IFA Jargon Buster

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The identification, measurement and economic control of risks that threaten the assets and earnings of an individual, business or other enterprise.

Refers to the fact that the value of your savings and investments can fall as well as rise. Some savings and investments (for example, direct investment in equities) carry greater risk than others (such as a bank or building society deposit account). It is also used by insurers with reference to their covering individuals or businesses.

New shares sold by a company to raise capital.

This is the annual bonus paid to you if invested in a 'with profits' fund.

A measurement of inflation calculated based upon the average monthly price of consumer goods, services and house prices.

This is the cost of buying the same or similar items as new, if you have to replace them in the event of an insurance claim.

Your monthly repayments consist of instalments of capital (the amount of money you have borrowed) as well as the interest due on the amount you borrowed. Also known as a capital and interest mortgage.

A life cover policy where you have the option to renew its terms without having to take a medical as it is renewed based on your health when you first took out the policy.

The process of switching your mortgage from one lender to another without moving house.

This is a life cover policy where the amount of cover decreases / reduces over the term. It is usually linked to a Repayment Mortgage (see below). Also known as Decreasing Term Life Insurance or Mortgage Protection.

The amount you receive back when a corporate bond or gilt matures and the loan is repaid.

The maturity date of a corporate bond or government security: it is when the loan amount becomes repayable to the investor along with any other agreed payments.

A non-UK pension scheme that can receive transfers of UK Pension Benefits without incurring an unauthorised payment and scheme sanction charge. This system was launched in 2006 as a direct result of EU human rights legislation with regards to freedom of capital movement. These were referred to as Qualifying Recognised Overseas Pension Scheme (QROPS) until April 2015.

This is the recommended amount of cover (from your property valuation) that you should take out under a buildings insurance policy. This may be higher or lower than the market value of your property.