doctrine of Utmost Good Faith

Insurance contract is issued on the basis that the applicant truthfully and fully discloses everything he or she knows about his or her health. This arises from the recognition that the insurance company is in a disadvantageous position, as the insurer does not know anything about the applicant. Similarly, the insurance company should deal with the applicant with honesty and integrity.


Financial instruments that gives the investor the option to buy or sell an asset. Derivatives include futures and options contracts. Futures contracts require delivery of a commodity or currency at a specified date. Options entitle the holder to buy or sell shares or commodities at a fixed price within a given period of time.

defined contribution scheme

A pension plan where the benefits depend on the amount and frequency of contributions paid into the scheme, the investment gain on those contributions, and annuity rates at the time of retirement. The exact amount of pension will not be known until retirement. Also known as a money purchase scheme.

defined benefit scheme

A pension scheme that set out the benefits payable to members irrespective of any contributions paid or investment gains made. An example is a final salary pension scheme, where payments are calculated as a proportion of the member's earnings at or near the date of retirement.

deferred annuity

An annuity (or pension) due to be paid from a future date or when the policyholder reaches a specified age. A deferred annuity may be funded by the policyholder by payment of a series of regular contributions or by a capital sum.


A fixed interest security issued by a company or government agency, usually secured on its assets, with a long-term redemption (repayment) date between 10 and 40 years ahead. If a company goes bust, debenture stockholders are first in line to be repaid before the other stockholders and shareholders.


This is the statement or section of the form where the person is required to declare that the statements or answers are given fully and truthfully and that if it were not so, there would be legal consequences.

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