Glossary of Life Insurance Terms

Critical Illness – Pays out a lump sum when you are diagnosed as having one or more very serious medical conditions, as specified in the policy. Policies vary greatly in comprehensiveness and quality and almost all sold include life insurance. Critical Illness is thus ideal for mortgage cover and as a top-up to Income Protection

Decreasing Cover / Decreasing Term – Life insurance that reduces at a flat rate each year as opposed to matching a mortgage, which typically decreases more slowly in the early years

Guaranteed Premiums – Guaranteed rates will stay the same throughout the term of the policy

Increasing Cover / Increasing Term – Life insurance that increases every year on a voluntary basis without the need for a medical. Not as popular as Level Term, but it should be as people may require additional cover in line with increases in their income and inflation

Level Cover / Level Term – Life insurance that pays out a fixed lump sum if you die within the specified period of the policy. It almost always includes Terminal Illness Benefit

Reviewable Premiums – Reviewable rates can be reviewed at the insurer’s discretion (usually after the first five years)