Glossary | LR Connections

Our A-Z glossary cuts through the jargon frequently heard in the financial services industry


Absolute owner – A person that owns 100% of an item, such as a building, vehicle or asset.

Accidental death benefit – Some life insurance policies will make an additional payment, over and above the original sum insured if the policyholder dies as a result of an accident.

Accrue – To build up investments or accumulate cash.

Actuary – A professional person who is qualified to calculate risks and probabilities relating to insurance and pensions.

Addendum – An additional piece of information added on to a policy.

Ademption – When an item in a will no longer forms part of the deceased’s estate at the time of death.

Administrative and public law – The section of the law that governs the way public bodies carry out their statutory duties.

Administrator – The person, normally the next of kin, who handles financial affairs of the deceased where a valid will has not been put in place to express the deceased’s wishes.

Adviser – A professional person qualified to give you advice. This could be an Independent Financial Adviser (IFA), a whole-of-market mortgage adviser, a solicitor or an accountant.

Advocacy – A legal representation in a court hearing, usually carried out by a barrister or solicitor on your behalf.

Affidavit – A written statement sworn to be true in front of a third party, usually a solicitor.

Agent – Someone who officially acts on behalf of someone else. For example, a conveyancer who acts on behalf of a couple buying a house or an accountant dealing with HMRC on a taxpayer’s behalf.

Aggregate limit of indemnity – A maximum amount an insurer will pay for all claims over a set time frame.

Allocation rate – When money is paid into a fund for example, a pension fund, the allocation rate is the percentage of the money left. This can be invested after the charges have been taken off. For example, if the charges were 5% then the allocation rate would be 95%.

Annual allowance – The maximum amount that can be saved by you or on your behalf in a pension scheme each year while still getting tax relief. This allowance may be reviewed and changed by government each year.

Annual payment – An agreed sum of money paid out every year, such as an annuity.

Annual percentage rate – Commonly known as ‘APR’, this is to inform you how much you will be charged as a percentage when you borrow money.

Annual statement – A statement from your financial services product provider that will be sent to you once or twice a year, (depending on your service level agreement.) This statement will be informing you how much you’ve paid, what your plan is worth and, if it’s in relation to a loan, what you still owe.

Annuity – This converts money from your pension fund into regular taxable income in your retirement. There are different types to suit your circumstances, but most annuities guarantee to provide you with an income until you die. Generally, you cannot change or cash in an annuity.

Annuity protection – An option you can choose when you take out an annuity. Upon your death, your nominated or chosen beneficiary will receive a lump sum payment or a percentage of the value of your pension fund (the annuity income you took from your pension fund while you were alive will be deducted).

Annuity rate – The amount of regular retirement income that you can buy from an annuity provider using your pension fund. It is dependent on the factors such as your life expectancy, expected returns on your investment, and the type of annuity you choose. Annuity rates will vary between providers, so it is important to talk to us before taking out a policy.

Annulment – This is when a marriage is declared void by a court in England and Wales, either because it was not legally valid when it took place or because it has since become not legally valid.

Appoint – To stipulate a particular person or company to deal or handle a matter on your behalf.

Appointed representative – A third party (person or company) appointed to sell insurance and investment products on behalf of an insurance company.

Approval in principle – A certificate some lenders issue to show how much they would be prepared to lend you, but this figure is not a guarantee. It can be helpful when you are looking to purchase a property.

Arbiter – A person who has been appointed to judge or decide the result of a dispute.

Asset – An item that you own, regarded to have value such as as buildings, vehicles, jewellery, art, stocks and shares or money in the bank, which can meet a debt. 

Asset allocation – An investment strategy used to balance your personal attitude to risk and reward by apportioning a portfolio’s assets according to an individual’s goals. This is used to gain a better understanding of risk tolerance and capacity for loss.

Associate – A person typically employed by a law firm handling your case. This term is often used for a lawyer, and they are often considered by the firm employing them to be a ‘senior assistant’.

Assurance – Cover for an event that is certain to happen, such as death. This is different from ‘insurance’ which protects against an event that might happen.

Attestation – The correct confirmation of a will. The will includes an attestation clause signed by its owner.

Attorney / Attorneys – The person or people who have been appointed in a Lasting Power of Attorney (LPA) document by the donor, to manage their financial affairs (LPA for Property and Finance) or health issues (LPA for Health and Welfare) whilst they are still alive but unable to manage their affairs by themselves. Attorneys must be appointed whilst they still have capacity.

Authorised firm – A firm that has permission granted from the Financial Conduct Authority (FCA) to carry out regulated activities and give advise for its clients.


BACS – Bankers’ Automated Clearing Services – the most popular electronic financial transaction service, often used to pay employees.

Bank of England – The central bank for the UK. It acts as the government’s bank, issues currency, oversees monetary policy and sets the financial interest rates that all other banks base their rates at.

Bankrupt – The legal status of a person or organisation that is unable to repay debts owed to their creditors.

Base rate – The interest rate set by the Bank of England on which all other banks base their interest rates.

Basic rate taxpayers – A basic rate taxpayer’s earned income is higher than their personal allowance for income tax and below the higher tax rate threshold. The current Basic Rate rate of tax in the UK is 20%.

Basic state pension – The income you receive from the government as a result of paying National Insurance Contributions throughout your working life.

Bear market – When the stock market appears to be declining overall, and demand is higher than supply. See also ‘bull market’.

Beneficiary – The title given to a person, people or origination named in a will or under a trust as entitled to receive a bequest or benefit.

Beneficiary (pensions) – A person(s) nominated to receive benefits under a pension scheme, or a person who will benefit in certain events such as the death of the pension scheme member or annuitant.

Benefit – Money paid by an insurer when a claim is accepted.

Bequeath – To leave an asset bequest in a will. 

Bequest – To leave a person or charity something in your will.

BIC – Bank Identifier Code – a number used to identify each bank and branch.

Bid or offer spread – This is a two-way price quotation indicating the best price that a security can be sold and bought at a given point in time. The bid price represents the maximum price that a buyer or buyers are willing to pay. The offer price represents the minimum price that a seller or sellers are willing to receive for that security. The difference between the two is known as the bid/offer spread. A trade or transaction then occurs when the buyer and seller agree on a price for the security.

Bid price – The price that a bidder (buyer) is willing to pay for goods. If you are a holder of a unit trust investment, this is the price you will get for each unit if you cash in all or part of your investment.

Blue chip – An adjective term used to describe high quality investments, usually in banking. It is used to describe stocks which are a reliable investment, but less so than gilt-edged stock.

Bond – Usually a secure investment, bonds are loans to a corporation or government in the form of a written promise to repay a debt at an agreed time, which often includes an agreement to pay a rate of interest on that debt.

Bonus – An added amount that you would usually expect to receive as a result of high levels of performance.

Book cost – The original cost of an asset before it gained or lost value.

Boutique – A smaller investment bank which offers some of the services commonly seen in large corporate banks.

Broker – A professional person or firm that buys and sells stocks for clients in return for a commission. Insurance brokers advise clients on the best insurance product to take out depending on their needs. Brokers can also provide other services such as risk management, designing or negotiating contracts, and handling claims.

Budget – The government’s financial plans for the fiscal year ahead, they usually take place in March and November amid much publicity.

Bull market – A term used to describe an attitude to investing in which prices are generally rising and investors’ confidence is high. See also ‘bear market’.

Business interruption – When business productivity has to stop due to an unplanned event or disaster, affecting its profits. Business interruption insurance will normally cover the loss of income specified for a period of time that a business suffers when it has to conclude its trading as a result of an unplanned event such as a natural disaster or fire.

Business Trustee(s) – The person or persons are in control of a trust containing business assets.

Buy-to-let mortgage – A loan taken out to buy a property that you intend to let to paying tenants. Buy-to-let investors need to be aware that properties prices can fall in value, as well as rise. You should always avoid borrowing more than a reasonable percentage of the overall value, and make sure that you budget for periods when you’re not receiving rental income.


Capital – The actual value of any assets, rather than any income from them. For example, the value of a rental property rather than the cash flow from it.

Capital gains tax – If you sell or give away something that has increased in value then you will usually need to pay tax on the profit. For example, you may need to pay CGT for selling shares in a company if you sell them for more then you originally paid years ago. CGT rates can vary depending on your individual circumstances so it is recommended to seek advice from a professional to obtain accurate figures.

Capital market – The financial system which raises capital by dealing in shares, bonds and long-term investments.

Capped mortgage – A mortgage which has been capped with a maximum limit on the interest rate that you’ll have to pay during a special deal period.

Cash flow – The amount of money transferred in and out of a business, affecting liquidity.

Cash-in value – The amount of money received when you terminate an investment.

Cashback mortgage – A type of mortgage that gives the borrower a cash lump sum at the beginning of the mortgage loan.

Caveat – A warning or an exception, usually within a contract.

Chancellor of the Exchequer – The UK’s chief finance minister who prepares the Budget.

Chancery – The division of the High Court that deals in the administration of wills, probate and the execution of trusts across the UK.

Charge – A liability, usually registered against property, which must be paid off when it is sold or transferred. It is a form of debt on the property.

Charitable Gifts – A gift to a charity or organisation, considered to be for the benefit of the community or for an important element of the community. It is imperative that the name and registered number of the Charity is correctly detailed where a legacy is made in a will.

Chattels – A historic term used to describe tangible and personal property such as furniture, domestic animals, etc. Chattel does not include land itself.

Civil Partners – People who are registered as civil partners have the same legal rights as a spouse should their partner die intestate.

Claim frequency – The number of claims made on an insurance policy in a set period of time.

Claims and underwriting exchange – The computerised register of information from insurance proposal, claims and renewal forms, shared by insurers. This is put in place to reduce insurance fraud.

Codicil – A legal document altering or adding to an existing will. It must be dated and witnessed for it to be valid and kept with the will.

Co-insurance – An agreement between more than one insurer to agree to cover the cost of an item to give maximum coverage. This arrangement ensures that there is an insurance policy in place by more than one insurer.

Collateral – Assets of value that are offered as security against a loan or credit.

Collective investment scheme – Where investors pool money together. These types of schemes include Unit Trusts (UT), Investments Trusts (IT) and Open-Ended Investment Companies (OEICs) to build a bigger pot for ultimately a better return.

Commercial business – A term used to explain any insurance policy taken out by an organisation to cover their trade, business or profession.

Commodity – Raw material that can be bought or sold such as ore, wheat, oil or gold.

Composite insurer – A company that offers different types of insurance, such as life insurance and group life cover. They would also offer other products such as non-life insurance products including property, motor or travel.

Contents policy – An insurance policy covering the contents of your home or other building against a number of risks that have been set out in the policy.

Contestable period – The period of time where the policy may be challenged by the insurance company if they believe that the customer has not followed the policy properly, or they believe that they have been misleading when taking out the policy.

Contract – An agreement between two or more people to do (or not to do) something. The agreement can be enforced by law and can be written or spoken. For a contract to be enforceable there must be an offer, an acceptance, and a means of consideration. Each party expects to carry out certain acts in return for the other party carrying out other acts.

Contractual Rights – These are the legal Rights that can be enforced by law under a contract if either side doesn’t hold to their contract.

Convertible term assurance – A particular type of insurance where the policyholder can change or transfer to whole life or endowment insurance without giving further evidence of their health.

Conveyance – A document or process transferring ownership of land or property, usually prepared by a solicitor.

Corporate bonds – Bonds that are issued by companies when they need to borrow money. As an investment, they often offer higher rates of return than banks and building societies but they come with a varying amount of risk, depending on the financial security of the company issuing the bond.

Coverage – What your insurance policy will and won’t protect if you need to make a claim on the policy.

CPI – Consumer Price Index. This is a measure of inflation used by the UK government for its inflation target. It measures changes in a typical ‘basket’ of goods and services purchased by the average household.

Credit – A payment that has been received from selling goods or services. Alternatively, an agreement to pay the value of something after its been sold by a set period of time by a company or person.

Credit rating – An assessment of a person’s credit worthiness. Everybody has a credit rating and it is from this score that you will be rated on whether you are deemed a risk by banks or credit lenders. The risk is the likeliness of you being able to pay the debt back which results in a rating score being assigned.

Credit scoring – The system used by banks and other loan companies to judge whether you are creditworthy when you apply to borrow money. If you have a poor credit score you will not be able to borrow money from that lender, or an unattractive interest rate will be offered (see ‘Sub-Prime’). It’s important to note that each lender will have their own level of risk that they will be willing to take. 

Creditor – The term used to identify a person or company to whom money is owed.

Critical illness cover – A type of insurance policy taken out so that you can rely on having a lump sum paid if you are diagnosed with a specified critical illness. It could be used to supplement your income, or pay for private medical treatment.

Current assets –  A balance sheet used account for represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash.

Current liabilities – Short-term liabilities that are due to be paid in less than a year such as bank overdrafts, money owed to suppliers and employees’ PAYE (pay as you earn).


Debit – A payment that has been made. 

Debt – If you have borrowed money, then you are considered to be ‘in debt’ and typically owe interest on that debt as well as the money initially borrowed.

Declined risk – The term for when an insurer may choose to refuse to provide insurance as the customer or the event may not meet certain criteria.

Decumulation – When saved funds or assets are turned into a form of income to give you a form of income that you can spend in retirement.

Deductible – A specified amount that has to be paid before an insurance company will pay a claim. Sometimes called a excess.

Deed of Gift – Transfer of a property, or share of property, from one person to another. Sometimes the husband, wife or one civil partner will own the whole of the property but the owner wants it to be owned as Tenants in Common, one partner can gift a share to the other.

Deed – A legal document that must be witnessed to make a contract legally binding.

Default fund – A term that refers to your pension contributions, a default fund is used if you do not decide on where your funds are invested, or if you choose it over the other funds available. All pension schemes being used for automatic enrolment offer a default fund (also called a default investment fund).

Defined benefit – In this type of pension scheme, members will receive a set pension income upon retirement. This income is based on their final salary at the point of retirement; and taking into consideration how many years they’ve been working for the company. Also commonly referred to as ‘final salary’ pension schemes.

Defined contribution – In this is a form of pension scheme the amount of money you will have in your retirement fund is dependant on the amount of money that you pay in. Where the money was invested will have an impact on how much your pension will grow. Also known as a money purchase scheme.

Defined contribution pension scheme – A pension scheme that provides retirement benefits based on the amount of money paid in and investment growth on this money. At the time of your retirement you should contact an adviser, and ask them to look around the market to find a plan that suits your needs and covers your retirement income, which will be provided from the scheme. All personal pension schemes, including stakeholder schemes, are defined contribution pension schemes.

Dependant – Someone who is reliant on you such as a family member, partner or child.

Depreciation – When an asset or belonging falls in value over time, often due to wear and tear.

Devise – To give land or other realty by will.

Disbursement – Payment that has been made to a third party.

Discounted mortgage – A mortgage that has a discounted variable rate of interest for a set period, after which the rate may increase.

Discretionary type trusts – A form of trust that allows the benefits to be allocated at the trustees’ discretion to one or more beneficiaries. The trustees might even decide, for a time, to benefit no one, with the income instead being accumulated for future use.

Distribution bond – A single premium i.e. a single one-off payment investment policy. The funds will then be invested in different assets (such as equities, gilts, stocks and shares) this is then used to provide a regular income.

Diversification – An strategy of investing broadly across a number of different investments to reduce risk; the process of spreading – or ‘diversifying’ – your investments over a range of assets, so that you reduce your exposure to risk. By diversifying your investment, if one type of investment falls in value, then the remaining ones may not be impacted and fall at the same rate.

Dividends – Payments made to shareholders by a company from any profits.

Draftsman – A person who draws up documents, for example trusts and wills for client approval.

Duty – A tax levied on goods and services. Value Added Tax (VAT) is an example of duty.


Early repayment charges – Depending on the terms of the loan you could be subject to charges if you decided to pay off the loan or mortgage early. You could be charged if you decide to move the debt to another lender.

Endowment – An income or lump sum of money that has been bequeathed or left to a beneficiary or loved one after death.

Endowment policy – A form of life insurance policy linked to a with-profits fund that will pay out a sum of money after an agreed period of time or when you die, whichever comes first.

Engrossment – The final preparation of a will or document for signing.

Enhanced annuity – A form of annuity that could pay you a higher regular retirement income if your life expectancy is shortened because of your lifestyle (for example, you are a smoker) or your medical history. For this type of annuity, the annuity provider will normally ask for a detailed medical questionnaire to be completed and a report from your doctor. (Sometimes called impaired annuity).

Equity – A company’s publicly issued stocks and shares. If you own shares in a company you own some of the company’s equity. It could also be used as a way to describe the amount, or value, of your home. If you ‘have equity’ in a property, it means that you own a portion of it above the value of any debts secured against that property, such as a mortgage.

Equity release – The process of using the value of your home to raise cash. There are two main types of equity release scheme available: lifetime mortgage (sometimes known as equity release mortgages) or home reversion schemes: this is when the property is sold and the plan provider reclaims their loan and any interest due with the remainder going towards the plan owner or to their estate.

ESG / Ethical Investing – Environmental, Social & Governance. An investment strategy focusing on protecting the environment and having a positive impact. ESG investment funds specifically avoid industries such as tobacco, alcohol, arms/weapons, petrochemical and gambling. 

Escalating annuity – An option for your retirement income designed to increase in line with a standard inflation index or agreed fixed rate each year.

Estate tax – A one-off tax paid on the value of the deceased’s estate, only applicable if the estate crosses the set threshold. See also ‘inheritance tax’.

Estate – The value of your assets when you die, less any debts or liabilities. Any property you own makes up your estate as well as bank savings accounts, investments and tangible items of value such as jewellery and vehicles.

Executor/Executrix (male/female) – The person, people or organisation (such as a solicitor, bank or estate planner) appointed in a will to deal with financial affairs of the deceased.

Executor’s Oath – A written statement that must be sworn by executors or administrators of an estate which accompanies an application for a grant of representation, this oath needs to be taken.

Ex-gratia payment – Derived from the Latin for ‘by favour’, literally a voluntary payment or gift made outside of an agreement or contract, and made with no legal obligation.


Family Trust – A type of trust designed to reduce any lengthy and formal administration upon death. The trust can also simplify generation skipping or IHT protection measures.

FCA – Financial Conduct Authority is the UK’s financial services regulator and governing body of the financial services sector and all finance markets including banking.

Fee Simple – A term referring to an absolute inheritance, immediate and without restrictions.

Fee Tail – A form of inheritance of an ‘entailed estate’, which may descend only to a certain class of heirs, such as eldest sons.

Fiduciary – Someone who acts on behalf of another person to manage money or property with responsibility and good faith.

Final salary pension scheme – Another term to describe a ‘defined benefit’ scheme.

Financial Instrument – A document involving monetary values, which can be equity based. It is used to represent ownership of an asset or to represent a loan made to an owner of an asset. They are tradeable packages of capital — essentially, an equity, asset or loan.

Financial Ombudsman Service – A government body which helps settle individual disputes between consumers and financial firms. The service to consumers is free and independent, but a complaint or problem must first be raised with the financial firm you are dealing with before escalating your case to the ombudsman.

Fiscal– Government revenue including VAT, Corporation Tax, inheritance tax, capital gains tax and income tax.

Fixed asset – An asset owned by a business such as a building, machinery or a vehicles, that is intended to be owned and used for many years by the company.

Fixed interest security – This is another name for a bond. The amount of interest you receive, when you invest in a fixed interest security, is stated at the time of purchase. These are usually regarded as a lower risk investment than stocks or shares. This is a form of investment is often favoured cautious investors.

Fixed rate – An interest rate that doesn’t move up or down over a set period of time.

Fixed rate mortgage – Some mortgage lenders offer fixed interest rate for a period of time, normally 2 to 5 years. After this time, it will revert to the Standard Variable Mortgage Rate (SVR). Fixed rate mortgages can make budgeting for mortgage payments easier for borrowers in the first few years.

Freehold – Property or land that is held free of duty except to the monarch (see also ‘leasehold’).

Friendly society – Similar to a mutual insurance company, which is owned by its policyholders, a friendly society is owned by and established for the benefit of its members, usually providing life insurance and sickness benefit.

FTSE 100 – The common name of the Financial Times Stock Exchange – an index of 100 companies on the London Stock Exchange (LSE) with the highest UK market capitalisation. Its daily rises and falls are used as a barometer of business prosperity.

Funeral Plan A life insurance policy that provides money to pay for the policyholder’s funeral expenses when they die.


GDP – Gross Domestic Product – a monetary value of all the finished goods and services produced within a country’s borders in a specific time period, usually annually.

Gift – An asset given wholly to someone else.

Gilts – Bond issued by the UK government. They are seen as being very low-risk and secure investments because of the government’s backing to pay. They are sometimes referred to as gilt-edged bonds or Treasury bonds.

Government bond – A bond issued by government to finance spending. While this means the bond is free of credit risk because the government can always pay the debt by raising taxes or printing money, it is also important to remember that this does depend on a stable and open political system.

Grant of Probate – This is gained by applying to the Court for the authority for the executors to deal with the deceased’s financial affairs and issued by the Probate Registry or Sub-Registry.

Gross – A total monetary amount, without any deductions of tax or costs.

Gross interest – The total amount of the annual rate of interest on an investment, security or deposit account before taxes or other charges are taken out.

Group personal pension (GPP) – A type of personal pension scheme set up by an employer on behalf of employees. Although arranged by the employer, who can also make contributions, each pension contract is between the pension provider and the employee.

Guarantee period – The retirement income from your annuity. This will not normally stop when you die but you can opt for your annuity to be paid out over a number of years (typically five or ten) even if you die within this time period. If you die before this period ends, then the annuity will continue to be paid to a nominated person(s) or your estate for the rest of the guarantee period. If you live past this period, the annuity will continue to pay you a retirement income until you die.

Guaranteed annuity rate – A fixed rate offered with some pension policies and used to turn a pension fund into retirement income which will not change with changing investment conditions. It can be very valuable, and will often provide a higher income than an annuity bought via the open market option.

Guaranteed equity product – A single premium investment policy whereby funds are linked to the stock market equity index. In many cases there is a ‘lock in’ clause where points are incorporated into the policy so that once a fund reaches a certain level the policy is guaranteed to pay out that dividend at the end of the term.

Guardian – The person or people appointed by the testator to have parental responsibility for children or dependents if they die.


Hedge – An attempt to protect against loss on a bet or investment by making a compensating transaction.

Hedge fund – Considered a high-risk investment but with potentially high reward. Hedge funds comprise of a complicated set of strategies that aim to make attractive returns on stock markets.

Heir – A person legally entitled to the property of another on that person’s death.

Higher rate taxpayer – You are considered a higher rate tax payer if you are earning more than the higher tax rate threshold set by HMRC, currently £52,270 with the higher rate of tax being 40%.

Holding company – A parent corporation, usually a limited liability company (LLP) or limited partnership that owns enough voting rights and control in another company to command its policies and management. This means the holding company is protected against the other company’s losses or liabilities but reaps the rewards of its profits. It can also be based in jurisdictions with attractive lower corporate tax rates such as Liechtenstein, Jersey, Cayman Islands or Luxembourg while allowing the other company to continue to operate wherever it chooses.


Income drawdown – An option that is available from some defined contribution pension schemes which allows the beneficiary to take an income directly from their pension fund rather than using it to buy an annuity. Your pension fund remains invested and so is subject to investment risks and returns. The amount of income you can take is subject to minimum and maximum limits which are set by the government and reviewed periodically. Drawdown income is taxable.

Income protection – A form of insurance policy, that will pay you a monthly income if you’re unable to work due to illness or injury, until you are able to return to work, or you retire, whichever is the sooner.

Income tax – The tax that you pay on your income. Generally, all income is taxable but exceptions include income falling within personal allowances and income generated from certain tax-efficient investments such as ISAs.

Independent financial adviser – A qualified person or firm that can offer independent advice on life insurance, pensions, mortgages and other investment products. By definition they are independent and not tied to a particular company and must be able to advise on products across the whole market. Frequently abbreviated to IFA.

Individual savings account (ISA) – A type of savings account that allows individuals to save a certain amount each year tax-free.

Inflation – An increase in prices meaning that the purchasing power of money falls and the cost of cost of living over time. Inflation is measured through the Consumer Prices Index (CPI) or Retail Prices Index (RPI).

Inheritance tax (IHT) – A tax on an estate after a person’s death. It is currently charged at 40% on amounts above the IHT threshold, which can change every year. A person’s estate includes the total of everything owned, less any liabilities at the time of their death. If this amount is less than the IHT threshold, no tax is payable.

Insolvency – When a person has a lack of financial resources to pay back debts that are owed.

Intellectual property (IP) – Anything created which has a commercial value. Things such as music, literature and products are often protected by IP registration.

Inter vivos – Latin for ‘between living persons’ – referring to a transfer or gift made during the donor’s lifetime, as opposed to in their will after their death.

Interest – Additional money that you would have to pay regularly as a charge for borrowing money, for example on a mortgage or bank loan. Typically, interest is set at an annual percentage rate. If, however your account is in credit then a bank would give you a small amount of interest back.

Interest in possession trusts – A form of trust used for those where income or benefit must be given to the specific beneficiary – it is his or hers by right. There may be more than one beneficiary but they will all have a fixed entitlement.

Interest-only mortgage – A type of mortgage whereby you only pay interest charges on the loan each month. Ultimately, you are not reducing the loan amount or capital itself, and this will need to be repaid in some other way by the end of the mortgage term.

Intestacy, Partial – Where the deceased leaves a will that fails to distribute the whole estate or where there is no executors appointed and able to act.

Intestate or intestacy – When someone dies without leaving a will and the estate is divided up by government following rules set out by law.

Intestate/Intestacy – When a person dies without a valid will they have died intestate. The deceased’s estate is then distributed according to statutory regulations called the Rules of Intestacy. The condition of a person’s estate after they die, in which its value is greater than their debts and funeral expenses and the leftover value has not been allocated in a will.

Investment – An asset or item purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.

Investment income – Income coming from interest payments, dividends, capital gains collected on the sale of a security or other assets, and any other profit that is made through an investment of any kind.

Investment trust – A type of trust that can be set up for a limited company whose business is the investment of shareholders’ funds, the shares being traded like those of any other public company.

Investment-linked annuity – This is a form of an annuity where the retirement income you receive will be linked to investments (such as stocks and shares). Your pension income may vary to reflect the changes in the value of investments.

IPO – Initial Public Offering – This is the first sale of a company’s shares that go on offer to the public. Commonly known as stock market listing or floating and used used as a means for a young company to raise capital to expand.


Joint Executors – When multiple parties are named to administer an estate sharing the duty to ensure the estate is handled properly. This could be two individuals or an individual and a company.

Joint life – A policy taken out to cover two or more people and paying out when the first person dies. Joint life policies can be a good idea for protecting a family in the event of either or both parents dying.

Joint life annuity – Upon death, this provides a regular retirement income (at the same or a reduced amount) to your surviving spouse, partner or dependants.

Junior individual savings accounts (JISA) – This is an account that you can open on behalf of a minor. The account has a large choice of thousands of funds that can be held tax efficiently. Parents of children under 16 that do not have a Child Trust Fund can open a JISA in a child’s name.


Key facts document – A document used by our advisers and a requirement under FCA regulation. It sets out the main features of a plan or product being offered to clients.

Key person insurance – An insurance policy taken out by a company in the event of the death of a key employee on whom the business depends for its continued profitability or even existence, this type of cover provides a sum of money which can be used to pay for the cost of finding and training a successor. It can also pay out for reduced profitability.


Lasting Power of Attorney (LPA) – A document that is separate to a will, allowing a person to appoint people to manage their financial affairs while they are still alive but unable to manage it themselves.

Leasehold – Property and/or land held, subject to the terms of a contract, for a specified period of time agreed upon by the two or more parties that are involved.

Legacy – A gift left to a person or organisation in a will.

Legal expenses insurance – An insurance policy which covers the cost of legal advice or the legal costs involved in pursuing or defending a civil claim. Not available for criminal cases.

Lessee – A person to whom a lease is granted.

Letters of Administration – This is a letter of official acknowledgement by the Court of the appointment of administrators of the estate.

Level annuity – An annuity that pays you the same amount of regular income from the start of your retirement until the end of any guarantee period, or until you die.

Leverage – Borrowing capital to finance an investment that is much larger than the amount being borrowed.

Liabilities – Any debts or bills that must be paid from your estate after you die.

LIBOR – London Interbank Offered Rate – This is a rate which some leading banks will charge each other for short-term loans, used to calculate interest rates on loans throughout the world.

Life interest The right to receive the income or benefit from a property or capital sum (but not the capital sum itself) for life.

Lifetime allowance – The maximum amount of money you can accumulate using your pension savings throughout your lifetime and still benefit from tax relief — currently £1,073,100. If the amount you save exceeds the lifetime allowance, then you will have to pay tax on those savings.

Lifetime annuity – An annuity that will give you a regular income for the rest of your life. You buy an annuity with the cash sum built up in your pension fund so that you can have a regular income during retirement. There are different types of annuities to suit your needs and circumstances.

Lifetime Gift – Something you may choose to give away while you are alive, rather than including the, in your will.

Liquidation – The process of closing down a company by paying its debts and distributing any money left over.

Liquidity – A measurement of how quickly an investment can be turned into cash. A mutual fund generally is considered a very liquid investment, because shares can be redeemed at any time. In contrast, a house is a very illiquid investment.

Living Will (Advance Directive) – This is an expression of your wishes on future medical treatment, should you be unable to communicate because of the lack of mental and/or physical incapacity.

Loan-to-value (LTV) – The percentage of mortgage money you want to borrow compared to the cost of a property. If the LTV exceeds a stated amount then some mortgage lenders will charge a higher rate of interest or impose some other penalty to accept the higher risk.

LSE – London Stock Exchange – The primary stock exchange in the UK, containing 350 companies from over 50 countries.


Managed fund – A pool of money managed by a fund manager which is spread in investments across a range of assets such as company shares, government bonds or property. These managed investment funds can be accessed through life insurance or pension plans.

Market value – The amount for which something can be sold on a given market, such as a property of used vehicle.

Market value adjustment – A reduction made to the value of a with-profits fund. If you cash in some or all of your with-profits investment before your selected pension age then firms use this adjustment to help ensure that policyholders who cash in some or all of their with-profits investment before the end of the policy term do not affect the remaining policyholders.

Maturity  When a policy such as life insurance or a pension reaches its agreed time limit and the value is paid out.

Mirror Will – A set of two will documents that are similar in content, normally written for couples. Mirror wills have replaced joint wills which were fairly inflexible.

Money purchase pension – Usually referred to as an occupational pension scheme or group pensions. With these, you can choose where your contributions are invested as well as the size of your fund depends on your contributions, over what time period you invest them, and how well your investments grow.

Moratorium – A period of time during which an insurance will not cover a specific risk such as a pre-existing medical condition.

Mortgage – A large loan granted by a bank or mortgage lender in order to buy a property. The property is then used as a security against which the loan is secured, meaning the lender may eventually have the right to take possession of the property if you do not keep up with the terms of the mortgage.

Mortgage broker – A qualified and regulated professional who has access to offers not available on the high street and therefore can make recommendations on the best mortgage deals for you, or they can give you information that helps you make your own choice. Mortgage brokers can be independent, or have a restricted range of mortgages available to them.

Mutual – An insurance company owned by its customers.


Net – The value of something minus tax deductions or any costs related to it.

Next of kin – A term for the next living relative typically used in a will or intestacy matters, the person entitled to the estate when someone dies intestate (without a will).

Nil-rate band – An allowance which is the amount up to which there is no inheritance tax to pay on the value of the estate. For a married couple or civil partnership, the unused part of the nil-rate band can be transferred to their spouse/partner on death, enabling the surviving spouse or civil partner to pass a parentage of their estate tax free.


Occupational pension scheme – Another term for a workplace pension scheme where the funds are governed by a board of trustees.

Offer price – How much you pay for each unit when investing in a set investment fund.

Open ended investment company (OEIC) – A type of company or fund in the UK that is structured to invest in other companies with the ability to regulate its funds by constantly reviewing its investment criteria and fund size. The company’s shares are listed on the London Stock Exchange, meaning there are no bids and ask quotes on OEIC shares – buyers and sellers instead receive the same price.

Options – Fast-paced investments involving agreements to essentially buy or sell a financial asset at an agreed price during a certain time period. If the price of the asset rises, the options buyer can buy it at the agreed lower price and sell it for a profit. On the other hand, if the price drops, the options writer can sell at the agreed price which is now higher, making themselves a profit instead.

Over insured – Insurance cover in place covering more than the value of the items insured.

Overseer – The person appointed to oversee the execution of a will – someone to give help, advice and support but with no legal powers.


P11D and P11D value – A form sent to HMRC annually to notify of what benefits employees have been given through their work for example, a company car or private medical cover. The P11D value is the monetary value of the benefit provided.

Pecuniary legacy – A gift of money in a will.

Pension – The most tax-efficient way to save money for when you have retired or no longer able to earn and need to rely on your savings to support you.

Pension benefits – The sums of money you get from your pension schemes.

Personal allowance – Set and reviewed annually by HMRC, this is the amount of income you can earn each tax year before you start paying income tax. The personal allowance for the 2022/23 tax year is £12,570.

Personal Estate – Any personal property of the testator, other than land or property.

Personal pension – A pension policy taken out through a pension company. Contributions are paid and, at retirement, it will provide some or all of your pension income. These are usually invested in funds, selected based upon your attitude to risk and plans for the future.

Personal Representative – A generic term to refer to executors and administrators.

Phased retirement – When benefits are drawn from your pension gradually, either through annuities or drawdown. Part of the income is provided as tax-free cash, so the level of income tax paid is managed and the balance of your fund is invested in a tax-efficient way.

Pledge – A promised gift to a person, company or charity.

Power of attorney – A legal document that allows someone to make decisions on your behalf should there come a time when you lack the capacity to do so yourself.

Price to earnings ratio (P:E) – The price is the current share price, the earnings are the profits that the company earns in one financial year for each single share.

Probate (grant of) – The legal procedure that is followed after death of a person to ensure that their will is valid and which gives the executors power to deal with your estate.

Probate Registry – The legal office or in some cases a court which grants appointed people permission to administer a deceased person’s estate.

Profit and loss account – A report that shows the money that a business has earned, minus any of its cost or spending needed to maintain and run it.

Protective Property Trust – A form of will trust or pilot trust that is written with the intention to protect a property should one of the owners die. The half of the property the deceased person owned is passed to a trust instead of to the surviving partner.  This will protect it should the surviving partner re-marry or require residential care.

Public company – A company that has issued securities through an IPO and consequently the value of their company is now determined by the markets.

Purchased life annuity – An annuity that provides a regular income in exchange for a lump sum, but not bought directly with money from a pension.


Qualifying years – The tax years in which you’ve paid a certain amount of National Insurance contributions. A minimum number of qualifying years must be built up during your working life to qualify for the full basic state pension at retirement.


Real estate/realty – Land and buildings owned by a person.

Recession – Two or more consecutive quarters recording negative GDP growth.

Reinsurance – Where your insurers buy cover from other insurers to protect themselves against large losses.

Remunerated executor – Where the executor is paid for their services beyond normal ‘out of pocket’ expenditure.

Repayment mortgage – A form of mortgage that pays off both the capital and the interest at the same time leaving no balance at the end of the agreed term, similar to an ordinary bank loan.

Reserves – An amount set aside by organisations to cover unexpected expenses or all regular expenses for a certain time frame.

Residuary beneficiary – The person or people who receive what remains of an estate after all other legacies, liabilities, taxes and expenses have been paid.

RPI – The Retail Prices Index (RPI) measures the change in the cost of a typical basket of retail goods and services.


Securities – A financial instrument which can be either a stock, a bond or an option.

Selected pension age – The age at which you start a pension plan and choose the age at which you expect to start taking a retirement income.

Self-dealing – When you are personally benefiting from a financial transaction carried out on behalf of a trust or other entity, for example, the purchasing of an asset from a trust by the trustee unless specifically authorised by the trust instrument.

Self-Invested Personal Pensions (SIPPs) – A type of pension plan that allows you, or your appointed fund manager, to make choices from a wider range of investments than other personal pension schemes offer. With a SIPP you can invest in the shares of any company listed on a stock exchange.

Settlor – The person who establishes a trust, held and administered by a trustee for the benefit of another. In some legal systems, a settlor can also be known as a trustor, and in some cases a grantor or donor.

Share index – A way of measuring change in an economy or securities market.

Shares – A financial asset or a unit of ownership interest in a company. 

Specific Legacy – A gift of specific item such as personal possessions; e.g. jewellery, land, buildings or investments including shares.

Stamp duty – A tax levied on the transfer of certain kinds of assets, usually property. It was imposed by Inland Revenue, who needed to ‘stamp’ documents to complete the purchase of the assets. Home buyers must pay stamp duty on properties with a value above a set figure. Anyone buying shares will also need to pay stamp duty.

Standard variable rate mortgage – A loan arranged at the lender’s normal mortgage rate without any discounts or deals.

State Pension – Basic pension paid by the government upon reaching your retirement age, based on your lifetime national insurance contributions.

State pension age – The age that you are entitled to draw a state pension. The government has proposed changes to the state pension age.

Statutory money purchase illustration – A yearly illustration of the estimated pension. This is to give you an idea of what you might get upon retirement at in today’s prices. It is important to remember that it can be adjusted to allow for inflation.

STEP – Society of Trust and Estate Practitioners – the membership body for professionals advising on family inheritance and succession.

Stockbroker – A person who buys and sells stock on behalf of clients. Only a registered stockbroker can buy or sell shares on the stock exchanges.

Stocks and Shares – Companies’ stocks and shares can be bought and sold on the market. Owning a share in a company means owning a part of that company, or owning some of that company’s stock.

Sub-Prime – A term used by banks to describe someone who is considered to be a risky borrower, such as someone with poor credit history, County Court Judgements (CCJs) or bankrupt, they can find sometimes a loan from sub-prime lenders. However, borrowers can expect to pay unattractively high interest rates compared to the normal lending rate because lenders see them as being riskier.

Succession – This is a term that is used to describe the body of law relating to the passing of property on the death of a person.

Surety – When someone has taken responsibility for another person’s debts or promises, and guarantees that they will be paid or undertaken.

Surety bond – A guarantee or promise that has been 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 obligations. This will then be paid by a third party who has agreed to act as surety.

Survivor – The last person within a defined relationship or group to die.


Tangible asset – This is any physical belonging such as a property, car or jewellery.

Tax relief – Relief on pension contributions, meaning you do not pay any income tax on the contributions you and/or your employer make into your pension scheme. Funds held in the scheme also receive favourable tax treatment but income tax is payable on any income taken from the scheme.

Tax-free lump sum – When you take up to 25% of your pension fund as a tax-free lump sum when you retire. The maximum tax-free amount is set by the government.

Testator/Testatrix (male/female) – The owner of a will.

Tied financial advisers – A financial adviser restricted to only offering advice on the products of one provider.

Tracker mortgage – A form of mortgage that has a level of interest rate linked to a particular rate set independently from the lender. The level of interest you’ll pay will move up and down as the interest rate fluctuates accordingly.

Trader – A person engaging in the transfer of financial assets in a market but for a much shorter time than an investor.

Trading result – An insurer’s overall profit and loss, calculated as the underwriting result plus investment income.

Transfer of Nil Rate Band (NRB) – The NRB is transferable from one married or civil partner to another. If the first to die does not use it in full or only a proportion of it, the unused proportion will be available for use upon the second death.

Trust Period – The duration a trust can exist before it is wound up and distributed. The maximum period is 125 years.

Trust – An arrangement where property is owned by trustees for someone else’s ultimate benefit, such as a grandchild.

Trustees – The person/people or organisation that looks after anything in a trust before ultimately passing the assets to the beneficiaries at the appropriate time.


Unit trust – A form of trust or organisation that takes money from individual investors and invests it in stocks and shares for them under a trust deed. The investment is in the form of units within the trust to be paid out to the beneficiaries.

Unitised with-profit – A form of with-profits fund, where the investor buys units which increase in value in line with any declared regular bonuses and to which a final bonus may be added when the units are cashed in.

Unit-linked annuity – A form of  investment linked to an annuity where the retirement income is paid to you and linked to the performance of units in investment funds. Your retirement income may vary depending on how the investments rise and fall.

Unsecured pension – A way of taking an income from your pension fund up to age 75, while leaving the rest of your fund invested. This form of investment does involve risk to the value of your pension fund. There are two types of unsecured pension – a short-term annuity and income withdrawal.


Variable interest rate – Interest rates offered by banks and financial institutions on loans and deposits that may change according to circumstances. For example, a movement in the interest base rate set by the Bank of England would usually be an influence.

Variation, deed of – A legal document that allows the beneficiaries to change the terms of a will, even after the person’s death.

Volatility – A term used to describe fluctuation in the price of a security. Generally speaking, the higher the level of market volatility, the riskier the investment will be. The rewards will be greater but so too will any losses.


Warrant – A certificate which gives the person holding it the right to buy shares at a given price.

Will (Last Will and Testament) – A legal document that details a person’s wishes after they have died. It would convey how you wish your assets be divided, who gets priority and detail any specific exclusions you wish to make.

Will drafter/preparer – The person instructed to prepare the will on behalf of the testator.

Will Trust or Trust – A clause written into the will that acts like a virtual safety deposit box. When the person dies then certain assets are passed into the trust by the executors in order to ringfence them and remove them from the estate making it more tax efficient. 

With-profits annuity – A type of investment linked to an annuity where the retirement income paid to you is linked to the performance of the annuity provider’s with-profits fund. The retirement income you will receive each year may go up or down.

Witnesses – Two independent people who are required to sign documents such as the last will and testament. The witness’s job is to state that they have observed the testator signing the document. The witnesses must be independent and cannot benefit from the will or be married linked to in any way to beneficiaries of the will.


Yield – A general term for the rate of income that comes from an investment, expressed as an annualised percentage and based on its current capital value.