Aviva 2013 Annual Report Download - page 314

Aviva plc
Annual report and accounts 2013
312
Glossary
Product definitions
Annuities
A type of policy that pays out regular amounts of benefit, either
immediately and for the remainder of a person’s lifetime, or
deferred to commence from a future date. Immediate annuities
may be purchased for an individual and his or her dependants
or on a bulk purchase basis for groups of people. Deferred
annuities are accumulation contracts, which may be used to
provide benefits in retirement. Annuities may be guaranteed,
unit-linked or index-linked.
Bonds and savings
These are accumulation products with single or regular
premiums and unit-linked or guaranteed investment returns.
Critical illness cover
Pays out a lump sum if the insured person is diagnosed with a
serious illness that meets the plan definition.
Deferred annuities
An annuity (or pension) due to be paid from a future date or
when the policyholder reaches a specified age. A deferred
annuity may be funded by a policyholder by payment of a series
of regular contributions or by a capital sum.
General insurance
Also known as non-life or property and casualty insurance.
Property insurance covers loss or damage through fire, theft,
flood, storms and other specified risks. Casualty insurance
primarily covers losses arising from accidents that cause injury
to other people or damage the property of others.
Group pension
A pension plan that covers a group of people, which is typically
purchased by a company and offered to their employees.
Health insurance
Provides cover against loss from illness or bodily injury. Can pay
for medicine, visits to the doctor, hospital stays, other medical
expenses and loss of earnings, depending on the conditions
covered and the benefits and choices of treatment available on
the policy.
Income drawdown
The policyholder can transfer money from any pension fund to
an income drawdown plan from which they receive an income.
The remainder of the pension fund continues to be invested,
giving it the potential for growth.
Investment sales
Comprise retail sales of mutual fund-type products such as unit
trusts, individual savings accounts (ISAs) and open ended
investment companies (OEICs).
Individual savings account (ISAs)
Tax-efficient plans for investing in stocks and shares, cash
deposits or life insurance investment funds, subject to
certain limits.
Mortgage endowment
An insurance contract combining savings and protection
elements which is designed to repay the principal of a loan
or mortgage.
Mortgage life insurance
A protection contract designed to pay off the outstanding
amount of a mortgage or loan in the event of death of
the insured.
Open ended investment company (OEIC)
A collective investment fund structured as a limited company in
which investors can buy and sell shares.
Pension
A means of providing income in retirement for an individual and
possibly his/her dependants.
Personal pension
A pension plan tailored to the individual policyholder, which
includes the options to stop, start or change their payments.
Protection
An insurance contract that protects the policyholder or his/her
dependants against financial loss on death or ill-health.
Regular premium
A series of payments are made by the policyholder, typically
monthly or annually, for part of or all of the duration of the
contract.
Collective investment scheme (SICAVs)
This is an open-ended investment fund, structured as a legally
independent joint stock company, whose units are issued in the
form of shares.
Single premium
A single lump sum is paid by the policyholder at
commencement of the contract.
Stakeholder pensions
Low cost and flexible pension plans available in the UK,
governed by specific regulations.
Term assurance
A simple form of life insurance, offering cover over a fixed
number of years during which a lump sum will be paid out if the
life insured dies.
Unit trusts
A form of open ended collective investment constituted under a
trust deed, in which investors can buy and sell units.
Whole life
A protection policy that remains in force for the insured’s whole
life; a lump sum will be paid out on death. Traditional whole life
contracts have fixed premium payments that typically cannot be
missed without lapsing the policy. Flexible whole life contracts
allow the policyholder to vary the premium and/or amount of
life cover, within certain limits.
General terms
Annual premium equivalent (APE)
Used as a measure of annual sales, taking the annual
premium of regular premium contracts plus 10% of single
premium contracts.
Available for sale (AFS)
Securities that have been acquired neither for short-term sale
nor to be held to maturity. These are shown at fair value on the
statement of financial position and changes in value are taken
straight to equity instead of the income statement.
Association of British Insurers (ABI)
A major trade association for UK insurance companies,
established in July 1985.
Acquired value of in force (AVIF)
The present value of future profits on a portfolio of long-term
insurance and investment contracts, acquired either directly or
through the purchase of a subsidiary.