IFA Jargon Buster

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This is a signed document by which the member can indicate a preference as to who should receive any lump sum death benefit. The choice is not binding on trustees or administrators and, as a result, Inheritance Tax is not normally payable. This is also referred to as a nomination form.

This is the charge for selling an investment or exiting a financial arrangement before the agreed end date.

This generally refers to an insurance policy and is something that is not covered. For example, specific types of cancer may not be covered by a critical illness policy, or gates and fences may not be covered by storm damage under a household insurance policy.

The first portion of a loss or claim which must be paid by the insured. An excess can be voluntary to obtain a reduced premium or imposed for underwriting reasons. This is sometimes referred to as 'deductible'.

These investment funds hold shares in certain companies that, for instance, promote the improvement of the environment, good working practices or green energy solutions. They tend to avoid markets such as alcohol, firearms, pornography and the tobacco industry.

The total value of all your assets less any debts you may have.

This occurs where you ‘release’ some of the value of your house as a cash lump sum while continuing to live there.

In relation to mortgages, this is the difference between the value of your property and the amount you borrowed. For example, if the value of your house is £80,000 and you have a £60,000 mortgage, your 'equity' is £20,000.

The ordinary shares of a company.

An annuity aimed at people suffering from medical conditions that may reduce their life expectancy. They often pay a higher income to individuals than a 'standard' annuity as a result of this perceived decreased life expectancy.

A life insurance and savings policy which pays a specified amount of money at the end of an agreed term or on the death of the life assured. These are often linked to a mortgage.

An insurance policy for employers designed to protect against their potential liability to employees for injury or disease arising out of and in the course of their employment. With some exemptions, this insurance is compulsory in Great Britain and the Isle of Man and can only be provided by an authorised insurer.

The total amount of a company's earnings divided by the number of ordinary shares it has issued. This is used as an indicator of the return on equity investments.

If you borrow money and pay it back before it's due, the lender will make less money on the deal than expected. To compensate, the lender may ask for an additional payment to cover administration costs to repay (or 'redeem') the loan early. The redemption period varies according to the terms of your mortgage or other loan.