A

Accidental Death Benefit

This benefit provides a lump sum payment to your family and loved ones should you die as a result of an accident and is paid in addition to the death benefit.

Accumulation Units

Typically accumulation units are purchased for regular contributions, from year two or three onward, and for all one-off lump sum payments. The ongoing policy charges are paid for by cashing-in units.

Administration Charge

This charge covers the cost of looking after your policy until the maturity date or your selected retirement date. See your latest Annual Statement for more details.

Allocation Rate

This relates to the portion of your contribution/premium that is invested in your plan.

Annual allowance

It’s the maximum amount you can save towards your pension in any tax year and across all pension plans. The limit for the tax year (2018/19) is £40,000 or 100% of your taxable salary, whichever is lower. This applies to most people. For more information visit Money Advice Service

Annual management charge

This charge covers the cost of managing the investment fund(s) and administration. The annual management charge is calculated each day based on the value of the fund. Because we deduct the charge when pricing the fund rather than by selling units from your plan, the amount shown on your statement is an estimated charge.

Annuity

It’s an insurance product that provides a guaranteed income at retirement, either for life, or a set period. For more on annuities click here.

Asset/ Asset class/ Asset type

In the world of stockmarket investments, there are three main asset 'classes' or types: (i) equities or shares, (ii) fixed income, bonds and cash, and (iii) what is known as 'money market instruments', such as treasury bills, deposits and securities.

Some investment managers include property, commodities and other types of investment in their mix of assets.

B

Benefits' charge

This charge covers the cost of providing your policy's benefits. See your latest Annual Statement for more details.

Bid/Offer Spread

The bid price is the price we pay when selling investment units should you decide to cash-in your plan or make a claim. The offer price is the price at which we buy the investment units with your plan contributions. The bid price is always lower than the offer price. The difference between each price is referred to as the ‘spread’. The bid/offer spread contributes to the cost of investing your contributions into the investment fund.

Bonus - annual

This is added to a with profits policy every year, which can mean an increase in the policy value. Once added, this bonus is secure and cannot be removed as long as premiums continue to be paid into the policy. To find out more about the bonus relating to your particular policy, please call us quoting your policy number.

Bonus - interim

This bonus may be added before you receive a payout from your with profits policy. It’s a way of providing your share, if any, of the future Annual Bonus. As Annual Bonuses aren’t linked to your policy anniversary date, the Interim Bonus ensures you don’t miss out on a bonus during the final year of your policy.

Bonus - terminal

This bonus may be added to the guaranteed basic sum assured of your with profits policy once it reaches its end date. Terminal bonus rates are not guaranteed as they reflect the level of profits provided by the policy. See definition of with profits policy for more about how this type of policy works.

Bonus - unit linked policies only

A plan may benefit from a bonus by extra units being added at certain times during the life of your plan. To find out more about the bonus relating to your particular plan, please call us quoting your plan number.

C

Capital Units

This type of unit tends to be used during the early years of a plan but not exclusively, for example,
an increase in a plan’s contribution. Your pension contributions buy capital units and after a specified period, there is a switch from capital to accumulation units. The annual management charge tends to be higher for capital units.

Critical Illness Cover

Also known as serious illness benefit, this pays a tax-free one-off payment in the event of a critical illness, such as cancer, heart attack, kidney failure and paralysis. Not all conditions are covered and the level of seriousness will form the terms and conditions of the policy from the outset. 

This type of cover usually forms part of a life assurance policy and features as a 'policy benefit'.

Details of the critical illness benefits covered by your policy are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

D

Death Benefit

This provides your family and loved ones with a cash lump sum should you die.

Decreasing Term Assurance

This offers a basic level of life cover. The amount of life cover decreases each year at an agreed amount until the policy reaches its end date or in the event of death.  This decrease would also apply to any Critical Illness Insurance added to this type of policy.

Defined Contribution Pension

This pension is made up of money paid in by you and/or employer, which is placed in a variety of investments, including shares. The value and size of your pension is based on the amount of money saved and the performance of the investments. Pensions include company, personal and stakeholder pensions. It’s also known as a ‘money purchase’ scheme.

Disability Benefit

This provides you with either a cash lump sum or income each year should you be unable to work as a result of an illness or accident before your policy’s maturity date or your selected retirement date. Details of the Disability Benefit covered by your policy are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

E

Endowment

This type of policy is a regular savings plan that includes life cover. The policy pays a cash lump sum in the event of death or at the policy's end date. Some endowments also allow for other benefits to be added to the policy, such as critical illness or disability cover. A With-Profits endowment offers a bonus each year and at the maturity date (referred to as a 'terminal bonus').

Details of your Endowment are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

Enhanced Allocation Rate

If your statement refers to an ‘enhanced’ allocation rate, it means the amount we invest in your plan is greater than the regular contributions you make.

Enhanced Annuity

This is an annuity that pays a higher income for people who may have a reduced life expectancy due to medical conditions or because they smoke, are overweight or drink alcohol regularly.

F

Financial Conduct Authority

The Financial Conduct Authority (FCA) regulates the UK financial services industry. It protects consumers, keeps the industry stable and promotes healthy competition between financial service providers.

Flexi-access Drawdown

It’s a method of creating a retirement income that offers an alternative to an annuity. It means you can keep your money invested while taking an income from it. It works by investing your retirement savings in funds designed to generate an income for you. But unlike the annuity, the income is not guaranteed. What it does offer, as its name suggests, is the flexibility to make changes to your income levels and/or switch to alternative income options in the future.

Freedom and Choice Reforms

On 6 April 2015, the government announced the ‘freedom and choice’ pension reforms. This gave millions of people unprecedented control over their pension savings by giving them the choice over how they access their money in retirement. So, now if you are 55 or over, you can take the whole amount as a lump sum, paying no tax on the first 25% with the rest taxed as if it were a salary at your income tax rate.

G

Guaranteed Annuity Rate

This benefit guarantees a particular annuity rate when your pension reaches your selected retirement date. So if you’re thinking about buying an annuity to provide an income in retirement, we will make sure the amount available to pay the annuity provider will meet the guaranteed annuity rate quoted on your statement. This rate is guaranteed as long as you access your pension between the ages of 60 to 70. If you decide not to buy an annuity, you will lose this benefit as there is no equivalent lump sum payment.
Similarly, you could lose this benefit if, for example, you transfer your pension to another company or take all of your pension as a lump sum.

See your policy terms and conditions for more information.

Guaranteed Minimum Fund Value

This provides either a guaranteed minimum fund or policy value, where the higher of the two values is payable. This guarantee is linked to a selected retirement date or a policy’s end date, which means it will no longer be valid if any changes are made to the policy, such as an interruption or reduction in the regular contributions, or any money is taken out of the policy before this date.

Guaranteed Minimum Pension

This is a benefit that guarantees a minimum pension at retirement, provided the plan remains untouched until the selected retirement date. If not, the guarantee will no longer apply. This is a valuable benefit and we strongly recommend you get guidance or financial advice if you are thinking about transferring your plan to another provider, or accessing your pension before your agreed retirement date.

Guaranteed Pension Income

The amount of income you will receive at retirement if your policy continues as it is until your selected retirement date. This income may be increased by future bonuses.

I

Income Protection

This is sometimes referred to as ‘Permanent Health Insurance’, it provides an income to help you meet your financial commitments should you be unable to work as a result of an illness or accident. The cover can replace income in a number of ways depending on the premium and the policy terms and conditions. For example, it can provide a regular amount until a return to work. It’s important to check the level of benefit to make sure it reflects current income. For example, a pay rise and/or promotion, or job change, are reasons to review this benefit. You can find out more by calling us and quoting your policy number.

Indexation

It's a built-in feature that helps to protect a policy from the effects of inflation and makes any necessary changes. It aims for a policy's benefits or premiums, or both, to keep up with the cost of living. The 'indexation rate', such as the Retail Price Index or a fixed rate, is used to keep your regular payments on track.

Inflation

The rate of inflation reflects changes in the general price level of goods and services. There are two key measures of inflation: the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). The rates are often expressed as a percentage. For example, if the CPI is 4% next year, it means the cost of goods and services will be 4% more expensive compared to this year. So an item you can currently buy for £100 will cost £104 next year.

L

Level Term Assurance

This provides your family and loved ones with a cash lump sum should you die. The lump sum amount is fixed for the length of the policy. Further details are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

Lifetime Allowance

This is the total amount you can build up in pension plans over your lifetime while still benefiting from tax relief. The allowance is £1.03 million for the tax year 2018/19. If you save more than that limit, you’ll have to pay a tax charge known as the ‘Lifetime Allowance Charge’. This charge is only applied to the amount of pension savings that exceeds the Lifetime allowance. Currently the charge is 55% if you take your money as a lump sum, or 25% if you choose an income option. Bear in mind that you’ll have to pay income tax too on any income or lump sums taken from your pension(s) that fall outside of the 25% tax-free money. For more information click here.

Loyalty Bonus

A loyalty bonus is our way of saying "thank you" for continuing to pay your premiums regularly. The timing of the bonus payment will vary depending on the type of policy you have with us. To find out more about your policy’s loyalty bonus, please call us quoting your policy number. 

M

Money Purchase Annual Allowance

This relates to a ‘defined contribution pension’ see the definition above. Once you access your defined contribution pension, it could reduce your Annual Allowance from £40,000 to £4,000 (2018/19). It’s this lower allowance of £4,000 that is known as the ‘Money Purchase Annual Allowance’ (MPAA). It means that you’ll benefit from tax relief on the money you put into your pension of up to 100% of your taxable earnings or £4,000, whichever is lower. But for this to happen, you will need to access your defined contribution pension in a particular way, known as ‘flexible access’. Examples are taking a lump sum of £10,000, or more, or by flexi-access drawdown. For more information click here.

Money Purchase Scheme

See ‘defined contribution pension’.

N

Non-qualifying Policy

This type of policy doesn’t have the same tax advantages as a ‘qualifying’ one. It means there may be additional tax to pay on the investment gains from your policy, no matter when you (or your loved ones) receive your money. If you’re a higher rate tax payer or these gains take you into the higher rate tax bracket, you may have to pay more tax.

O

Occupational Pension

This is a pension scheme provided for the members of a particular occupation or by an employer.

P

Paid Up

This is an industry term which is used to describe a policy where the premiums/contributions are no longer being paid and the policy continues to run until its end date. The way this works does vary depending on the policy type. See your policy terms and conditions for further details.

Partial Surrender

A partial surrender means taking some money out of a policy by cashing in the number of units needed for the amount requested. If a policy has units in more than one fund, an equal number of units is deducted from each fund.

Percentage Return

This is the 'rate of return' shown as a percentage. The rate of return indicates the gain or loss on an investment over a particular period.

Q

Qualifying Policy

Put simply, a qualifying policy follows particular rules as set out by HM Revenue & Customs, some of which make this type of policy tax efficient. This means you may not be liable for any income tax on your money when it’s paid to you, or your loved ones, either before or at your policy’s maturity date. But if any changes are made to the policy, what was once a qualifying policy can become a non-qualifying one, i.e. you may have to pay additional tax.

R

Retail Price Index

It measures the change in the cost of a typical selection of retail goods and services and is one of the key measures of inflation.

Retirement Bonus

This is, in effect, a loyalty bonus for continuing to pay your contributions regularly until your selected or actual retirement date. We will add this bonus to your policy when you choose to access the money from your pension, provided your policy has reached or passed your selected retirement date. This doesn’t include transferring your pension to another company. The amount will depend on the type of pension you have with us.

S

Sector

In the world of investing, a sector is a group of investment funds that share similar objectives and features.

Sector Average

A sector average is the average performance of a collection of investment funds that best represents the sector as a whole. It means you can see how your fund is performing compared to its peer funds in the market.

Stakeholder Pension

This is a type of defined contribution personal pension that offers low and flexible minimum contributions, a cap on charges and a set or ‘default’ investment strategy if you don’t want to choose the investment funds. For more information click here.

Surrender charge

This charge is applied should you surrender your policy before the maturity date.

T

Tax relief

Paying into a pension attracts tax relief. This means in addition to your pension contributions, the government ‘tops up’ a pension in the form of pension tax relief. The amount depends on your rate of income tax. Your pension contributions get tax relief at the highest rate of income tax you pay. For example, for a basic-rate taxpayer (20%) contributing £100 each month to their pension, this would actually cost them £80 because the government tops up the pension by £20, the amount that would have been taken in tax from £100 of their salary. For more information about tax relief click here.

Term Assurance

This is the cheapest and simplest way to have life cover. Money is paid in the event of death and only if this happens before the policy reaches its end date. This type of policy usually provides life cover for a specified period. The policy expires at the end date without a cash lump sum for your family or other dependants.  Critical Illness and Income Protection Insurance can be added to a Term Assurance policy. See 'Critical Illness Insurance' and 'Income Protection Insurance' for more information. 

Terminal Illness Benefit

This benefit provides a cash lump sum if you're diagnosed with a terminal illness which will significantly reduce your life expectancy. The amount shown on your statement is the maximum payable although the actual amount would be at the discretion of Countrywide Assured. Payment of this benefit will reduce or replace the sum assured benefit.

Total Permanent Disability Cover

This cover typically provides a cash lump sum in the event of being permanently disabled and unable to continue working in a current occupation, profession or own-business. In this context, a total permanent disability is one that will be permanent throughout a person's life.

This type of cover can be included as part of a life assurance policy and feature as a 'policy benefit'.

Details of your Total Permanent Disability benefit are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

Transfer charge

This charge is applied should you transfer your policy to another provider before the selected retirement date.

U

Unit linked policy

A policy that invests in an investment fund that is divided into a number of equal units, each representing an equal share of the fund. The value, or price, of the units depends on the value of the investments that make up the investment fund, such as shares, bonds, property and cash.

W

Waiver of Premium

This provides a way of paying ongoing policy premiums if an illness or injury prevents a person from working. It's an 'added' benefit to another policy.  

There is usually a period between the date of the injury or illness and when this benefit starts taking over the premium payments. This is usually 13 or 26 weeks, depending on the terms agreed at the start of the policy.  

Details of your Waiver of Premium benefit are shown in your policy's terms and conditions. Or you can find out more by calling us and quoting your policy number.

Whole of Life Policy

This type of insurance is designed to provide protection against a particular event(s) throughout life. It can be used as a way to provide insurance cover.