London Life - Jargon Buster

Use our Jargon Buster to cut through the complicated language financial services companies sometimes use, and find out what it really means. The list is in alphabetical order so you can scroll down to look up words and their meanings:

Daily Bonus
A regular bonus added each day which represents 1/365th of an annual bonus rate.
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Decreasing term
Some life insurance policies are for a fixed length of time (term), and pay you a fixed lump sum if you die during that time. With a Decreasing Term policy, the amount paid out at death reduces over the term. At the end of the term the policy typically has no value.
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Defined Benefit Pension Scheme
A type of occupational pension provided by some employers. The amount you receive at retirement is directly related to how many years you have been a member of the scheme and how much you are earning shortly before you retire. These are also called Final Salary Schemes.
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Defined Contribution Pension Scheme
A type of Pension scheme where the pension amount at retirement depends on the amount of premiums paid into it, and the investment growth. Also known as a Money Purchase scheme.
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Dependant
An individual who is financially dependent on the person receiving the pension.
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Derivatives
General term for financial instruments including futures, options and warrants that gives the investor the option to buy or sell an asset within a given period of time. Typically they are only used by professional investors.
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Disclosure of costs
An investment company is required to tell you the total cost of taking out a product or policy with them, including any commission paid to an adviser.
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Discounted mortgage rate
A guaranteed reduction in the standard variable rate (SVR) of interest charged on a mortgage. The reduction lasts for a set time and then returns to the standard variable rate. Sometimes this type of deal also involves paying a penalty if the mortgage is redeemed (paid off) during or at the end of the discounted period or for a given period of time after.
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Diversification
The practice of spreading investments across different asset classes to create a balance of risk and return in an investment portfolio.
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Dividends
A distribution of company profits to shareholders.
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