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Accrued Bonuses

Total allocated bonuses declared to the policy. The life company will inform the policyholder at least once a year by means of a bonus declaration.

APMM

The Association of Policy Market Makers (APMM) consists of member firms that buy and sell with-profits endowments and whole-of-life policies. The Association was founded in April 1992 to:

Promote awareness and understanding of the TEP market;
Ensure that the highest professional standards are maintained by members and that they adhere to the Association’s Practice Guidelines

Bonus Declaration

Once a year Life companies send out bonus declarations, informing clients of the bonuses allocated to their policy.

Death Benefit

The amount that will be paid out on the death of the life/lives assured.

Endowment

This is a regular savings policy, which provides a combination of life assurance cover and investment. Policies are taken out for: mortgage repayment (mortgage endowment) – to provide a regular income, to finance retirement, to pay school fees.

Estimated Future Maturity Value / Formula Maturity Value

This is a terminology widely used in the Traded Endowment Market.

It is the value of the policy at maturity if the current rates of reversionary and terminal bonus were to stay the same during the remaining term.

FSA

The Financial Services Authority (FSA) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. See http://www.fsa.gov.uk/who/

Financial Services Compensation Scheme

The Financial Services Compensation Scheme (FSCS), established under the Financial Services and Markets Act of 2000, is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a firm is unable, or likely to be unable, to pay claims against it. In general this will be when a firm is insolvent. See http://www.fscs.org.uk/

Life Assured

The person(s) whose live(s) is/ are insured. Policyholder and the life assured can be different people.

Locked In / Guaranteed Value

This is the aggregate of the sum assured and all allocated bonuses to date, which is guaranteed to be paid at maturity, as long as all premiums have been paid.

Maturity Date

End date of a policy.

Market Maker

Market Makers are those companies who are specialised in buying and selling endowment with profits policies.

None-Profit Endowment

The life company guarantees at outset of the contract to pay a fixed amount of money, the guaranteed sum assured, for a fixed amount of premiums during the term of the policy. The sum assured is paid at death or at maturity, whichever is earlier.

Paid Up Policy

A policy where premiums have been stopped – the policy is still in force but different conditions apply.

Premium Payments / Contributions

The amount payable to the life company, usually regularly, monthly or annually.

Policyholder

The legal owner of the policy.

Projection

Under the rules of the FSA (Financial Services Authority) a Life Company is only allowed to project the estimated future maturity value of your policy on assumed standard growth rates fixed at 4%, 6%, and 8%. (March 2004)

Re-Projection Letters

Green Letter

A green letter confirms that a policy needs to grow by no more than 6% annually to keep on track
Amber Letter

An amber letter indicates a possible shortfall of a policy
Red Letter

A red letter indicates a likely shortfall of a policy

Reversionary Bonus

Accrued bonuses, which are normally allocated to the policy, annually, towards the end of the year.

Sum Assured

The amount payable on death or maturity whichever is earlier, provided that all premiums have been paid.

Surrender Value

The amount a life office is prepared to pay out when the policy is stopped before the end of its term.

Terminal Bonus

A terminal bonus might be paid at maturity. The terminal bonus is not guaranteed.

Traded Endowment Policy / Second Hand Endowment

A TEP (Traded Endowment Policy), also known as a second-hand endowment policy, is a traditional with-profit endowment policy, which the original policyholder sells on to a private or institutional investor for a better price than the surrender value his life company would have offered.

Unit Linked Policy

Premiums are invested in “units”. There is no bonus allocation or guaranteed sum and the investment growth depends on the performance of the fund. As the unit price will change, according to the fund performance, so will the value of the policy.

Unitised With Profits

Premiums are invested in “units” of the endowment with profits fund.

With-Profit Endowment

The policy participates in the profit of the Life Company’s with profits fund. This profit is paid in form of annual and terminal bonuses.

Genuine Testimonials:

"After saving me £3,600 in premiums - Endowment Check proved to be a good investment."