A reinstatement cover variant. The sum insured is in two parts – the declared reinstatement value of the property at inception (day one) and an added provision for inflation (between 115 per cent and 150 per cent) during the policy and reinstatement periods. An agreed percentage of 150 per cent attracts a flat rate of 15 per cent above the normal premium. Alternatively the rate is 7.5 per cent with the premium being adjustable at the end of the year. ‘Day one average’ applies the actual value at risk on ‘day one’ against the day one’ declared value rather than the value at risk at the date of reinstatement against the sum insured.

Process of a mutual insurance company becoming a limited liability company owned by shareholders. Ex-mutual members have received substantial payments to compensate them for their loss of status.

Includes entering into a contract of insurance with a customer on behalf of an insurer and is therefore FSA regulated as a part of insurance selling.

Tax-free lump sum payable on the death of a group life and pension scheme member while still employed prior to retirement. The benefit is a multiple (e.g. four times) of the deceased’s annual earnings. The trustees pay out the lump sum and are not necessarily bound by the member’s nomination as to the beneficiary. Early leavers may exercise rights under a continuation option, to continue with life cover without evidence of health.

The mortality risk above the level of the ceding office’s retention for which reinsurance may be required. On a risk premium basis this is the difference between the sum insured and retention in the first one or two years.

Securities issued by companies acknowledging long-term loans. Debenture holders are entitled to a fixed rate of interest each year regardless of company profits as it is debt capital.

UK: 1. Underwriting measure imposed by life insurers on sub-standard lives. The debt is deducted from the sum payable on death within the term but not from any survival benefit. It may be for a fixed amount (fixed debt) or it may diminish each year (diminishing debt) eventually to nil to coincide with a reducing extra risk 2. Money due from one party to another. ‘Trade debtors’, a balance sheet item, are assets at risk through non-payment and therefore insurable under credit insurance and book debts insurance.
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UK: a device the effect of which is to reduce the amount payable under a life policy effected on a sub- standard life in the case of death from a specified cause, or from natural causes as opposed to accidental death.
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MEDICAL,USA: Legal obligation to pay money. This may arise from a consumer credit transaction or rental purchase agreement.