Glossary

AFM

Association of Financial Mutuals – is the trade body that represents mutual insurers, friendly societies and other financial mutuals in the UK.

 

Assets

Anything of value owned by a business that can be set against its liabilities. Assets are usually divided into four types: fixed assets (typically land, buildings and machines); current assets (cash, stock, investments, work in progress and payments owing); liquid assets (cash or funds held in a form that can be quickly converted into cash); and intangible assets (goodwill, trademarks, patents, etc).

Association of Financial Mutuals

Is the trade body that represents mutual insurers, friendly societies and other financial mutuals in the UK.

 

Bonuses

Bonuses are normally added to policies each year (depending on actuarial advice) based on the sum assured or capital balance. These bonuses, which are not guaranteed, are a percentage of the sum assured figure, and vary dependent on the policy type.

Endowment

A policy combining life assurance and investment under which the sum assured is paid at a pre-agreed date, or on the death of the policyholder if earlier. 

Equities

Another word for “Share” A shareholder’s equity is the value of the shares they hold.

Ethical

Sheffield Mutual only invests in companies that are not involved in the production of Armaments, Tobacco or Pornography.

F.S.A

Financial Services Authority – a regulatory body that oversees London’s financial markets, Regulator of all providers of financial services in the UK.

FSCS

Financial Services Compensation Scheme – The FSCS is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading they may be able to pay compensation to its customers.

HMRC

Her Majestys Revenue and Customs is a non-ministerial department of the British Government primarily responsible for the collection of taxes and the payment of some forms of support.

IFA

Independent Financial Advisor – Professionals who provide independent advice on financial matters.

Illustration

A quote – an example to show possible returns and sum assured figures.

 

Investment

The investing of money or capital in order to gain profitable returns, as interest, income or appreciation in value.

 

Maturity Date

The date that an insurance policy or other financial contract finishes or "matures", and the proceeds, sometimes known as the maturity value, become payable.

 

Mutual

A Mutual has no shareholders but instead is owned entirely by its policyholders known as members.

 

MVR/MVA

Market Value Reduction/Adjustment – this is a mechanism used to ensure that policy withdrawals/surrenders are reasonable in relation to the policy’s fair entitlement to the assets of the with-profits fund.

 

Premium

The monetary amount paid for a policy. The payment a policyholder makes in return for insurance cover / or an amount deposited to a savings plan.  Usually paid monthly, annually or as a single lump sum.  

 

Regular Savings Plans

A policy to which you make regular payments for a set term and amount which is chosen at the outset. Premium frequencies can be Monthly or Annually. Our Regular Savings Plan provides a Sum Assured figure to which bonuses are added each year. (bonuses are not guaranteed)

 

Sum Assured Figure

Is the minimum guaranteed amount we would payout on maturity, or depending on the policy, on death.

 

Surrender

The encashment /closure of a policy before the maturity date.

 

Term

The length of time a policy is to run for.

 

Terminal Bonus

An additional final bonus may be added to the policy upon encashment dependent on investment returns and the length of time the policy is held.

 

With Profits Bond

A type of investment plan sold in the UK in which extra amounts may be added to the main benefit (known as the sum assured) to reflect profits earned during the course of the contract. Regular or "reversionary" bonuses may be added, usually each year, and once declared are guaranteed.

A final or "terminal" bonus may be added when the policy becomes payable. With-profit funds are typically invested in a mixture of equities, property and fixed income investments. Under poor stock market conditions a “Market Value Adjustment” (MVA) may be applied to the value of the policy if it is surrendered before the maturity date.