A mortality table based on selected lives only and not the general population, e.g. lives accepted for insurance.

This occurs when rates of mortality are differentiated by age and duration. Most mortality tables used in life insurance have two or three periods of select mortality.

Life insurance practice of categorising lives as standard, substandard or declined. The object is to guard against anti-selection, as the substandard lives have the greatest incentive to insure, disturbing the mortality balance. Standard lives attract normal terms while sub-standard (i.e. impaired) lives are rated according to their impairment.

Actual damage to the insured item from internal rather than external causes. It features in some engineering insurance policies.

Hiring out of vehicles for short periods allowing customers to drive. The self-drive policy defines acceptability in terms of both vehicles and drivers. See WAIVER OF DAMAGE.

The investment of the asset of an occupational pension scheme approved under Chapter I in employerrelated investment. A 5 per cent limit is imposed by PA95 and the IR imposes separate restrictions on self-investment by small self-administered schemes.

Earmarked schemes where the policies are linked to an investment fund. The investment fund is normally selected by the employer or trustees but held in the name of the insurance company.

Personal pensions that allow the individual to select where his contributions, within limits, should be invested. The investment opportunities include stocks and shares, unit and investment trusts, insurance company funds, deposit accounts and commercial property. Certain investments (e.g. works of art) are prohibited. Individuals must have net relevant earnings and will receive tax relief on contributions at the highest marginal rate. Group arrangements are common. SIPPs are offered by insurance companies and stockbrokers. See SELFINVESTMENT.

Policy effected by a seller of cargo to protect his contingency interest in the event that the buyer’s policy fails to respond to a loss. See QUANTUM OF INTEREST.

Treaty under which only one of the parties has an obligation. The cedant may be obliged to offer all risks of the given class but the reinsurer will not be bound to accept them (obligatory-facultative). Conversely, the reinsurer may obliged to accept all risks that the cedant chooses to offer (facultative-obligatory).