In a unit-linked insurance contract, it is the percentage of the premium that is used to buy units. It varies according to the charging structure of the policy and the age of the policyholder.

Collective investment where investors (unitholders) obtain an interest in a fund by purchasing units from the managers knowing that they can resell their units to the managers at a price reflecting the stock market’s value of the trust’s investments on the day. FSA authorised trusts are empowered to sell units directly to members of the public. Many unit trust schemes are unit-linked life insurance schemes. See UNIT TRUST SECTORS. (Visit www.investmentfunds.org.uk).

For purposes of performance comparison, UK unit trusts are divided into sectors according to their investment objective. For example, the Income Funds sector’s objective is ‘immediate income, the Growth Sector seeks capital protection while the Specialist Fund sector provides options for investors who want to invest in a single country, e.g. Japan, or pursue a single theme, e.g. technology.

Annuity where the payment to the annuitant is linked to the performance of underlying assets, e.g. a particular investment fund. Performance depends on current investment market conditions. A pension scheme member taking a particular view on the value of the underlying assets could opt for such an annuity.

long term business with an investment content whose return is linked to the performance of investments (or an index of them) comprised in a fund divided into units.

Life policy in which profits depend on the performance of units in an invested fund. Part of the premium purchases guaranteed life cover but most is invested in a fund that invests in unitised funds. The policyholder’s investment is expressed in units of the underlying investment vehicle and their value can rise or fall. At maturity the policyholder receives the net value of all units purchased for him or the units themselves.

An approach which combines the ‘with profits’ concept with the management structure of a unit-linked life policy. Policyholders receive units in the ‘with profits’ fund and units are priced depending on an annual reversionary bonus. A terminal bonus is added at maturity. Most UK ‘with profits’ business is written on a unitised basis.

The application of average to commercial and industrial fire risks on a widespread basis so that virtually no policy is issued without being subject to some form of average.

A situation where an individual such as a sole trader or partner is liable to the full extent of his personal wealth for business debts. Contrast with a shareholder of a company whose liability is limited to the capital he has agreed to subscribe. Names at Lloyd’s have unlimited liability. The intention is to switch all Lloyd’s underwriting capacity to corporate members.
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Requirement that the owner or owners assume full responsibility for all losses or debts of a business.

Damages that are assessed by the court. Unlike liquidated damages they are not agreed in advance and included in a contract. Unliquidated damages are the main component of liability insurance claims.