FAQs

Are you looking to understand more about one of our products, or do you need further information on the processes and practices at Canada Life? Use this page to easily select the category and/or product region to find what you need. We also have a glossary that may help with some of the key terms used across the site. 

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Glossary of terms

Absolute Trust

Another name for a Bare Trust. A trust where the beneficiaries have a fixed interest in the trust fund and the sole duty of the trustees is to hold that property for the beneficiary. Is also known as a Bare Gift Trust.

Account

The arrangement where investment funds and charges are processed.

Accrued Benefit 

The financial benefit you have earned to date, payable on your Normal Retirement Date.

Accumulation units

Units where net income is automatically reinvested to purchase more underlying investments for the fund. This is reflected in an increase in the unit price.

Actively at work requirements

A set of terms which can be applied to groups of employees when full medical underwriting is not warranted.

Additional Policy Schedule

The separate document that may be issued when an Additional Premium is accepted. It contains specific information relevant to the Additional Premium.

Additional Premium

Any additional payments invested in a policy after it has started. Also known as a top-up.

Additional Rate Tax

The income tax rate (45%) payable on income above £150,000 a year.

Adviser Charge

The fee charged (where applicable) by a professional adviser in relation to the investment made or any other service provided which has been arranged in advance with a professional adviser.

Age 18 to 25 trust

This is a discretionary trust where the property is held on trust for the benefit of someone aged between 18 and 25. When the property leaves the trust on or before the 25th birthday an inheritance tax charge may occur.

Alcohol abuse

Inappropriate use of alcohol which leads to an insured illness. (Group Critical Illness)

Amount Invested

The amount of the payment applied to an investment policy.

Anniversary Date

The anniversary of when a policy began.

Annual Allowance

The annual limit set by HM Revenue & Customs on the amount of pension savings that benefit from tax relief.

Annual revision date

The date from which premiums are recalculated each year.

Annuitant

The person receiving annuity payments.

Annuity

An annuity is a guaranteed regular income payable to you for your lifetime and, if chosen, the lifetime of your spouse. It can be paid on a monthly, quarterly, half-yearly or yearly basis and can include a number of features such as guaranteed payment periods. Income from an annuity can remain level or escalate if so chosen at outset.

Annuity Commencement Date

The date on which annuity payments begin.

Annuity Rate

The rate applied to the amount invested to calculate an annuity.

Asset Allocation

Dividing an investment among several securities or asset classes (for example: shares, commercial property, a deposit account or fixed income stock) in order to pursue investment objectives, such as producing income, targeting future expenditure or balancing risk and return.

Asset Class

Category of investments that have similar risk and return characteristics; for example, equities.

Assets

The investments that make up a fund. For example, shares, commercial property, a deposit account or fixed income stock.

Assignment

A way of legally transferring the ownership of a policy to someone else; to do this a deed of assignment has to be completed.

Assignment into trust

An existing policy can be put under trust by the policyholder assigning the policy to the trustees for the benefit of the intended beneficiaries.

Bare Gift and Loan Trust

A special type of trust used for estate planning, where you initially make a small gift (£10) to set up the trust and then lend money to the trustees. The advantage is that the growth of the value in the investment will be allocated to the beneficiaries.

Bare Trust

A trust where the beneficiaries have a fixed interest in the trust fund and the sole duty of the trustees is to hold that property for the beneficiary. Is also known as a Bare Gift Trust.

Basic Benefit

The benefit to be covered which does not include pension scheme or National Insurance contributions, or any employer's lump sum. (Group Income Protection)

Basic Rate Tax

The income tax rate (20%) payable on income above your personal allowances and below the level at which higher rate tax is paid.

Beneficiary

A person or one of a class of persons (for example, grandchildren) who is named under a trust as the future recipient of the trust fund (or a share of it). However, with a discretionary trust it is at the complete discretion of the trustees if they actually receive anything (see potential beneficiary).

Benefit Crystallisation Event

The circumstances when there is a test to see if the pension benefits exceed the lifetime allowance. The events are when any pension benefits are taken; for example, the payment of a lump sum, drawing an income or death benefits are payable before age 75.

Benefits (under a pension)

Under a pension arrangement, this is the amount of lump sum a person might receive, the income payable or the death benefits payable.

Benefits (under a trust)

The share of a trust fund to which a person is, or might be, entitled at a future date.

Bid Price

The price used to credit or cancel units under a policy.

Bid-Offer Spread

The difference between the bid and the offer price. The size of the spread is affected by several factors, including current trading volumes and market conditions. Some units do not have a spread and only have a single price for both bid and offer.

Bond

A Bond is a shortened name for Investment Bond, which is a lump sum life assurance investment policy.

Bond Currency

The currency in which the bond investment fund is set up. UK bonds are in Sterling, but international investment bond funds can be set up as Sterling (British Pounds), Euros or US Dollars.

Breach of Trust

This occurs when the trustees fail to act in accordance with the conditions of the trust deed. Any financial loss suffered by the beneficiaries may be remedied by suing the trustees.

Business Day

Any working day for the stock market. The stock market is generally open each weekday except Bank Holidays.

Canada Life

A general name applying to Canada Life Limited and/or Canada Life International Limited and/or CLI Institutional Limited and/or Canada Life International Assurance (Ireland) DAC.

Cancellation of Units

The process whereby units are cancelled to pay for certain expenses and charges.

Cancellation Rules

You have a minimum 30-day cooling-off period during which you can cancel a policy for any reason. You will get a refund of any payments you have already paid. For investment related policies this will be less any fall there may have been in the value of the investments.

Capital Gains Tax (CGT)

Individuals may be subject to CGT when they sell assets such as shares, unit trusts, OEICS and investment property.

Capitalisation factor

A number that death in service pension benefits are multiplied by when we need to estimate the total value of the benefit over the life of a claim. It is related to the basis of cover and can change. (Group Life Assurance)

Capped Drawdown

A type of income drawdown product that was available before 6 April 2015. If you already have a capped drawdown product, it will continue under its existing rules until the next review date.

Carve Out

A feature of a trust where the settlor has retained ownership of specific benefits (such as withdrawals) as defined in the trust and cannot benefit from any of the other benefits payable under the trust (such as the surrender value). That is, the settlor has 'carved out' specific benefits for themselves.

Cash Account

The part of an Account which is held in a cash deposit and is used to pay expenses, charges, withdrawals and adviser charges.

Cash gift

A cash amount given by a person to another individual (often their children or grandchildren).

Catastrophic event

One event, or a series of related events, which results in the death of multiple members. (Group Life Assurance)

Catastrophic event limit

The maximum benefit we will pay to cover all the claims arising from a catastrophic event. (Group Life Assurance)

Cease age

The agreed age at which cover under the policy will end for each individual.

Chargeable Lifetime Transfer (CLT)

A CLT is a transfer of value, such as an investment in a discretionary trust. Inheritance tax at 20% is payable at the time of the transfer if, when added with previous chargeable transfers made in the last seven years, it is more than the current nil rate band.

Child

Any natural or legally adopted child who is older than 30 days and younger than 18 years of age. (Group Life Assurance) See "eligible child". (Group Critical Illness)

Circulatory system illnesses

A defined set of insured illnesses which relate to the mechanisms by which blood is transported around the body. (Group Critical Illness)

Civil partner

A person that the member has entered into a civil partnership with, as defined in Section 1 of the Civil Partnership Act 2004.

Claim

Notification to an insurance company requesting payment of an amount due under the terms of the policy.

Claim benefit

The amount of insured benefit we have agreed to pay.

Collective Investment

A collective investment is a fund that is operated by an investment provider. Collective investment funds combine the assets of various individuals and organisations to create a larger, well-diversified portfolio fund. Typical examples are unit trusts and OEICS.

Commencement date

The date on which the policy starts.

Commission

This is the amount payable to an adviser to cover their costs for setting up a life assurance policy.

Constitution of the trust

The establishment of a trust by the transfer of assets to the trustees.

Consumer Price Index (CPI)

The CPI is a measure of consumer price inflation and is used by the government as a guide to by how much it should increase certain state benefits (such as the State Pension).

Contingent interest

This is a legal term for a situation which depends on the happening of a particular event which may in fact never happen.

Contribution

Any payments invested in a pension policy.

Corporation Tax

The tax levied on companies' profits.

Creator of trust

The creator of a trust (for income tax purposes) is the person who started up the trust. They are also known as the 'settlor'.

Crystallised Fund

This is the term given to pension funds that have been used to provide benefits or have been allocated to an annuity product.

Death Benefit

The amount paid out under a policy on the death of the life assured, last life assured (joint life, last survivor policy) or the first life assured (joint life, first death policy).

Decision Letter

Written confirmation of our decision following medical underwriting of an individual.

Deferred period

The agreed period of incapacity before a claim will be considered. (Group Income Protection)

Dependant

People who are financially dependent upon another person.

Deposit Account

An investment where you place a sum of money and regular interest is paid to you or added to the account.

Designation

The adding of a note to an account, policy or investment that you want the proceeds to benefit another person or persons.

Disclosure Of Tax Avoidance Schemes (DOTAS)

A requirement to notify HMRC that you are operating, or a participant in, what they define as a tax avoidance scheme. Failure to do so will result in penalties and fines.

Discount

In the context of estate planning, the reduction in the inheritance tax value of a gift into a certain type of trust: the discounted gift trust.

Discounted gift

The actual inheritance tax value of a gift into a discounted gift trust

Discounted Value

The actual reduction in the inheritance tax value of a gift into a discounted gift trust

Discretionary benefit

A benefit for an individual which is larger or smaller than they would normally be eligible for.

Discretionary entrant

An individual who is joining the policy outside the normal eligibility for entry.

Discretionary Fund Manager (DFM)

A professional third party investment manager choosing the investments for a portfolio, who will work to set parameters in terms of portfolio choices (risk profile, client preferences and so on).

Discretionary Gift and Loan Trust

A special type of trust used for estate planning, where you initially make a small gift (£10) to set up the trust and then lend money to the trustees. The advantage is that the growth of the value in the investment will be allocated to the beneficiaries. See also Discretionary Trust.

Discretionary Investment Manager (DIM)

A discretionary investment manager is someone who is involved in discretionary fund management.

Discretionary Trust

A trust where the trustees decide at their complete discretion as to who should get a share of the trust fund. They are guided by the people named or described on the trust deed.

Dividend(s)

The payment by a company to its shareholders.

Domicile

The country in which a person is, or is legally deemed to be, permanently resident and in which it is their intention to remain.

Donee

A person who receives a gift .

Donor

A person making a gift.

Drug abuse

Inappropriate use of drugs, legal or otherwise, which leads to an insured illness.

Earlier claim

Any previous claim paid under our or any other Group Critical Illness policy an individual has been a member of due to employment. (Group Critical Illness)

Earmarking

This is a term used for sharing pension benefits on divorce. If you decide to opt for pension earmarking then when you start to draw retirement benefits, part of them are paid to your ex-spouse or partner or vice versa.

Elements

This is each separate, identifiable investment set up under a policy.

Eligible child

A natural or legally adopted child, or any child who is financially dependent on the member, who is under the age of 23 or dependent on the member due to disability. (Group Critical Illness) See "child". (Group Life Assurance)

Eligible dependant

Someone who is eligible for a pension when a member dies. (Group Life Assurance)

Eligible employee

Anyone who meets the agreed eligibility criteria for inclusion in a policy. These will be specific to each policy.

Employer

Any company, partnership or organisation we agree to include in a policy.

Employer's benefits

Benefits provided by an employer for their employees, such as a pension scheme, life cover or permanent health insurance.

Employer's lump sum

A single payment due at the end of an agreed claim payment period if an employee continues to meet the agreed definition of incapacity. (Group Income Protection)

Endorsement

A written record of any change to the provisions or details of a policy.

Equities

Shares issued by a company to the people who have invested in that company.

Equivalent lump sum

The annual value of a pension multiplied by a capitalisation factor. (Group Life Assurance)

ESA

Employment and Support Allowance, described in Chapter 5, Part 1 of the Welfare Reform Act 2007.

Establishment Charge

The charge deducted from a policy to cover the cost of establishing it. Typically, these are taken at regular intervals over the first five years.

Estate

The total of all assets a person possesses and is beneficially entitled to.

Estate Planning

For inheritance tax (IHT) purposes, the process of anticipating and arranging, during a person's life, for the disposal of their estate. Estate planning can be used to eliminate uncertainties over the administration of a probate and to maximize the value of the estate by reducing taxes and other expenses.

Ethical investments

The term given to investment in companies where the companies have been selected because of a certain ethical stance that they have. For example, a fund may avoid investing in alcohol or in companies that exploit labour from poor countries but may invest in tobacco.

Evidence of insurability

Any documentary or medical evidence we may require to include someone in the policy.

Exempt Transfer

A transfer that does not count as a chargeable transfer for inheritance tax purposes and therefore is not subject to tax. An example of an exempt transfers is the transfer of investments between spouses or registered civil partners.

Existed

An insured illness or related condition that was first diagnosed, treated or known about before a member was included in a policy or their benefit under a policy increases. (Group Critical Illness)

Exit Charge

When money leaves a discretionary trust, there may be an IHT exit charge.

Expected normal pension age

The age at which a member would be expected to leave service and receive a pension from their employer's registered occupational pension scheme. (Group Life Assurance)

External Fund

Any unit linked fund that is not managed by Canada Life but instead is managed by a third party investment management company.

Financial Conduct Authority (FCA)

The FCA is the independent financial services regulator. Their objectives are to protect consumers, to secure an appropriate degree of protection for consumers and to protect financial markets. They also promote effective competition in the interests of consumers.

Financial Services Compensation Scheme (FSCS)

FSCS is the compensation scheme for customers of UK authorised financial services firms.

Fixed income stock

Fixed income stock are investments that provides a yearly return in the form of fixed payments and return a set amount at a specified maturity date.

Flexi-Access Drawdown (FAD)

Flexi-Access Drawdown allows you to take money out of your pension fund; part of which will be tax-free cash and part taxed as income. The remaining fund will still benefit from investment growth. This arrangement is also called Uncrystallised Fund Pension Lump Sum (UFPLS).

Flexible Drawdown

Flexible Drawdown allows you to take all your tax-free cash entitlement out of your pension arrangement, with the remainder being available as taxable income, as and when you draw it down. The remaining fund will still benefit from investment growth.

Flexible Trust

This is a trust where certain individuals will receive any income that is generated. With investment bonds, the income is reinvested so will not actually be paid out. The trustees or settlor have the option to alter the individuals of the income or replace them with others. The trust capital may also be due to these individuals or other people instead.

Free cover limit

The amount of benefit we will normally accept on standard terms without requiring evidence of insurability.

FTSE

A range of indices, operated by FTSE International Limited, which record the performance of certain groups of shares (such as the top 100 UK shares - the FTSE 100 Index). The value of the index is derived from the values of the underlying shares and provides an up-to-the minute indicator of how share prices are performing in that group. (Note: FTSE originally stood for 'Financial Times - Stock Exchange).

Fund Adviser Fee

Where the policyholder has agreed a fee for fund advice, this is the agreed amount can be deducted from the policy or investment and paid as a fee to the fund adviser.

Fund Manager

The person responsible for managing an investment fund or the investments of a customer in accordance with agreed investment objectives and guidelines.

Fund of Funds

An investment fund which holds investments in other funds. The idea is that the fund of funds manager will use their expertise to select the best funds in each sector.

Fund(s)

Any investment fund offered within a policy.

GAAR

The General Anti-Abuse Rule (GAAR) was introduced by the Government to catch tax arrangements which they deemed to be abusive, such as the tax avoidance schemes widely reported in the newspapers.

Gainful occupation

Any activity which has the potential to provide a member with some form of tangible gain. (Group Income Protection)

Gift with reservation

This is where an individual disposes of property by way of a gift and either possession or enjoyment of the property is not taken by the donee fully or it is not enjoyed to the exclusion of the donor.

Gilts

Gilt-edged securities are bonds issued by the UK Government, which provide a guaranteed fixed rate of interest and a high degree of security.

Gross Roll-Up

The compounding of interest where no tax has been deducted.

Growth Fund

A fund aiming to provide capital growth rather than income.

Growth rate

The possible percentage return on an investment, where all investment returns and income are accumulated.

Guarantee Period

This in relation to an annuity is the minimum number of years it will be paid for, normally 5 or 10 years, even though the annuitant may die in that period.

Guaranteed Maturity Value (GMV)

The amount paid under a policy on the Maturity Date, as stated in the policy schedule.

Her Majesty's Revenue & Customs (HMRC)

Her Majesty's Revenue & Customs are responsible for collecting tax in the UK.

Higher Rate Tax

The income tax rate (40%) payable on income above the basic rate limit and below the level at which additional rate tax is paid.

HMRC

See Her Majesty's Revenue & Customs, above.

IFA Promotion

The old name for unbiased.co.uk.

Illustration

A document that forms part of the Key Features and gives you a guide to how much you might get back from your investment.

Incapacity

Illness or injury which meets a definition agreed with us. (Group Income Protection)

Income Drawdown

Income Drawdown allows you to take money out of your pension arrangement as and when you want it.

Income Tax

A tax you pay on your earnings, pensions, interest and all other types of income – unless it is exempt, such as ISA income.

Independent Financial Adviser (IFA)

Professionals who offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market.

Inflation

Inflation measures the rate at which general prices for goods and services are rising. One measure in the UK is the Consumer Price Index (CPI).

Inflation Rate

The percentage change in the price level between two periods.

Inheritance Tax (IHT)

A tax levied on property and money acquired by gift or inheritance.

Inland Revenue

The old name of HMRC (see above).

Insurance Policies

A contract which usually provides a lump sum or regular payments on the occurrence of a specified event; for example, death, illness etc.

Insured benefit

The amount of benefit for which a member has been accepted in a policy.

Insured illness

(Group Critical Illness) A condition or operation on the agreed list to be covered by a policy.

Insured person

A member, or a member's spouse or civil partner covered by the policy. (Group Critical Illness)

Interest in possession

The legal right to any income that arises from a trust fund.

Internal Fund

Any investment fund that is managed by Canada Life.

International Investment Bond

Investment Bonds issued outside of the UK, for example in the Isle of Man or Dublin, where there is little or no tax charged on the investment funds.

Investment

This is an asset, financial product or fund of money, which may generate income or grow in value over a period of time.

Investment Bond

A lump sum life assurance investment policy.

Investment Funds

These are groups of different investments which have been selected by the Investment Manager to match the objectives of the Investment Fund.

Investment Return

This is the change in value of an investment or amount of income generated by that investment over a given time period – normally expressed as a percentage.

Irreversible

An insured illness which cannot reasonably be improved by medical treatment and/or surgical procedures used by the NHS. (Group Critical Illness)

ISA

An ISA is an Individual Savings Account; a scheme allowing individuals to hold cash, shares, and OEICS free of tax on dividends, interest, and capital gains.

Joint Tenants

A term used to denote that the asset is jointly owned by two (or more) people and if one of them dies it will automatically continue in the name of the survivor(s). This is irrespective of what the deceased's person's will might say.

Key Features Document

These are documents that set out the key facts for a particular investment, including its aims, your commitment and risk factors. It also has questions and answers about the policy.

Keyman Insurance

This is life insurance on a key person in a business. In a small business, this is usually the owner, the founders or perhaps a key employee or two. These are the people who are crucial to a business and the ones whose absence would financially harm the company.

Late entrant

Anyone who joins a pension scheme which provides access to benefits under a Group Insurance policy after they were first eligible to do so.

Law Society

The organisation in charge of solicitors.

Level Term Assurance

A term assurance policy where an insurance amount could be payable during the policy term and the premiums don't change. The insurance amount is paid out if you die during the term. If it hasn't been paid by the end of the term, the policy ends and nothing is paid out. There is no cash in value at any time.

Life Assured or Lives Assured

The life/lives assured are the persons on whose death a life assurance policy would pay out.

Life Cover

This is the amount of insurance that would be payable on a person's death.

Life interest

An interest in possession whereby an individual is entitled to trust income only, but not the capital, for the remainder of their life.

Life Policy

A general term covering a contract between a life assurance company and a person, subject to various conditions as set out in the policy provisions.

Life Tennant

The name given to an individual with an interest in possession.

Lifetime allowance

A limit defined in the Glossary of the HMRC Registered Pension Schemes Manual.

Lifetime Allowance (LTA)

This is a limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income – and can be paid without triggering an extra penalty charge.

Lifetime Annuity

These are annuity policies that use the money you have saved in your registered pension scheme to provide you with a guaranteed, regular income for your lifetime and, if you so choose at the outset, your partner’s lifetime.

Lifetime Annuity Rate

The rate used to calculate how much lifetime annuity you would receive for each £1,000 invested.

Lifetime Income

The amount of money provided by a Lifetime Annuity.

Limited period

An agreed maximum duration for a claim, after which an employer's lump sum may be payable. (Group Income Protection)

Long-term Care

Long-term care is a range of services and support for a person who is unable to manage daily living unaided.

Loyalty Bonus

An additional amount added to a policy once it has been in force for a set period.

Management Charge

A charge paid by the policyholder, based on a set percentage of the value of the fund.

Manx Law

The legal system on the Isle of Man.

Material and substantial duties

The tasks a member is expected to perform in their normal occupation, which cannot reasonably be omitted or modified. (Group Income Protection)

Maturity Date

The date on which the proceeds become payable under an investment or insurance policy.

Member

The person who is entitled to benefits under a pension scheme.

Member's earnings

The total income of a member from all sources. For non-salary income, we may average earnings over a period of 3 years. (Group Income Protection)

Money Laundering

A process whereby money generated by criminal activity is run through a series of financial transactions to hide the original source.

Money Purchase Annual Allowance (MPAA)

This is the Annual Allowance for people who have taken taxable benefits from their pension plan.

Monthly Management Charge

A charge of a pre-determined amount that is deducted monthly form a policy.

National Insurance (NI)

The system of compulsory payments by employees and employers to provide state assistance for people who are sick, unemployed, or retired.

National Insurance contributions

The annual amount of employer's National Insurance contributions which would be payable if the employer was paying a member an income equal to the basic benefit they are covered for. (Group income Protection)

Neurological illnesses

A defined set of insured illnesses which relate to the nerves and nervous system. (Group Critical Illness)

Nil Rate Band

The amount of an individual’s taxable estate which is subject to a 0% inheritance tax rate.

Nominated Professional Adviser

A professional adviser that you have authorised to act on your behalf.

Nominee

A person or organisation that holds legal title of the assets on behalf of an investor (who is still the beneficial owner of the assets).

Non-qualifying Policy

A policy that does not satisfy the qualifying rules for life assurance policies. This means that any profit on the happening of a Chargeable Event could give rise to an income tax charge.

Normal entrant

An eligible employee who is included in the policy for normal benefits as soon as they are eligible to join.

Normal inclusion date

The first day an eligible employee qualifies for inclusion in a policy.

Normal occupation

The job which a member was employed in or engaged to do immediately prior to their incapacity. (Group Income Protection)

Normal place of business

(Group Life Assurance) A place where one or more of your employees perform their duties on a regular basis.

Offer Price

The price at which an investor buys shares or units.

Offshore Bond

Investment Bonds issued outside of the UK, for example in the Isle of Man or Dublin, where there is little or no tax charged on the investment funds. Also known as International Investment Bonds.

Ongoing Charges Figure (OCF)

The OCF is the overall total of the charge made by the fund manager for running the fund and all expenses and fees deducted from the fund. The OCF is reflected in the unit price of the fund.

Onshore Bond

Investment Bonds issued in the UK.

Open-Ended Investment Companies (OEICs)

OEICs are collective investment vehicles, similar to unit trusts and investment trusts. An OEIC issues shares rather than units. These shares are increased or reduced in number by the fund managers, according to the demand for investing in the OEIC.

Organisation for Economic Co-operation and Development (OECD)

The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world.

Other benefits

Any benefits a member receives for incapacity from other sources, such as a mortgage protection policy. (Group Income Protection)

Other income

Any payment that a member receives from a salary or other payment from an employer, self-employment or pension. (Group Income Protection)

Partial Surrender

The withdrawal of part of the value of the investment in a policy. Also known as a Withdrawal.

Partnership partner

An equity partner, or person listed in the incorporation document of a Limited Liability Partnership.

Pension Commencement Lump Sum (PCLS)

This is the amount of money that you can take as a lump sum from your pension fund without paying tax.

Pension Fund

A sum of money, accumulated individually or in conjunction with an employer, to provide pension benefits to a person at a later date, usually upon retirement.

Pension Input Period (PIP)

The period of time over which the amount paid into a pension scheme is measured, so that a check can be made to see if the Annual Allowance has been exceeded.

Pension scheme contributions

An agreed contribution to an employer's sponsored pension scheme on behalf of an employee as part of their claim benefit. This could include employer and employee contributions. (Group Income Protection)

Periodic Charge

An inheritance tax payment made by trustees of discretionary trusts after a ten-yearly anniversary of the trust starting.

Periodic review date

The date on which premium rates, policy conditions and policy fees ar reviewed.

Permanent

An insured illness which is expected to last throughout life with no prospect of improvement. (Group Critical Illness)

Permanent neurological deficit with persistent clinical symptoms

Problems with the nervous system which are present on clinical examination and expected to last throughout life.

Perpetuity Period

The maximum period that a trust can last. English law allows a perpetuity period of 125 years.

Personal Allowance

The amount of income that a person can receive before they will pay any income tax.

Personal Example

A personalised quotation, which includes important information about your policy, such as any guarantees, the amount invested (after charges), your chosen funds, adviser charge and so on. Also known as a Quote or an Illustration.

Personal Illustration

A personalised quotation, which includes important information about your policy, such as any guarantees, the amount invested (after charges), your chosen funds, adviser charge and so on. Also known as a Quote or a Personal Example.

Phased Investment Option

This allows a policyholder to ask that funds are switched to others, on a scheduled basis, for a period up to three years. At the end of the period , the policy will be entirely invested in the new fund(s).

Phasing Frequency

How often the Phased Investment Option happens.

PLC

A 'Public Limited Company'. This is a Company whose obligations to creditors are limited and who has fulfilled the legal requirements to attain public status (this does not necessarily mean their shares are tradable by the public).

Policy

A contract to provide insurance to an employer.

Policy fee

A charge on each policy towards our costs.

Policy Provisions

The details of the contract between the insurance company and the policyholder.

Policy Year

A year beginning with the Commencement Date of the policy or any anniversary of that.

Policy/Policies

Each of the separate and identical different contracts into which an investment or the life assurance has been divided.

Policyholder

The owner(s) of the policy. This could be an individual but may also be trustees, administrators, executors and assignee's.

Potential Beneficiary

Someone who is named on a trust deed who may possibly benefit from some of the trust fund in future.

Potentially Exempt Transfer (PET)

Most gifts you make to other people during your lifetime (unless they fall into the list of exempt gifts) are classified as PETs for inheritance tax purposes.

Power of Appointment

The ability to name someone as the person who will be receiving trust property in future. This may be 'irrevocable', meaning that it cannot be changed in future, or 'revocable', which means that the person named may or may not actually receive trust property.

Pre-existing conditions exclusion (PECE)

A clause which prevents claims being allowable for an insured illness which existed before an individual joined a policy or their benefits under a policy increased. (Group Critical Illness)

Premium

A payment into a policy for an amount of life assurance provided or as an investment.

Probate Bare Trust

A trust that avoids any delays in paying out the policy proceeds on a person's death. The beneficiaries will be the people named in the policyholder’s will.

Professional Adviser

Professionals who offer advice on financial matters to their clients and recommend suitable financial products.

Proper law

The law of a specified country, which governs the existence and administration of a trust.

Protected Pension Age

The age of certain people in specified professions, or under certain contractual circumstances, can take pension benefits before the standard minimum age of 55.

Protected Tax-free Lump Sum

The amount that people can receive before they will pay any income tax. The amount will be different from the standard amount because the individual has registered their protected amount with HMRC.

Qualifying Policy

A policy that under the rules for life assurance policies qualifies for no tax on any policy proceeds. There may be a requirement in certain circumstances that the premiums have been paid for a minimum period.

Quote

A personalised quotation, which includes important information about your policy, such as any guarantees, the amount invested (after charges), your chosen funds, adviser charge and so on. Also known as an Illustration or a Personal Example.

Rate of Growth

In a Personal Illustration or Example, the assumed yearly percentage increase in the value of an investment.

Real Rate of Return

The growth rate of an investment after taking into account inflation.

Reduced capacity

Work-related activity which may include fewer hours or less onerous duties. (Group Income Protection)

Registered occupational pension scheme

An occupational pension scheme (s.150 Finance Act 2004) set up under discretionary trust and registered with HMRC in accordance with Part 4, Chapter 2 of the Finance Act 2004.

Registered Office

The place that is a limited company's official legal address.

Registered Pension scheme

A scheme that has been reported to HMRC and is run in line with their rules.

Regular Premium

A premium that is paid every month or every year.

Related condition

A medical condition which is associated with, or likely to have led to, an insured illness. (Group Critical Illness)

Remaindermen

Beneficiaries who only get to benefit from a trust fund after the death of the Life Tenant.

Resulting Trust

Occurs automatically when a trust is invalid and the trust goes back to the settlor, or if he is dead, to the settlor’s estate.

Retained Trust

A trust where the settlor keeps part of the trust benefits for himself (for example, half of the trust fund) and gives away the rest.

Retirement Annuity

Old types of pension plans that were set up before 1 April 1988. They were replaced by personal pension plans.

Return to work plan

A schedule for a member suffering from incapacity to gradually return to their normal occupation. The plan will be agreed with the member and their employer, as well as any treating medical professionals. (Group Income Protection)

Reversionary Interest Trust

A trust which is set up with multiple policies, the proceeds of which could be paid to the settlor on maturity dates if the trustees decide that should happen.

RPI

The Retail Prices Index published by the Office for National Statistics.

Rules

The rules of a pension scheme, as to what can happen and who can benefit and when.

Schedule

The Schedule is attached to the policy provisions and records all policy details of your investment, pension or life assurance.

Scheduled territories

A defined set of countries which we typically treat less strictly with regards to providing overseas cover.

Scheme

An arrangement by which an employer sets up a pension fund for their employees.

Scheme benefit

The typical benefit provided under a scheme.

Scheme salary

The income which we have agreed to cover.

Second annuitant

A second person who you have chosen to receive an income from your annuity in the event of your death. This could be your spouse, civil partner or another person.

Secondment

A temporary period in which an employee is sent to work somewhere other than their normal place of work.

Section 226 Policies

Old types of pension plans that were set up before 1 April 1988. They were replaced by personal pension plans. Also known as a Retirement Annuity.

Security / Securities

Freely tradeable assets quoted on a stock exchange. There are many different types of securities, including stocks and shares, derivatives and bonds.

SEDOL Code

The code used by the stock exchange to distinguish shares and other securities on the 'Stock Exchange Daily Official List'.

Self-inflicted injury

Intentional harm to oneself which leads to an insured illness. (Group Critical Illness)

Service Charter

A published no-quibble, non-performance penalty system. If we don’t keep our promises, we will pay either you or your adviser.

Set Up Charge

This is a one-off charge for setting up a policy.

Settlement

A transfer of property, whereby the property is held in trust (except for Bare Trusts).

Settlor

The person who sets up a trust.

Share class

Companies can issue different classes of share with different rights and obligations attached to them. A typical example is 'A' and 'B' shares, where 'A' shares allow the investor to vote at the company's AGM.

Share exchange scheme

A scheme whereby an investor's existing equity portfolio can be exchanged for another investment such as an investment bond.

Single Premium

A one-off single payment, usually made into an investment bond or a pension policy. Also known as an Additional or a Top-up.

Spousal Bypass Trust

A trust that can be used to protect pension death benefits from IHT on the subsequent death of a spouse/civil partner or dependant, and also to provide clients with some control over how their death benefits are paid.

Spouse

A person who is legally married to a member.

Stakeholder pension schemes

A type of pension scheme with a set of conditions laid down by the Government.

State Pension

The Government old age pension. From April 2016, a new State Pension was introduced.

State pension age

The age at which a member is first entitled to the basic State pension.

Statutory leave

Any statutory parental leave taken from active employment.

Successor

The person who assumes control of a trust after the initial trustee dies or becomes unable to continue with his or her responsibilities.

Sum Assured

A secured, guaranteed amount under a life assurance policy to be paid on death.

Supplementary benefit

National Insurance and/or pension scheme contributions. (Group Income Protection)

Survival bonus

If all the annuitant(s) named on an Annuity Growth Account (AGA) are alive on the policy’s review date, a survival bonus is added to the Investment Element. The bonus will be a percentage of the Investment Element and will depend on the sex and age(s) of the annuitant(s). The percentage will be shown in the policy schedule when the AGA was set up or the endorsement that was issued at the last review.

Survival period

The amount of time an insured person or child needs to survive after the onset of an insured illness for a claim to become valid. (Group Critical Illness)

Switch

Moving an investment from one fund to another.

Taper Relief

Tapering relief applies for inheritance tax when someone has made large gifts, but died within the following seven years.

Tax

A levy by the Government on income and business profits, capital assets, or added to the cost of some goods, services, and transactions.

Tax relief

A tax reduction allowed when you make payments to certain types of pension arrangements and investments.

Tax year

This runs from the 6th of April one year to the 5th of April the following year.

Tax-Free Cash

This is the amount of money that you can take as a lump sum from your pension fund without paying tax. Also known as a Pension Commencement Lump Sum (PCLS).

Term Assurance

A simple form of life insurance offering life assurance over a fixed number of years during which a lump sum will be paid out if the life insured dies.

Top-Up

Any additional payments invested in the policy after the policy date.

Total benefit

The combined total of all parts of an employee's benefits.

Trust

A trust is a legal arrangement, whereby certain individuals (the trustees) deal with property over which they have legal control for the ultimate benefit of other persons (the beneficiaries).

Trust Deed

The provisions which govern how the trustees must run the Trust.

Trust Fund

The property held by the Trustees in the Trust.

Trustee

Individuals, or a trust corporation, who are named in the trust deed as being the legal owners responsible for holding the Trust Fund and dealing with the administration and tax affairs of the trust.

TUPE

The Transfer of Undertakings (Protection of Employment) Regulations 1981.

unbiased.co.uk

A website that holds information which can help you choose a financial adviser, mortgage broker, solicitor or an accountant in your local area.

Uncrystallised Fund

Uncrystallised is the term given to pension funds before they are cashed in.

Uncrystallised Funds Pension Lump Sum (UFPLS)

A way of taking pension benefits where 25% is tax free and the remaining 75% taxable at the member's marginal rate of tax.

Underwriting

The process that an insurance company uses to assess whether an applicant is in good health or not.

Unit Linked

A way of dividing pooled investments so that each individual will know what their investment in a fund will be worth.

Unit Trust

A trust fund that is a collective investment vehicle pooling investors' money and therefore spreading the risks involved. It is an open-ended investment and therefore units can be created and cancelled depending on demand.

Unit Value

The value of the investment under a policy; it is the units allocated multiplied by the current unit price. Note: it may be different from the surrender value.

Units

One of the equal parts into which a fund is divided for the purpose of recording the value of your investment.

Valuation day

The day the Unit Value in a fund is calculated in order to process certain requests, pay claims and to carry out the normal functions of the policy.

Value Added Tax (VAT)

A consumption tax in the UK, which adds additional cost to an item or service.

Value of Units

The value of the investment under a policy; it is the units allocated multiplied by the current unit price. Note: it may be different from the surrender value.

Vested

An interest in a Trust is vested where the person in question has been given an absolute interest in the Trust Property.

Waiver Of Premium

A clause in an insurance policy that waives the policyholder's obligation to pay any further premiums should he or she become seriously ill or disabled.

War and civil commotion

War, invasion, hostilities (whether war is declared or not), civil war, rebellion, revolution or taking part in a riot or civil commotion, which leads to an insured illness. (Group Critical Illness)

Withdrawal

This is when you take a partial surrender from an investment bond.

Working Day

A day other than a Saturday, Sunday or a public holiday in the UK.

Yield

The dividend income last paid by a share of fund, expressed as a percentage of the current share or unit price.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.