Glossary of terms

Contrasts between parties are always complex because they attempt to reflect the relationships between two or more individuals from that moment on. Insurance contracts are no different. Although we have considerably simplified our language in recent years to make it more accessible, it is sometimes necessary to clarify certain terms:

Proposer: This is the person taking out the insurance, and it may also be the Insured or even the Beneficiary.

Insured: This is the person(s) protected by the insurance. For example, in a comprehensive insurance policy it is usually the householder.

Beneficiary: This is the person receiving the compensation from the insurers whenever a claim arises. In life insurance, it is the person receiving the compensation for the decease.

Participation form: In collective life insurance policies, this form is attached to the policy. It is signed jointly by the person proposing the insurance and by the Insured.

Deferred capital: This is an undertaking by an insurer to pay a sum of capital after a specified amount of time has elapsed.

Deferred capital with reimbursement of premiums: This is a survival-based insurance contract for a deferred capital whereby the insurer undertakes to pay back the premiums received if the Insured dies during the life of the contract.

Deferred capital without reimbursement of premiums: This is a survival-based insurance contract for a deferred capital whereby the Insurer is released from paying any sum whatsoever if the Insured dies during the life of the contract.

Deductible: This is a clause appearing in some policies, whereby the liability of the insurer is limited in the event of a claim. Different types of deductible include time-based limitations (the insurance will not be effective during the first x months after the signing of the policy) or monetary deductibles (in the event of a claim, the insurer will not pay the first x euros of the cost of the repair).

Infra-insurance: situation in which the value of the item insured is greater than the value declared in the policy.

Comprehensive policy: Comprehensive insurance policies, through a single document and for a single premium, cover clients against a varied collection of risks. The term is basically used to refer to insurance for housing, business, joint-ownership neighbourhood associations and industrial policies.

Participation in profits: This is a clause included in some savings plans through which, if the financial or other results obtained by the Insurer are above a certain level, the client receives a share of the said profits.

Policy: This is the insurance contract document, although it is a term that is being used less and less.

Service provision insurance: In service provision insurance no money is paid out in the event of a claim; instead, a particular service that the Insured requires is provided; for example, a visit to a physician in the case of health-care insurance.

Insurance proposal: This is a document in which the Insurer describes the terms and conditions under which coverage is provided. Receipt of this document is not binding on the client (in other words, he or she is not obliged to take out the insurance) but it is binding on the Insurer (in other words, if the client decides to purchase the insurance cover, it will be on the basis of the conditions described in the proposal, which the Insurer is not allowed to change).

Technical provisions: These are accounting magnitudes which the Insurer must fund in order to be able to meet the undertakings signed with its Insured.

Actuarial income: Actuarial income is the amount calculated on the basis not only of the financial yield (profitability of the investment) but also actuarial calculations (probability of the recipient’s survival, life expectancy, etc.). As a result, actuarial income is usually paid for life, meaning that their payment is guaranteed throughout the life of the beneficiary, regardless of the number of years each person lives.

Salvage: This is an option for the early recovery of all or part of the savings accumulated in an insurance contract, including, where appropriate, the accumulated profitability.

Grounds for claim or Claim: this refers to the negative and harmful event affecting the Proposer or the Insured that must occur for the Insurer to be obliged to fulfil its undertakings and proceed with the payments agreed or provide the services indicated in the policy.

Unit linked: This English term is used in Spain to refer to a type of insurance normally described as “contracts in which the Proposer assumes the risk of the investment”. These are savings plans which do not guarantee any minimum return, but where the client has the option to decide where his or her money will be invested, and to change those investments.

As-new value: When the Insurer of an item guarantees its value as-new in the event of loss, robbery, breakage, etc., it is undertaking to pay the client, in the event of a claim, the sum necessary to replace the object damaged.

Remainder value or Market value: When the Insurer of an item guarantees its market value in the event of loss, robbery, breakage, etc., it is undertaking to pay the client, in the event of a claim, the value of the said item on the open market at the moment the grounds for the claim occurred.