Acronym for the Association of British Insurers, a regulatory body for the UK insurance industry.

A car insurance term.Insurance that protects against damage to goods, not loss or theft. Not always included as part of motor cover, but sometimes applies to vehicle contents that are stolen or damaged.

Certain stocks/shares/securities are subject to an arrangement whereby on sale (before the ex dividend date), the interest accrued between the date of the last interest payment and the date of sale is regarded for income tax purposes as the income of the seller. The buyer can deduct this sum from taxable income.

Assets (such as money, securities and property) can be placed in a trust fund, created as a means of setting aside money for the benefit of minors (commonly grandchildren). The trust attracts beneficial tax treatment, provided the income paid out is used only for the education, maintenance and benefit of those under age 25 and the capital is eventually used for their benefit.

Shares/units that are issued by companies to existing share/unit holders instead of dividends. They are treated as taxable income but the taxable amount adds to the basic cost of the shares, reducing possible capital gains tax when sold.

Accident or event which happens without human intervention, usually due to natural causes, eg a storm or earthquake. Suggesting that an event was an "act of God" may be a defence in English law against a claim for liability since it could not have been foreseen or safeguarded against.

A professional person trained in the technical aspects of insurance and related fields who specialises in the mathematics of insurance and the calculation of premiums and reserves.

Any change or addition made to a contract.

Another name for a mortgage or loan.

A payment made 'up front'.

Acronym for the Alternative Investment Market which is a stock market 'alternative' to the London Stock Exchange. It lists companies that are not quoted on the Stock Exchange because they are too small or do not comply with the enormous amount of regulation required for such a listing.

Someone acting on behalf of another. Insurance company salesmen have been known as agents.

The first step in approving your mortgage. An initial agreement with a bank ot lend you the momney you wish to borrow, subject to certain conditions, such as a credit search and a satisfactory valuation of the property.

This is also known as reversionary bonus. This bonus payment is made each year by with-profits policies.

A lump sum investment to purchase a periodic amount paid by a life office, usually for life. Predominately used by people as a pension income in retirement.

See Income Drawdown.

A car insurance term. Insurance that allows anyone to drive a vehicle with permission of the owner.

Acronym for Annual Percentage Rate. This comprises the interest rate charged on a loan or credit card plus any other charges such as an arrangement fee or the annual credit card fee. It is calculated to a standard formula intended to give you the true cost of borrowing calculated over a year.

Acronym for Automated Teller Machine-what most people call a cashpoint or cash dispenser.

A car insurance term. A team of insurer-approved repairers usually who operate across the country.

A method of arriving at an acceptable agreement between two disputing parties. An independent person or body, often a member of the Institute of Arbitrators, listens to the arguments of both parties and then makes a decision which is binding on all concerned.

An association which represents over 450 insurance companies which account for more than 95% of the business transacted by UK insurance companies.

The amount of share capital that a company is permitted to issue by its Articles of Association (a company's constitution or rules). The Articles can be varied from time to time if the company wants to vary the authorised share capital.

Acronym for the Association of Unit Trust and Investment Funds, a trade body.

Acronym for Additional Voluntary Contributions. These are "top up" pension contributions in respect of an occupational pension scheme.

A type of trust where the beneficiary(ies) has an absolute interest and the sole duty of the trustee is to hold the property for the beneficiary and transfer it to him or her when required.

The rate of interest set by the Bank of England. Sometimes lenders call their own standard variable rate their base rate or basic rate.

A phrase used to describe a stock market when share prices are falling or are expected to fall.

A type of home contents insurance policy whereby you pay a fixed rate according to the number of bedrooms in your house, rather than the value of its contents.

The price at which the holder of units can sell their units from a collective scheme such as a unit trust.

The difference between the bid price (the price at which units are sold) and the offer price (the price at which units are bought).

A term to cover many types of lump sum investments. Life companies can issue a bond where the underlying investment can be with profits, unit linked or guaranteed. May also refer to fixed interest stocks issued by companies or the Government.

A fee required for some capped and fixed-rate mortgages, to secure the funds.

A car insurance term. An insurance policy that provides recovery and repair services should your vehicle breakdown.

An agent who brings together two parties, eg, the customer and the insurer, and enables them to enter into a contract to which he is not a principal.

A detailed survey of a property, which lenders usually reccomended for older and unusual properties.

A phrase used to describe the stock market when share prices are rising and investors are optimistic that the trend will continue.

A provision in an insurance contract that permits the insurer or the insured to cancel a policy at any time before a specified expiration date.

Also called a "writing down allowance"; this is an amount of money a company or the self employed can set against tax each year representing the depreciation of a capital asset used in a trade or profession.

A car insurance term. A roof that covers a driveway or other parking area. It does not have a door in the manner of a garage as is considered as less secure.

This allows personal pension contributions made in one year to be treated as though they were made in the previous year. Tax relief is obtained, based on the previous year's basis.

This allowed personal pension contributions to make use of unused tax relief from the previous six years (so long as the current year's relief is used first). Carry forward ceased to apply from April 2001.

A car insurance term. An amount of money received if a policyholder surrenders an insurance policy. In the case of car insurance policies this is usually zero, though some insurers refund some of the premium if a policy is cancelled early.

Acronym for Consumer Credit Counselling Service, which provides free advice for people in debt.

Acronym for Capital Gains Tax, which taxes the chargeable gains an individual makes on the disposal of assets (compared to the cost paid for that asset and an allowance for inflation). Many assets are specifically exempted from CGT.

The term used to describe the process of getting an insurance company to pay out on your policy.

The amount of money set aside by an insurer to meet the cost of claims incurred but not yet settled.

An investment vehicle, usually an investment trust, whose shares are quoted on the Stock Exchange and which issues a fixed amount of shares to investors.

An agreement that certain professions sign up to in which they agree to act in a certain way in order to best protect the consumer.

A car insurance term. An extra insurance premium you may have the option to take, this removes your liability to pay any insurance excess on a vehicle such as a hire car.

The percentage of the premium the insurer gives to an introducer if a policy be sold from their lead.

A car insurance term. Covers all related risks of that product’s insurance policy. It is also the most expensive form of car insurance. It covers damage to other peoples' cars, your own car, any liability, as well as losses incurred by fire and theft.

Legislation to define the rules which relate to lending money and is designed to protect the consumer.

A legally enforceable agreement made between two parties.

If you sign a contract, you are bound by its terms and conditions. If you fail to abide by the agreed conditions, it may result in financial loss or criminal charges.

A type of term assurance which can be converted to a whole of life policy or to an endowment policy on payment of an increased premium. Further evidence of good health is not required at conversion.

A bond which can be exchanged for shares of a company at a later date.

The period of time during which a customer who has entered into a contract may cancel it without incurring a penalty.

Cover describes the specific risk a given policy will protect you against.

A temporary certificate stating that an insurance policy is in force.

A check made by the lender to find out if you have a record of not paying loans or meeting other financial commitments

An insurance policy that pays a lump sum on diagnosis of the life assured having a critical illness that is covered by the policy conditions.

An insurance policy from which a lump sum is paid if the life assured dies within an agreed term. This amount reduces during the term of the policy. Often used to protect repayment mortgages.

If an agreed payment or a series of premium payments are missed.

See Final Salary Scheme.

See Money Purchase Scheme

An agreed amount paid when an application is made for an insurance policy.

The various costs a solicitor will pas on to you when doing your legal work.

Part of the profits of a company distributed to its shareholders.

The penalty fees that lenders charge if you repay the ortgage earlier than expected.

The profits of a company available to shareholders, which is what is left after deducting tax and other items.

A figure arrived at by dividing the earnings of a company by the number of shares issued.

The date on which the insurance under a policy begins.

See Occupational Pension Scheme.

A life policy which pays out on maturity or earlier death. Premiums are paid for a fixed number of years.

A scheme to encourage people to invest in small unquoted businesses which by nature are high risk. There is favourable tax treatment for people willing to invest.

The proportion of the property you actually own.

Another name for ordinary shares which represent ownership in a company.

A sum of money being the amount of the first part of an insurance claim that you have to pay yourself. This amount is specified from the start of the policy.

The swapping of contracts between a buyer's conveyancer and the seller's conveyancer. Once you have exchanged contracts you are both legally bound to the transaction.

Items or events not covered by an insurance policy. Exclusions include running a taxi service (for motor insurance), overloading your car or allowing drivers other than those specified in the policy to drive the vehicle.

Also known as EPP. This is an employer's pensions scheme offered by insurance companies which covers a few senior employees.

A fault claim is one where your insurance company is not able to recover all of the costs from another party.

There are two types of financial adviser, both recommend products and services that will help individuals plan their finances. An Independent Financial Adviser or IFA works on behalf of the client who can choose from any product or service. A Tied Agent works on behalf of a company and will only recommend their products.

Acronym for Financial Intermediaries and Claims Office, which can give advice on tax relief on mortgages and deals with tax residence matters.

Also known as a Defined Benefit Scheme. A type of employer's pension scheme that provides a pension based on a proportion of your earnings at or near to retirement, also the length of time you have worked for the company.

The lead regulator for the UK financial service industry.

A joint life insurance policy which pays out on the first partner's death.

Land or property that is owned outright by the owner, compared with leasehold, where the owner buys the right to live there for the duration of the leasehold agreement.

Non-cash items that an employer may give to an employee in addition to salary, e.g. a car, private medical insurance, low-rent/rent-free accommodation, subsidised canteen meals and luncheon vouchers. Many are taxable as P11D earnings if total earnings for a tax year (including the value of benefits) are £8,500 or more.

Acronym for Free-Standing Additional Voluntary Contributions: these are "top-up" contributions for members of an occupational/employer's pension scheme, paid into a "free-standing" AVC contract from a pension provider. These are paid net but the contribution to the scheme is grossed up at the basic rate of tax. Higher rate tax payers can claim additional relief through their Tax Return/Coding.

FTSE stands for Financial Times Stock Exchange. There are a number of FTSE Actuaries Share Indices that are calculated each business day. There is the FTSE 100 (Footsie) which is an index of the share prices of the biggest 100 companies quoted on the Stock Exchange. The FTSE All-Share Index measures the share prices of about 850 stocks and shares. The FTSE 250 gives the share prices of the 250 next biggest companies outside the top l00. The FTSE 350 is a combination of the FTSE 100 and FTSE 250 that provides a measure of large and medium-sized companies.

A car insurance term. See comprehensive cover.

Gearing is the ratio of a company's debt, or fixed-interest loan stock, to its ordinary share capital. A highly geared company is one which has a lot of debt on its balance sheet.

Also known as British Government Stocks. Gilts are issued to help fund government spending. Most are stocks issued with a fixed interest rate, which is paid half-yearly. At the end of the period of the investment, the government redeems the stock at the known published amount unless the gilt is irredeemable.

Acronym for Group Money Purchase Scheme. The pension an employer provides from an occupational scheme in place of SERPS.

Acronym for Group Personal Pension, which is a collection of personal pensions, usually organised through an employer.

A document issued to those driving abroad as evidence that they have the legal minimum insurance cover required. Not usually essential for European travel as minimum legal cover is usually automatically included in UK policies. You will require a Green Card if you wish to drive in Spain.

A person's (or a company's) income before deduction of expenses are incurred and before deduction of tax.

To convert a net figure into a gross one for the purposes of a tax calculation.

A low-risk investment, which you buy with a lump sum. It guarantees a fixed level of income, which is paid over the term of the investment annually or monthly. Usually with a return of the capital at the end of the investment.

Someone who agrees to guarantee your loan and is fully liable for its repayment if you default.

A job that makes a person more likely to have an accident.

The top rate of tax chargeable in the UK which is set at 40% This rate is set for individuals earning £28,401 (2000/2001) after taking into account allowances.

A plan designed to enable an elderly owner or owners of a property to free the capital value locked in the bricks and mortar by providing an income whilst still allowing them to live there until death.

A set of rules under the state pension system which preserves pension rights for housewives, mothers and carers (male or female) as long as they work and pay full National Insurance Contributions for part of their life. Then when they take time off to look after children, or to care for elderly relatives, they need fewer years to qualify for a pension under Home Responsibility Protection rules.

An employer pension scheme that calculates the policyholder's pension and benefits on the basis of both final pay and money purchase and pays the holder whichever sum is the greater.

Acronym for Independent Financial Adviser who can advise you as to what is available across the whole range of the market rather than being tied to one company. He/she operates as your agent (rather than that of the company whose products they may recommend) and therefore owes you a duty of care.

Acronym for Investment Management Regulatory Organisation which regulates any institution that offers investment management. It is now coming under the wing of the Financial Services Authority.

A facility which allows you to delay buying an annuity if rates are low when you reach retirement age. Drawdown allows you to put off buying your annuity up to the age of 75 years, giving you an income directly from the capital in the pension fund.

This is the current interest rate offered by a stock/security/other investment, which will usually depend on the current market price.

A type of home insurance policy: it takes into account wear and tear of the items insured when assessing the amount to pay out under a claim.

If an investment, a pension, an annuity etc. is index-linked, it is "linked" to rises in the general level of prices so that it keeps pace with inflation. It is usually linked to the Retail Prices Index.

A relief or allowance in respect of capital gains tax so that you don't pay tax on a "gain", or rise in value of an asset, due simply to inflation. An amount, calculated by reference to the retail prices index, could be deducted from any gain when you sell the asset. For disposals made after 5th April 1998 the allowance is given up to this date but not thereafter. See tapering relief for further explanation.

A charge imposed by a management company of a unit trust to cover administrative and marketing costs, and to cover any commission that has to be paid to an intermediary such as an IFA.

Previously have been referred to as LISAs and PPIs. An IPA is an investment vehicle for pension schemes. It is a similar concept to the ISA or PEP in that it acts as a tax-privileged wrapper for various types of investment (predominantly unit trusts and OEICs). Savers cannot access IPAs before retirement.

An agreement under which individuals, businesses and other organisations, are guaranteed indemnity for losses resulting from certain events or conditions specified in a contract (policy) in exchange for payment of a sum of money (a premium), Insurance Premium Tax (IPT): A Government tax that is charged as a percentage of insurance premiums.

The person or organisation covered by an insurance policy.

A car insurance term. The insured car as specified by its registration mark on your current certificate of motor insurance.

The provider of the insurance contract. The insurer is bound by the contract to pay for losses or benefits.

A person or organisation that offers advice and also arranges policies for clients.

Individuals, companies or websites that provide information to borrowers about certain products or services and ‘introduce’ them to the lender.

A type of collective investment where the investor's money is pooled with that of other investors and invested in a professionally managed portfolio of stocks and shares. An investment trust is a publicly quoted company. Investors buy shares in that company and the investment trust's fund managers invest in other stocks and shares.

Acronym for Individual Savings Account, a tax efficient savings plan that can hold a range of investments such as unit trusts, OEICs, investment trusts, corporate bonds and shares. There are three types of ISAs offered - equity, cash or insurance as a Maxi or Mini version.

This is the amount of a company's authorised share capital that is issued as shares to shareholders.

This is the replacement for unemployment benefit, funded by National Insurance Contributions.

An arrangement between insurance companies to reduce administration and the costs of legal action.

A policy which is terminated for non-payment of the premium.

When the owner buys the right to live in a property for the length of the leasehold agreement.

Some policies include a provision to cover the costs of private legal action.

If you let part of your home, you may have to pay capital gains tax on the part that is not occupied by you when you sell your home. However if your home is wholly or partly eligible for private residence relief you might be able to claim "lettings relief" which reduces the taxable gain.

Charges which are deducted on a level basis throughout the term of a financial product.

An insurance policy that pays out a cash lump sum if you die. This money would be used to pay off your mortgage.

London-based insurance market comprised of syndicates who underwrite most types of policy.

The extent to which an individual is charged more than the ‘standard’ or ‘average’ rate for their insurance. This can be due to a bad claims history, age, occupation and sometimes even gender.

The insurance term for being robbed, burgled, injured or in a car accident. A loss gives rise to a claim.

Acronym for Loan To Valuation. It the size of the mortgage as a percentage of the property value.

Any amount invested as a single payment.

A car insurance term. The person who uses the vehicle the most.

A car insurance term. The value the vehicle the ‘market’ is willing to pay, based on the valuation of the car at a specific period.

Information that would affect an insurance company accepting a policy, or the premium it would charge. Failure to disclose a material fact could invalidate a policy.

An ISA that can use one or all three of the ISAs elements (cash, shares, insurance). The holder must invest solely with one plan manager during the same tax year.

A car insurance term. MBI policies are usually known as extended warranties for cars. They are insurance policies that pay out if certain faults occur with a car.

The average of the bid and offer price of a share.

Acronym for Mortgage Indemnity Guarantee, which is a guarantee which covers the lender if the borrower defaults, for which the borrower pays the premium. Usually only applied to mortgages above 75% of the value of the property bought. Also acronym for Minimum Income Guarantee. This is the amount the Government will pay as a minimum income in retirement.

An ISA that uses just one of the ISA's three elements (cash, shares, insurance). The holder is allowed to buy an additional mini ISA from the same or an alternative plan manager during the same tax year.

Acronym for Mortgage Interest Relief at Source that is a form of tax relief applying to qualifying mortgages. MIRAS was abolished in April 2000.

Also known as a Defined Contribution Scheme. This is a type of pension scheme that invests your (and/or your employer's) contributions to produce a lump sum to buy a pension income when you retire. The benefit is not defined.

A car insurance term. A body funded by motor insurance companies who deal with claims for injury compensation when the driver at fault is not insured or cannot be traced.

A document giving details of your policy, excesses, endorsements and premium that is specific to your insurance and should be read in conjunction with your insurer's policy wording.

The fee payable to the lender when a mortgage exceeds a certain percentage of the valuation of the property (usually 90%) to cover the greater risk to the lender.

An insurance policy which ensures the interest element of mortgage repayments will be paid while the borrower is unable to work.

An insurance company that is owned by its policyholders.

A car insurance term. A driver who has been named on an insurance policy but who does not own the vehicle.

A form of state insurance which pays for health care, pensions, and other state benefits. National Insurance contributions (NICs) are paid by employers, employees and the self-employed.

A variety of savings schemes backed by the Government in which the public can participate. These schemes are therefore secure. They include premium, capital and income bonds and are usually tax free.

Acronym for Net Asset Value, which is the total assets of a company or fund, less its liabilities and other charges.

A term usually used in respect of home ownership, but applicable to any asset currently worth less than the sum of money borrowed originally to buy it.

Relevant earnings before deduction of personal allowances but after deduction of items such as capital allowances, allowable expenses and losses.

A type of insurance policy that covers the cost of replacing the insured items with brand new ones.

A bonus or reward, by way of a discount on premiums, given to insurance policyholders who haven't made a claim under the policy for a specified length of time or have a protected no-claims policy. Commonly offered in motor insurance policies.

A car insurance term. When the insurance company recovers all the costs from another party.

This is a pension scheme set up by an employer to provide pension benefits for employees when they retire. They can either be set up on a Final Salary or Money Purchase basis.

Acronym for Open Ended Investment Companies which are collective investment schemes.

Acronym for Office of Fair Trading. A government department that seeks to protect the consumer by overseeing competition activities.

The price at which units are purchased in a collective scheme (eg Unit trust)

Acronym for Occupational Pensions Advisory Service which provides help and advice on company pension schemes.

A unit trust or Oeic in which the fund managers may change the investments in the trust without notifying the unit-holders.

Acronym for Occupational Pensions Regulatory Authority which regulates occupational pension schemes.

An option is a right to buy, or to sell a security, commodity or currency at a future time and price. You do not have to buy or sell, only if the agreed price produces a profit by being greater than the current market price. If the option is not exercised, it just lapses and the loss will be the original cost of the option.

A car insurance term. Other products available in addition to your car insurance, eg, breakdown cover or windscreen cover.

Another name for equities or shares which represent ownership in a company.

A country other than England, Northern Ireland, Scotland and Wales.

A car insurance term. The legal owner of a vehicle. The legal owner may not be the person to maintain or drive a vehicle. It may well be driven by a named driver.

A term used to describe a pension or life assurance policy when the policyholder has stopped paying premiums before retirement or before the end of the term of the policy. There will still be an underlying value that may be used to maintain benefits.

Shares that allow the buyers to pay the issue price in more than one instalment. The first instalment is due immediately on purchase and the subsequent installment(s) is (are) due a few months later.

The rate of interest you pay on a mortgage.

Acronym for Pay As You Earn. It is a means of collecting income tax at source under Schedule E of the tax legislation. Employers have to collect the tax by deducting it from their employees' wages and pay it to the Inland Revenue.

Acronym for Price Earnings ratio. Generally expressed as one number, which is arrived at by dividing the current market price of a share by the "earnings" per share. Earnings are the profits (usually calculated annually) of the company, after allowing for tax and other items. This figure is viewed as a reliable guide as to whether a share price is high or low, compared with the market price.

These are shares which trade at a low price and are generally high risk.

A tax efficient savings plan designed to provide the holder with an income after retirement. It cannot be accessed before retirement.

The period of time covered by an insurance policy as shown on your certificate of insurance.

The PIA regulates the way in which some financial products are marketed, promoted and sold.

Acronym for Personal Equity Plan. A tax-efficient investment plan. From 6 April 1999 no new money could be invested in PEPs but existing PEPs can continue receiving the same tax benefits as an Individual Savings Account.

Individual taxpayers are entitled to a personal allowance which is an amount deductible from their income which they can earn free of income tax.

A money purchase pension plan that can be taken out by the self-employed and employees who are not members of an occupational pension scheme. They receive relief on contributions made, but contributions are subject to a maximum percentage of net relevant earnings (depending on your age) and an overall maximum of £91,800 (2000/2001).

Also known as Income Protection Cover. This policy provides an income if you are unable to work because of long term illness or accident.

Acronym for Personal Insurance Arbitration Scheme which deals with problems between you and your insurer.

Acronym for Permanent Interest Bearing shares which are issued by building societies and pay income only. The capital is not repaid.

Acronym for Personal Identification Number, a number allocated to the holder of a credit/cash card enabling the cardholder to use the card mainly at cashpoints.

Acronym for Private Medical Insurance which pays for private hospital and related health care.

A legally binding document issued by the insurance company to the policyholder, which states the terms and conditions of the insurance.

This document holds the full list of the terms, conditions, exceptions, and exclusions as set out in your policy.

The amount to be paid by the customer in the event of a claim being made.

The events or instances not covered by your insurance policy.

A document detailing the level of cover under a policy, the sum insured, the discount that you qualify for (if any) and the premium to pay.

The length of time an insurance policy provides coverage for.

The person to whom the insurer issues the policy.

A mortgage that can be transferred to another lender without penalties.

A means of averaging the cost of buying shares or units to avoid the ups and downs of the market. It involves paying for shares or units by fixed periodic, often monthly instalments. When the price is high, the monthly amount buys fewer shares or units, when prices are low, the amount buys more.

Acronym for Personal Pension Plan.

These are shares that are considered to be less risky than ordinary shares as they have a fixed return. In the event of the company (to which the shares relate) is wound up, preference shareholders rank above the claims of ordinary shareholders (but behind bank and trade creditors). Preference shares do not usually carry a vote unless dividends fall into arrears.

The single or regular payment made to an insurance company to receive an insurance policy.

Where securities, such as shares, are sold for the first time - as opposed to the secondary market where the securities are already existing and are bought and sold by investors.

A capital gains tax exemption. The sale of a principal residence is not subject to capital gains tax.

Acronym for Profit-Related Pay. Part of your earnings, which fluctuates in line with your employer's profits (paid under a regulated PRP scheme). PRP was phased out in April 2000.

A car insurance term. Covers legal liability for injury or damage caused to others while driving.

See quote.

An amount an insurer estimates to be the cost of providing a service based on the available information.

A company listed on the Stock Exchange is a quoted company. It must meet strict requirements as to the value of the company and publication of financial information.

The pricing criteria upon which an insurance premium is based. This is the cost of a given unit of insurance.

Shares that are issued with the right reserved by the company to redeem them - sometimes on a fixed date, otherwise on a date to be fixed.

This is the current interest on, or income from a stock/security/other investment with an adjustment for the capital gain/loss if the investment is held to redemption.

A car insurance term. A person who looks after a vehicle but does not own it.

A practice whereby one insurer transfers part or all of the risk it has accepted to another insurer (the reinsurer).

Arranging a new mortgage on an existing property. Also known as refinancing.

Renewable assurance policies offer the facility to renew at the end of the term without the need to produce further evidence of good health.

An agreement to continue insurance beyond any original term.

Rent received from letting furnished accommodation in a principal residence can be received tax free up to £4,250 (2000/2001).

The age at which a person retires. This often means 65 years for men and 60 years for women but can apply to any other age as appropriate.

A car insurance term. A vehicle provided by an approved repairer or another company instructed by the insurer while repairs are made to your car.

The sum set aside by an insurance company as a liability to fulfil future obligations.

An annual bonus, which reflects the underlying growth of investments in a with-profits assurance policy which is added to the sum payable on maturity or death. Once added the bonus cannot be taken away.

Credit which is given to an agreed limit for an agreed period, within which a borrower can draw and repay as they please so long as the limit is not exceeded.

The issue of new shares in accordance with existing shareholders' rights of first refusal of the shares (pre-emption rights) in proportion to their existing holdings. A rights issue is a means of raising money for the company.

A car insurance term. An insurance policy providing recovery and repair services for motorists.

A term used in respect of capital gains tax. It means that you can postpone the tax otherwise payable on a gain on disposal of a business asset by deducting that gain from the cost price of another asset. The gain is not deleted, it is "rolled over", because the effect of deducting the gain from the second asset is to deem that second asset to have a low cost price-which in turn means that a gain on its disposal may be higher.

Retail Prices Index, used as a barometer of the cost of living.

Acronym for the State Second Pension. This pension will replace SERPS from April 2002.

Acronym for Save As You Earn which is a system for making regular savings that attracts beneficial tax treatment. It is not necessarily linked to earnings, but seeks to encourage longer term investment in building societies, National Savings, or in an employee's own company. SAYE schemes started after 1984 can be linked to an approved savings related share option scheme and must run for at least 3 years. Monthly savings are limited to £250 (2000/20001) for all schemes into which an individual pays.

A dividend paid by way of shares instead of cash.

The issue of free shares to existing shareholders, in proportion to their existing shareholding. The effect is to convert cash from the company's resources into issued share capital and reduce the price of the shares.

A market where securities are sold for the second time. For example the securities already exist, having been sold by the organisation which created the security at the primary market.

The self-assessment taxation system puts the responsibility on the taxpayer to declare to the Inland Revenue his or her tax affairs. If a Tax Return is completed and sent to the Revenue by the 30th September they will calculate the tax bill, but if the form is sent in later, the taxpayer (or their agent) will need to calculate their own tax bill.

Where you declare your income to a lender rather than providing accounts or payslips, generally used by self-employed people.

When the insurer pays a claim.

Another name for equities which represent ownership in a company. Different types of shares confer different entitlements, such as voting rights and payments from the profits of the company. By trading shares you can make a capital gain or loss, depending on the differences in the prices at which you buy or sell. The holders of shares have a right to vote at the company's Annual General Meeting, and an entitlement to a share of dividends declared.

Acronym for Securities and Investments Board, a regulatory body.

The difference between the bid or buying price for shares/units and the offer price for selling them.

A new form of private pension vehicle made available from April 2001. Known as Stakeholder pensions, these schemes are likely to offer a low-cost straightforward method of funding for retirement.

A tax charged on the purchase of property or shares.

A second state pension scheme, funded from National Insurance contributions. The amount depends on the policyholder's average lifetime earnings. Self-employed individuals do not have access to SERPS. This type of pension is to be replaced by S2P.

Part of a debt of a government body or company, sold by way of a security for deposit of a lump sum, which yields fixed interest on the amount invested and return of the capital at the end of the term of the investment. Often called "gilts" or "gilt-edged securities" if government stock or "corporate bonds" if company stock.

The minimum amount payable by a life insurance policy or on the maturity of a policy.

A type of home contents insurance policy whereby the company specifies a rate for every £1,000 of cover you need to cover the value of the contents.

A tapering relief from Capital Gains Tax for assets held by individuals and businesses. Operative from 6th April 1998, the relief works by exempting a percentage of the gain made depending on the number of years (after 6th April 1998) the asset was held, up to a maximum of 40% for non business assets held 10 years or more. Business assets have more generous rates of exemption. See Indexation relief for CGT treatment on assets held before 6th April 1998.

The process by which the Inland Revenue refunds you tax already paid on money committed to a pension or other government-approved scheme.

The period of time for which a policy is valid.

A type of life cover which guarantees an agreed sum of money if the life covered dies before the end of the term of the policy. The policy only pays out if you die before the end of its pre-set term.

A sum of money (not guaranteed) given to policyholders at the end of the term of their with-profits investment such as a bond or endowment, reflecting the growth of the with-profits fund.

A car insurance term. The geographical limits inside which your policy is valid. Most UK insurance policies are valid in Great Britain, Northern Ireland, The Isle Of Man and the Channel Islands. Also included are the journeys between each location.

Acronym for Tax Exempt Special Savings Account: a five-year account. No new TESSAs were available from 6th April 1999, but the original capital from an existing TESSA (£9,000) can be rolled over into a TESSA-only ISA.

A car insurance term. Basic motor insurance cover. Third party covers damage to others' cars but not to your own. It is also the cheapest form of car insurance.

A car insurance term. Third party fire and theft provides additional insurance against fire or theft above what is provided by third party-only insurance.

An agreement to keep a mortgage with a lender for a certain period of time. Pentlties are payable if the agreement is broken.

Legal documents showing property ownership.

A car insurance term. If your insurance company decides it is uneconomical to repair your car following an accident, theft or damage it will be written off as a total loss.

A car insurance term. An electronic device which emits a signal enabling law enforcement agencies to locate the car if it is stolen, anywhere in the UK.

Also called an index fund, or index tracker fund, this is designed to track the movements of a stock market index; the fund manager aims to do no better or worse than that index.

If you give incorrect details or do not give a full account of your circumstances, it can lead to a lower premium being offered. This is illegal and will result in the insurance company refusing to pay out in the event of a claim. It is less common in motor insurance, but more prevalent in house contents insurance. The customer is responsible for the correct evaluation of possessions. Should you be under-insured, the insurance company will simply reduce the value of the claim they will pay.

A technician who is trained in evaluating risks and determining rates and coverage for them.

Where an insurance company takes into account known facts like your age, sex and health, in order to assess the likelihood of you making a claim on the policy.

A decision made by insurance underwriters based on supplied evidence.

A car insurance term. An additional level of insurance protection. If a motor accident was the fault of a third party, the insurers will attempt to recover your uninsured losses including repair costs, policy excess, loss of use, hire costs of alternative vehicle, transport costs, etc.

A collective investment where a unit trust manager puts an investor's money, together with that of others, into a fund of shares or securities of a specific type which is then professionally managed. The nature of the unit trust is determined by a trust deed and the fund itself is held separately by an independent trustee.

An investment where units of shares or other asset types are purchased through a life assurance or pension policy. The value of the units, which can go down as well as up, depends upon the performance of the underlying assets.

A check on a property carried out by a qualified surveyor, in order to find out how much it is worth.

Investment in small companies that are not quoted on the Stock Exchange is available through a VCT. Generally regarded as higher-risk holdings. There is beneficial tax treatment for both income and capital gains tax.

Voluntary excess is the amount that you choose to pay in addition to the policy excess that has to be paid in the event of a claim.

A benefit offered by insurance companies. It means that if you are ill or have an accident over the long term, the product waives your premiums, i.e. pays them for you.

The right to buy shares in a company at a fixed time and usually at a fixed price. As with options, there is no obligation to buy.

A term used to indicate the percentage of stocks and shares invested in holdings such as pension funds, and unit trusts.

An insurance policy which pays an agreed sum of money when the life assured dies. The protection lasts for the whole of your life.

This type of policy means that you receive a share of any profits which the life assurance company makes on its with-profits fund (a mixture of shares/property/cash etc.). At the end of the term, a terminal bonus may be paid. If annual or reversionary bonuses are added they can not be taken away.

A car insurance term. When the insurance company decides it is not economical to repair your vehicle following an accident, theft, or damage. (see total loss).

The annual income earned from an investment, measured against its current market price, always expressed as a percentage.

Zero is short for Zero Coupon Bonds. As the name implies, zeros pays no interest, so there is nil income tax to pay whilst they are held. The investment "rolls up"; i.e. the interest is included in the capital amount received on transfer or redemption, which is liable to income tax at that time. Zero Dividend Preference shares have similar advantages.