An excess of loss layer that provides for further reinstatements of cover after the exhaustion of the automatic reinstatements of the original contract. The policy defines which basic contracts come within its scope and how many reinstatements they contain. Top and drop is a development of the back up layer, but the reinsured who relies upon it runs the risk that the top layer may have been exhausted by earlier calls upon it.

Occurs when a policy is expressed as operating from a date before final agreement has been reached on its terms. Cover begins before the date cover is issued and will cover any losses in the intervening period. It is illegal to backdate compulsory motor insurance, but acceptable in life insurance where the insured may wish to date from his previous birthday or other specific date.

The period of previous service in employment with which a new member of a company pension scheme can be credited.

A combination of an annuity and whole life policy on the same life whereby a single payment purchases the annuity, the instalments from which pay the whole life premiums. The annuity purchase reduces the purchaser’s estate, but the life policy proceeds paid on death are tax-free and replace the initial single payment. Life premiums payable out of normal income are an exempt transfer and therefore exempt from inheritance tax.

Occurs where the terms and conditions of a primary insurance policy match those of its counterpart reinsurance policy. There is a presumption that facultative reinsurance is back-to-back with the original insurance (Vesta v. Butchers and Others). It is also presumed that proportional reinsurances are back-to-back with the insurance policies, but this is not true of excess of loss treaties. Where by express terms the risk presented to the reinsurer is materially different from that assumed by the reinsured, there is no presumption of back-to-back cover (Gan Insurance and Another v. Tai Ping).