1. An amount paid annually (or more frequently) under a family income benefit policy from the time of death to the end of the agreed term. 2. An amount paid monthly (or weekly) under a policy covering disablement from working due to accidental injury or sickness. See SICKNESS BENEFITS.

Single premium life policy paying a guaranteed income for a fixed term, three to five years. At maturity most schemes return the original capital but there are more complex schemes where the return of capital depends on the performance of the underlying assets. A basic rate tax payer is allowed a tax-free income of 5 per cent per annum.

Withdrawal of pension scheme benefits before using balance of fund to purchase a compulsory annuity. Members of smalladministrated pension schemes, personal pension schemes and occupational schemes with money purchase benefits or additional voluntary contributions can delay the purchase of a pension until age 75 while withdrawing regular sums from their pension fund subject to certain maximum and minimum amounts. The individual can still take a tax-free lump at retirement leaving the balance for drawdown and the retirement annuity purchase by age 75.

A permanent contract that, after a waiting period, pays an income for so long as the policyholder is unable to work due to accident or illness up to a given age, usually retirement. The maximum benefit is circa 60 per cent of pre-disability income and may be level or index-linked. A proportionate benefit is paid to persons returning to work but forced to take lower paid jobs. Income protection cover is available for individuals and groups. Benefits can be immediate or deferred until a certain time has passed. See DEFERRED PERIOD.

Policy provision often included in life policies whereby the insurer agrees not to challenge the validity of a policy because of alleged misstatement by the insured after the policy has been in force for a stipulated period, usually two or three years.

Limited liability company operating as an underwriting member at Lloyd’s.

Standardised international trade contracts defining the obligations in a sale. These terms deal with expenditure, place (delivery) and time (when goods and transit risks pass from seller to buyer). See FOB, FOR, CIF, EXW.

An expense that is insured under a business interruption insurance. It is the additional expense necessarily and reasonably incurred for the sole purpose of reducing the shortfall in turnover during the indemnity period. For example, the business may have to rent alternative premises and/or pay overtime to make up for lost production. The insurer will not pay for increased costs in excess of the loss of the gross profit that the extra costs have served to avoid.
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Under a business interruption policy the occurrence of the event insured against may cause the insured to incur increases in his costs in endeavoring to maintain production. The insurance provides some cover in this respect.

Covers an excess amount over the insured value of the property, hull or cargo. The insurance stands alone for a separate agreed amount in excess of the agreed value and is written as a total loss only cover. In the case of cargo I/V covers increases in value during the currency of the underlying policy. Hull policies limit the amount of I/V cover in excess of the agreed hull value.

A life insurance term to describe an extra risk that increases with the passing of time, e.g. being overweight or chronic bronchitis.