Life Insurance glossary.

Age limits: The maximum and minimum age you need to be to take out a policy or continue one that’s already in place. These limits are set by the insurer.

You need to be aged between 18 and 77 years to apply for Tesco Life Insurance.

Application: Once you have a quote, you can apply for Tesco Life Insurance by completing an application online or over the phone. You’ll usually need to answer questions about your health and lifestyle as part of your application.

Beneficiary: The person or organisation that’ll get the lump sum payout - after a successful claim - if you die or become terminally ill during the term of the policy.

Benefit: The amount of money paid to the beneficiary when the insured person dies or is diagnosed with a terminal illness during the policy term. The payout is sometimes called the death benefit.

Cash-in value: There’s a savings part to some life insurance policies, which means the policyholder can get a cash-in value if the policy’s cancelled early. Tesco Life Insurance doesn’t have a cash-in value.

Claim: When you apply to the life insurance company for a payout after the insured person has died, or been diagnosed with a terminal illness, during the term of the policy.

Cover amount: How much the life insurance policy will pay out when there’s a successful claim. To work out how much cover you might need, see our guide – How much life insurance do I need?

Critical illness: Critical illness cover can support you and your family financially if you’re diagnosed with a specific illness or medical condition. You’ll get a tax-free lump sum to help with things like bills and treatment costs.

You can take out life insurance and critical illness cover at the same time, as they cover you for different things.

Death in service benefit: This is included with the benefits you get from your employer. You choose a beneficiary and they’ll get a tax-free lump sum if you die while working for the company. The benefit often comes with membership of your employer’s pension scheme, and you don’t usually have to pay for it. But you may lose it if you leave your job.

Decreasing Term life insurance: With Decreasing Term life insurance, also called Mortgage Protection, the value of your policy goes down gradually over time until it reaches £0, but your premiums stay the same. This is usually used to cover a mortgage or repayment loan.

Estate: The property and money left by someone who’s died.

Executor: An individual or company named in a will who’s responsible for handling your estate and carrying out your instructions after you die. Their duties include arranging the funeral, dealing with assets, paying unpaid bills and distributing the estate to the beneficiaries.

Guaranteed life insurance: A type of life insurance that you’ll be accepted for, regardless of your health. You won’t be turned down, and there’s no medical exam.

Income protection: A type of insurance that supports you if you can’t work due to sickness or injury. It pays you a fixed monthly amount and usually covers around 80% of your pre-tax salary.

Inflation: An increase in the price of goods and services over time. With Tesco Life Insurance, you can choose to protect your cover from the effects of inflation.

Insurance risk: If you’re insured for something, the risk is how likely it is to happen, meaning the insurer must pay out. For life insurance, the risk is the likelihood of the policyholder dying before their policy term ends.

Insured: The named person who’s covered by the life insurance policy.

Joint life insurance: A policy that covers 2 people’s lives for one monthly premium. With joint life insurance, the policy usually pays out when the first person dies and ends after that. If you and your partner have separate life insurance policies, the surviving partner’s policy will continue after the first one dies.

Length of cover: How long your insurance policy will cover you for, also called the policy term.

Level Term life insurance: With Level cover, also called Family Protection, you pay the same monthly amount throughout the policy’s lifetime, and the amount of cover stays the same. This type of insurance has no cash-in value.

Life assurance: Like life insurance, this pays out when the insured person dies. The main difference is this: life insurance is designed to provide cover for a specific period of time, while life assurance covers you for the rest of your life.

Life insurance: Life Insurance is a policy that pays out if the policyholder dies during length - or term - of the policy. Some policies also include a payout for terminal illness.

The lump sum payout could be used to help pay off a mortgage or go towards your family’s living costs.

See our beginner’s guide to life cover and how it works - What is life insurance?

Life insurance company: A provider of life insurance policies, such as Aviva, who provide and administer Tesco Life Insurance.

Lump sum:The benefit that a life insurance company pays out in one amount when the insured person dies.

Medical exam: When you apply for Tesco Life Insurance, you’ll be asked about your health and lifestyle. In some cases, you might be asked to have a medical exam, but Aviva will cover the costs.

Medical referral: Your insurer might need some additional medical information to make a decision about your application - this could either be a medical report or an exam carried out by a nurse or doctor. If they need more information, it’s called a referral.

Mortgage protection insurance: A type of term life insurance that’s also called Decreasing life cover. A repayment mortgage goes down over time, so this type of cover goes down over time too. If you die during the policy term and before you’ve paid your mortgage off, the payout could help your family to pay off the rest of the loan and stay in the family home.

Policy anniversary: The anniversary of the date your policy started. You’ll find this in your policy documents.

Policyholder/Policy owner: The person, or people, taking out the life insurance policy.

Power of attorney: A legal document that lets you nominate someone to make important legal and financial decisions for you if you can’t make them yourself. If you want someone to act on your behalf, you’ll need to give them power of attorney over your affairs.

Pre-existing medical condition: Also called an existing medical condition, this is an illness, injury or disease you have when you take out a life insurance policy. When applying for a life insurance policy, you must answer all the questions accurately and honestly to make sure your policy’s valid.

Premium: The amount you pay your insurer for cover. It’s usually paid monthly, but some insurers let you pay once or twice a year.

Probate: Probate is the process of proving a will and dealing with the estate of a person who’s died. If you’re a named executor in a will, you may need to apply for probate so you can gather their assets, pay any unpaid bills, and share out what’s left to the beneficiaries.

Quote: A life insurance quote is an estimate of what your premium will be, based on things like the type of life insurance, the amount of cover and the length of the policy.

Separation option: This option lets you split a joint policy into 2 single policies if you and your partner aren’t together anymore. Either or both of you can then take out a new policy without answering any more medical questions. You both need to agree to use this option when taking out a joint life insurance policy.

Single life insurance: A policy for one person, with one cover amount and one payment each month, which pays out if you die or become terminally ill during the policy term.

Sum assured: The total amount of cover that an insurance policy will pay out as a lump sum if you die, or are diagnosed with a terminal illness, during the policy term.

Term: The length of time a life insurance policy gives you cover for.

Terminal illness: An illness you’re not expected to recover from. Tesco Life Insurance includes a terminal illness benefit that pays out if you’re not expected to live longer than 12 months. Once the payment’s made, the insurance policy ends.

Term life insurance: This pays your beneficiaries a set amount if you die during the policy term. You pay regular premiums to your insurer, usually every month, for the length of the term.

Trust: A way to leave something of value to someone without handing them full control. You can put assets like money, investments and property, as well as your life insurance policy, into a Trust. This is known as writing life insurance in trust, or a policy written in trust. A Trust won’t be counted as part of your estate when you die - that means the money you leave to your beneficiaries is usually exempt from Inheritance Tax.¹

Underwriter: A trained expert or company that works out the risk of insuring someone. They decide the amount of cover the insured person can get, and how much they should pay for it. In some cases, they might decide there’s too much risk to insure them.

Underwriting: The process carried out by an insurer when someone applies for an insurance policy. It includes:

Whole of life insurance: A policy that lasts for the lifetime of the person who’s insured. It’s also known as permanent or traditional life insurance.

Will: A legal document that sets out how you’d like your estate to be managed and shared out when you die. You can name executors in your will to carry this out.

1. Any references to tax treatment are based on Tesco Insurance's understanding of legislation and HM Revenue & customs practice at the time of publication. Both of these are likely to change in the future, and a liability to tax may arise under an existing arrangement. Every care has been taken as to accuracy, but it must be appreciated that neither Tesco Insurance nor its representatives can accept responsibility for loss, however cause, suffered by any person who has acted or refrained from acting as a result of material published. Tax rules depend upon the individual circumstances of each client. If you are concerned about your estate’s liability for tax, please consult a professional adviser.