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INSURANCE DEFINITIONS
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Cancellation Clause
A provision in an insurance contract that permits the insurer or the insured to cancel a policy at any time before its expiration date.

Capacity The largest amount of insurance or reinsurance available from a company. It can also refer to the largest amount of insurance or reinsurance available in the marketplace.

Cash Surrender Value
The amount of money received when a policyholder surrenders a life insurance policy with cash value.

Caveats
Conditions attached to an insurance quotation.

Cede
To transfer all or part of a risk written by an insurer to a reinsurer.

CII
Chartered Insurance Institute. A body controlling professional standards (educational, ethical etc) in the insurance industry.

Claim
Notification to an insurance company that payment of an amount is due under the terms of a policy.

Claims Experience
The relationship of claims to premiums for a period. Usually expressed as a percentage or ratio.

Claims Reserve Amounts set aside by an insurer to meet costs of claims incurred but not yet settled.

Co-insurance
An arrangement by which a number of insurance companies cover a particular risk.

Conditions
Provisions in an insurance contract that state the rights and duties of the insured and of the insurer.

Consequential Loss A financial loss occurring as the result of some other loss. Also known as an indirect loss. (eg a shop is destroyed by fire. The loss of the building, stock etc is a direct loss. The loss of ongoing profit because of the inability to continue trading is a consequential loss).

Continuation Option
Allows employees to continue their group insurance coverage under certain conditions after their employment has terminated (much less common today).

Continuing Professional Development
A formal procedure by which a professional body ensures that its members keep their expertise up to date with current developments. Applies to doctors, lawyers, accountants, financial advisers etc.

Contract
A legally enforceable agreement between two parties

Convertible Term Insurance
Term insurance which can be changed into a permanent policy without further evidence of insurability or medical examination.

Cooling Off Period
A period allowed in certain circumstances during which a person who has entered into a contract (for example, an insurance policy or a personal loan) may cancel it without incurring any penalty.

Cover Note
A temporary certificate confirming that an insurance policy is in force. Used in motor insurance for taxation/registration purposes and in some other contexts such as life assurance to confirm that cover is effective on a temporary basis while further information is being gathered.

CPD
Continuing Professional Development.

Critical Illness Policy
A Critical Illness policy will provide a lump sum payment to the insured should he or she be diagnosed as having one of a number of specified illnesses, conditions or diseases.

Custom Excise
A government department responsible for the collection of duties on imports, VAT and other taxes including Insurance Premium Tax.

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