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:

Illustration
An estimate of what you might expect to get back from an investment. It is worked out based on standard growth rates and includes assumed future charges you may have to pay. The amount you actually get back may be higher or lower than the illustration depending on the investment returns and the period invested.
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Impaired life Annuity
Some companies offer better annuity rates and higher than normal levels of income to people who have made certain lifestyle choices (e.g. Smoking), followed certain occupations, or who have had certain medical conditions. (See also Enhanced Annuity).
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Income tax
The tax you pay on your income each year. The amount of tax you pay depends on the amount of money you earn and receive from your investments and savings and on your individual tax allowances.
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Index Linked
An increase to annuity payments, to pension benefits, or to premiums you pay linked to a government index, (usually the Retail Price Index~RPI). The purpose of index linking is to attempt to protect against rising costs as a result of inflation.
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Index Tracker
An investment fund that follows a selected market index, for example the FTSE 100 index. The value of the investment will go up and down in line with the index that it is based on.
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Individual Savings Account (ISA)
An ISA is a product that invests your savings in cash, equities (bonds, gilts and shares), life insurance or a combination of these. You do not pay tax on the income from an ISA, or on any money you may make when you sell it. There are limits on the amount you can invest in ISAs in each tax year.
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Inflation
A rise in the price of goods and services meaning that the same amount of money will buy less in the future than it does today.
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Instant access
A savings account that you can draw your money out of at any time, without giving the bank or building society any warning (notice).
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Interest only mortgage
With an interest only mortgage, your monthly payments pay off only the interest you still owe on the amount borrowed. At the end of your mortgage term you will need to pay off the actual amount you borrowed, which most people plan for by using an ISA, pension or endowment.
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