PAID UP POLICY
A regular premium policy (eg an assurance or endowment policy) where the policyholder has elected not to pay any further premiums, but wishes the cover to continue. The benefit amount, called the "paid up SUM ASSURED" is reduced accordingly.

PENSION
An ANNUITY payable under a life office annuity or from a pension scheme.

PENSION IN PAYMENT
A pension under which the payments have already commenced, as opposed to a DEFERRED pension.

PERIL
The type of event causing an insurance claim eg accidental damage, fire, storm, burglary.

PERMANENT HEALTH INSURANCE (PHI)
Insurance to protect against long term sickness or invalidity. The definition of sickness usually relates to the policyholder's ability to carry out their usual job or a similar type of work. It is ''permanent'' in the sense that the policy conditions are fixed from the outset.

PERPETUITY
An annuity payable for ever.

PERSONAL PENSION SCHEME
A pension arrangement for an individual paid for by premiums paid to an insurance company or other financial institution.

POLICY
An insurance agreement or the documents specifying the terms of the agreement.

POLICY ALTERATION
A change to the conditions of a policy requested by a policyholder during the term of the policy eg increasing the sum insured when a policyholder with an endowment mortgage moves to a "bigger" house.

POLICYHOLDER
An individual who has an insurance policy. See also: INSURED.

POLICY VALUE
The RESERVE under a policy.

PORTFOLIO
A block of insurance policies or investment holdings.

PREMIUM
A payment made by a policyholder in return for insurance cover. Policies may be paid by a single premium or by regular premiums. Plural: "premiums".

PRESENT VALUE
The expected discounted value of a series of future payments, allowing for interest and (if applicable) mortality.

PRIVATE MOTOR INSURANCE
Insurance for motor vehicles owned by private individuals.

PROFESSIONAL INDEMNITY INSURANCE
Professional indemnity insurance provides protection to professional people (eg lawyers, accountants, doctors and actuaries) to protect them against claims for negligent advice given to clients.

PROPOSAL
An application for insurance cover. Applications are normally submitted on a standard proposal form.

PURE PREMIUM
Same as NET PREMIUM.

REDEEM/REDEMPTION
A loan or fixed interest security is redeemed when the initial capital is repaid. The redemption rate may be greater than or less than 100% ie an amount greater than or less than the NOMINAL capital amount may be repaid. See also: IRREDEEMABLE.

REFUND OF CONTRIBUTIONS
Repayment of a member's contributions to a pension scheme if the member leaves without receiving a pension eg if the member dies before retirement age or changes jobs. In the UK members who withdraw voluntarily with more than 2 years' SERVICE must be given a DEFERRED PENSION, rather than a refund of contributions.

REINSURANCE
Insurance effected by an insurer to provide protection against large claims and catastrophes which might damage the insurer s solvency position. There are specialist reinsurers which write only reinsurance business. Many DIRECT INSURERS also accept reinsurance business.

REINSURER
An insurer that offers insurance to another insurer.

RENEWAL
In general insurance, the date when the term of an annual policy comes to an end. If cover is to continue, the policyholder must apply for the policy to be renewed.

RENEWAL DATE
A policy anniversary. Under an annual premium policy, premiums are payable on the renewal dates.

RENEWAL EXPENSES
Expenses that are incurred at the time of renewal, as opposed to INITIAL EXPENSES.

RESERVE
The funds an insurer considers should be held in respect of a particular policy, taking into
account future outgo (benefit payments and expenses) and future receipts (premiums).
Theoretical reserves may be calculated retrospectively or prospectively using the reserving BASIS.

RESERVING
The process of calculating and setting up RESERVES.

RETURN OF PREMIUMS
Repayment of the premiums paid by a policyholder. Many life assurance policies include a return of premiums (payable to the policyholder's estate or designated beneficiary) to give the appearance of providing value for money in all circumstances. The amount of premiums returned may be calculated without interest, with simple interest or with compound interest.

REVALUATION
An adjustment (eg a regular increase) applied to the value of an asset or the amount of a benefit to offset the effects of inflation.

REVERSIONARY ANNUITY
An annuity payable to an annuitant following the death of an assured life.

REVERSIONARY BONUS
Bonus added to the benefit of a with profit policyholder throughout the life of the policy. The benefit is not guaranteed in advance, but once added to the benefit, it is guaranteed.

RISK
The possibility of a financial outcome worse than its predicted value. In general insurance, risk refers to the insurance of a particular item eg a building or a vehicle.

RISK PREMIUM
The pure premium needed to cover the expected risks, but with no allowance for expenses, commission or contingencies.