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Jargon Breaker Bonuses to Date The total Reversionary (annual) Bonuses added to a policy to date, once added bonuses can not be reduced or taken away and are guaranteed to be paid at maturity date. Basic Sum Assured The guaranteed amount upon which bonuses are calculated. The Basic Sum Assured is guaranteed to be paid at maturity providing that premiums have been paid in full and that the policy has not been amended. Bonus Notice Normally an annual statement giving details of bonuses added to the policy Clear Title A legal term confirming that no one has any financial interest in the policy Commencement Date The date the policy started Contract Notes A legally binding agreement signed by the seller and buyer of a policy Deed of Absolute Assignment A legal document transferring the ownership from the policy seller to the policy buyer Endowment Policy A fixed term (normally) regular premium life assurance policy giving Life assurance cover with a savings element. Formula Maturity Value Is the actuarially calculated maturity value of a policy based on the current rates of reversionary and terminal bonuses declared by the relevant insurance company based upon a similar term policy maturing this year. Gearing A term referring to a method of borrowing money using TEPs as security for the loan to purchase additional TEPs. Letter of No Further Interest Confirmation usually from a Bank or Building Society that they no longer have any interest or claim on a policy. Life/Lives Assured Normally the original owner(s) of the policy on whom the life assurance cover remains. Locked in Value The Basic Sum Assured and Total Accrued Bonuses to date. The locked in value at any point is the guaranteed amount that will be paid at maturity providing premium payments are made in full. Maturity Date The end date of a policy when all the benefits are paid to the legal owner of the policy. Maturity Value The value paid to the legal owner of the policy at the maturity date. The maturity value will be made up of the Basic Sum Assured, the Accrued Reversionary Bonuses and normally a Terminal or Final Bonus and occasionally a Special Bonus. Please note Terminal Bonuses are not guaranteed. Minimum Death Benefit The minimum amount that will be paid out on the death of the life/lives assured. Non-Qualifying Policy In relation to TEPs, is normally a policy that has been amended in such a way to make it Non-Qualifying. The status of a policy either Qualifying or Non-Qualifying has implications as to how policy gains are taxed to UK investors (see taxation). Notice of Assignment Legal document normally sent along with a certified copy of the Deed of Assignment advising the life company of the transfer of ownership of the policy. Paid-up A policy where premiums have been stopped and normally cannot be restarted. The Basic Sum Assured is reduced from the original amount to reflect the reduction in total premiums payable and future bonuses are based on the revised paid-up sum assured. The policy would normally continue to maturity. Premium The monthly, quarterly, half yearly or annual amount paid to the life company to maintain the policy. Premium frequency can normally be altered to suit the investor. Pricing Discount Rate (PDR) Sometimes called Annual Discount Rate, is an actuarial calculation used to discount the Formula Maturity Value and future premiums to calculate the sale price and purchase price of a policy. The PDR should not be considered as the potential yield on a TEP and is in no way a guarantee of return however if bonus rates remain unaltered during the remaining term of the TEP the PDR would represent the investment yield on the purchase price and premiums paid by the buyer. Purchase Price The price a TEP is offered for sale. The buyer will also be responsible for the legal fees payable to transfer the ownership of the policy. The purchase price does not include the future premiums required to service the policy. Qualifying Policy The majority of TEPs for sale are Qualifying Policies normally policies which have not been altered or amended in such a way to make them Non-Qualifying. The status of a policy either Qualifying or Non-Qualifying has implications as to how policy gains are taxed to UK investors (see taxation). Referees Buyers of TEPs are normally supplied with the contact details of Referees – these are normally close friends or relatives of the life/lives assured on the TEP who have agreed to respond from time to time as to the well-being of the life/lives assured. UK Endowments Limited has an associate company, Tepcheck who will contact the Referees (normally on annual basis) on behalf of TEP investors for a small fee. Reversionary Bonus The annual bonus allocated to a policy. The annual bonus addition increases the total accrued bonuses and also the Locked In Value of a policy. Security Factor A measure of the risk associated with a particular TEP. It is calculated by dividing the Locked-in Value by the total investment amount (purchase price, legal fees and total remaining premiums) and multiplying by 100. A security factor of 100% or more indicates a capital guaranteed policy. Sensitivity Table A table designed to illustrate to a TEP buyer how changes in reversionary and terminal bonus rates would affect the future returns on a policy. Surrender Value Is the amount the life company would pay if the policy were surrendered back to them. Surrender Value Date The date on which the life company calculates the Surrender Value. Terminal Bonus Is a final bonus usually paid at maturity of the policy or on the earlier death of the life/lives assured. Terminal Bonuses are not guaranteed. Total Investment Amount Is the purchase price of a TEP plus the total remaining premiums to maturity and any legal fees incurred when buying the policy. Total Premiums to Maturity Is the sum of the remaining premiums payable by the policy buyer until the policy reaches maturity date Traded Endowment Policy (TEP) A policy, normally a With Profits Endowment policy, which has been sold by the original owner(s) instead of being surrendered back to the life company. Whole of Life Policy Whole of Life Policies are policies designed to run until the life assured dies, they are sometimes of interest to the TEP market but are normally amended to an endowment policy to have a fixed maturity date.