Glossary
Getting to grips with Positive Forward Planning means getting to grips with a number of terms and products. Here is a list of some of the issues you are likely to come across.
Accidental Death benefit
An extra payment made by a life insurance company if the insured dies as a result of an accident.
Annuity
Another name for a pension really. It relates to an annual sum payable for life from a capital sum built up by someone. This device can be used to contribute to potential future care costs.
Critical Illness Cover
An insurance policy which pays out sums of money if the insured party contracts a particular illness contemplated in the policy.
Death in Service Cover
An insurance connected to a company pension scheme whereby a payment is made if the insured dies whilst in employment.
Dependant
Someone who depends on another for financial support.
Advance Health Care Directive
This document is a direction or instruction to your doctors of your treatment preferences should you become extremely ill. Sometimes it is known as a “living will” and it is frequently used by people to state that they do not wish to be kept alive indefinitely by medical interventions should their life be ending. But the directive can contain in it whatever anyone wishes regarding medical treatment.
Power of Attorney
This is a document whereby you give someone legal powers to act on your behalf should you become temporarily or permanently unable to act for yourself. The powers you grant can be extensive or limited but they usually fall into two broad categories “property and financial powers or welfare powers. The person or persons you appoint are called your attorneys, and they can only act in your interests but they can make decisions for you.
Will
A legally binding document appointing someone to wind up your affairs on your death and stating who is to get your property. You can make other wishes clear in your will – such as care arrangements for your children.
Advance Health Care Plan
This is a general document usually but not always prepared by someone in conjunction with medical attendants about health care issues including preferred place of treatment if seriously ill. It generally complements the particular instructions on treatment in and Advance Health Care Directive.
Term Life Policy
This is a type of insurance policy which only pays out if the insured dies during the period the policy is in force – i.e during the Term of the policy.
Health Insurance
Provides cover for illness or bodily injury.
Inheritance Tax
Tax paid on death on the value of the deceased’s estate.
Joint life policy
An insurance contract covering the lives of two people.
Policy Document
The written terms and conditions of an insurance policy.
Sum Assured
The lump sum payable under and insurance policy.
Tax avoidance
Legal steps taken to cut tax payments.
Trust
A legal contract where someone is appointed to administer and or own property on behalf of another.
Trustee
A person appointed to hold or administer property on behalf of another party – called the beneficiary.
Whole of Life Policy
This is a form of insurance where a party contracts to pay as some of money every year or his or her life to an insurance company which pays out money due under the insurance contract to the beneficiaries of the policy on the death of the insured party. There are many forms of this type of policy and the beneficiary could be the estate of the insured, for example to pay for funeral and other costs.
Funeral Plan
Strictly speaking this just means a plan of a funeral but it is now taken more to mean the pre planning of a funeral and the financing of it. For example someone may pre pay for their funeral with the money being held in a trust fund till the death occurs. The companies offering this service usually include actually pre planning the funeral itself as part of their service.
Equity Release Mortgage
A mortgage or loan taken over a property to realease some of the property value. A typical equity release mortgage taken out by and older person on the property they own will give them a capital sum with the interest on the loan being paid on death only.
Home Reversion Plan
The sale of part of a property to a company to release capital to the property owner whilst allowing the owner to live in the property.
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