselves before the insurer pays. A higher excess usually lowers the premium charged.

A condition that reduces a claim payment where the sum insured is less than the value of the property at risk, so the policyholder shares the shortfall.

Cover that pays amounts the insured becomes legally obliged to pay for injury to others or damage to their property, plus legal defence costs, up to the limit of indemnity.

The maximum amount an insurer will pay for liability claims arising from an event or during a policy period, often stated as a single figure per claim or in total.

Insurance that replaces lost profit and covers continuing fixed costs when a business is disrupted by an insured event such as fire or flood, usually for a stated period.

Insurance protecting a business's buildings, contents, stock and machinery against specified perils, forming the basis on which many interruption claims are triggered.

Cover that pays for private diagnosis and treatment of acute conditions, often with limits per condition per year, exclusions for chronic illness and a choice of hospital tiers.

A medical insurance approach where the applicant answers limited questions at outset, and conditions existing in the recent past are excluded until a set period without symptoms or treatment has passed.

A loan secured on property, usually repaid over a long term with interest, where the lender can take possession of the property if repayments are not met.

The amount borrowed expressed as a percentage of the property's value. A higher ratio generally means higher risk for the lender and often a higher interest rate.

A housing loan where each monthly payment covers both interest and part of the capital, so the debt is fully cleared by the end of the agreed term.

A housing loan where monthly payments cover interest only, leaving the original capital to be repaid at the end from a separate savings or investment plan or other funds.

An arrangement where an older homeowner sells all or part of their home to a provider for a lump sum or income while keeping the right to live there rent-free until death or move-out.

A way for older homeowners to unlock cash from their property without moving, through a lifetime mortgage or a home reversion plan, with the debt usually repaid from the sale of the home.

The legal right under a home reversion plan for the former owner to remain living in the property for life, rent-free, provided the terms of the agreement are kept.

Lending to individuals for personal rather than business purposes, such as personal loans, credit cards and hire purchase, usually regulated with required disclosures and affordability checks.

A standard measure of the cost of credit expressed as a yearly rate, including certain fees, so borrowers can compare the true cost of different loan offers.

A record held by an agency showing a person's borrowing history, repayments and defaults, which lenders use to assess whether to grant credit and on what terms.