Glossary

This glossary is intended as a general aid to help you understand some of the commonly occurring phrases and jargon used in the insurance world.  If you have any questions about the use or meaning of a term or expression in any particular product or literature, you should raise them with the provider concerned.

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Salvage
Recovery of all or part of the value of an insured item on which a claim has been paid.
Schedule
A document describing the details of the cover you have from the information you have supplied to your insurer.
Selected pension age
When you start a pension plan you can choose the age at which you expect to start taking a retirement income. Speak to your pension provider if you want to change this.
Self-invested personal pension
A type of personal pension that allows you more flexibility with your investments. For example, it allows you to hold individual stocks and shares, investment trusts and commercial property. Charges for a SIPP may work differently to a personal pension. Using different types of investment involves different risks to other personal pensions and you should consider seeking advice.
Single-life annuity
Annuity based on the lifetime of just one person.
Solvency II

The European Union Directive that governs insurance companies. The text sets out:

  • valuation rules and capital requirements
  • risk management and corporate governance standards
  • reporting and disclosure obligations
Solvency ratio
The ratio of an insurance company’s eligible capital to its regulatory capital requirement. This ratio is used as an indication of an insurance company’s financial strength and its ability to withstand the risks they are exposed to such as falling asset prices or increased liabilities. It is usually expressed as a percentage and is calculated as follows: Solvency ratio = (eligible capital/regulatory capital requirement) x 100
Stakeholder pension

A type of defined contribution scheme that has to meet minimum standards set by the government. These include:

  • a charging structure that is capped at a maximum of 1.5% a year for the first 10 years and 1% a year after that
  • there can be no penalties for altering or stopping contributions or on transferring the benefits to another scheme
Stakeholder pension providers may only refuse to accept contributions if they are less than £20.
State earnings-related pension scheme
An additional State Pension which people who worked for an employer before 2002 could earn. Any SERPS entitlement will be affected by the changes to the State Pension. For more information on state pensions, see the Gov.UK website.
State pension
The government pays a basic State Pension to everyone who has paid the minimum National Insurance contributions. For further information, see the Gov.UK website
State pension age
The age at which you are entitled to draw a State Pension. The government has proposed changes to the State Pension Age. For more information see the Gov.UK website.
State second pension
An additional State Pension, linked to earnings, that replaced SERPS in 2002. It is due to be replaced by the single tier State Pension in 2016. For more information about the state second pension, please see the Gov.UK website.
Statement of fact
A form outlining all the information given to an insurer that is signed by the customer.
Statutory money purchase illustration
A yearly illustration of the estimated pension a member might get when they retire, in today’s prices.  It is adjusted to allow for the effect inflation can have on the cost of living over the period before the member retires, and how far their money will go in the future. (Also known as SMPI).
Subject to survey
Insurers use this term to provisionally accept a policy but this may change on what survey results, such as a survey on a property, show.
Subrogation
This is where someone takes over the claim made by another person. For example, if an individual has a problem with broken drains that are the responsibility of the local authority, the insurance company may pay to fix the drains and will then look to recover the costs from the local authority.
Subsidence claim
A claim for damage to a building caused by subsidence, that is when the ground beneath a building sinks, pulling the property’s foundations down with it. The downward movement of the site on which the building stands is unconnected with the weight of the building. Subsidence usually occurs when the ground loses moisture and shrinks, for example following prolonged dry spells.
Sum insured
The value of an insured item (or event) which will form the basis of a claim.
Surety
This is someone who takes responsibility for another person's debts or promises, and guarantees that they will be paid or undertaken.
Surety bond
A guarantee or promise taken out with the payer to pay you (the first party) a certain amount of money if the payer (the second party) fails to meet their agreed (or contractual) obligations. This will then be paid by a third party who has agreed to act as surety.