A feature on a personal pension or life insurance plan that guarantees your contributions will be paid for a period, usually by the insurer, if you are ill or lose your job. It usually costs extra.

A security that entitles the holder to buy shares in the issuing company at a specific price and within a certain time frame. Warrants are freely transferable and traded on major exchanges. Their value will go up or down as the price of the shares to which they relate goes up or down.

Life assurance a customer pays for throughout the whole of their life that pays out when they die. On some whole-of-life policies, premiums stop at a certain age.

A document drawn up to administer an estate on death.

An amount that is added to a with-profits life assurance policy. It can be added within the term of the policy (regular) or at the end of a policy (final).

Essentially a fund made up of shares, property, cash and fixed interest securities, which usually carries a medium risk.
The products that use with-profits are typically regular and single premium savings plans and pensions. With-profits funds pool policyholders’ investments, and customers share in the company’s investment returns and other profits. These returns are smoothed to help reduce the volatility associated with direct equity investments.

An investment where regular premiums or a lump sum are paid into a with-profits fund made up of shares, property, cash, and fixed interest securities. With-profits policies are usually medium-risk investments that use a smoothing device, when determining any bonus additions that might apply, to provide some protection for the investor from ups and downs of the market.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.