Jargon buster
A
Accidental death benefit
This is a benefit included on some life insurance policies which pays a lump sum if the policy holder dies in an accident. A life insurance policy doesn’t come into legal effect until you pay the first premium to your insurance company.
Some insurers offer accidental death benefit from the date they receive your application form. This means that if you die suddenly before the policy is issued, the life company will either pay out the sum assured or a certain percentage of it, up to a specified limit.
Additional voluntary contributions (AVCs)
AVCs are extra payments you make on top of your standard pension contributions, either by you or your employer, if you’re a member of an employer pension plan.
AVCs help to increase the value of your pension fund or can be used to contribute to a tax-free lump sum at retirement. If you are earning an income, you can claim tax relief on AVCs up to certain limits.
Administration fee
This is a fee you pay to a financial services firm for a service or product. All regulated firms have to give you details of administration and other fees before you buy a service or product.
Advisory service
A stockbroker will discuss your investment aims and objectives and then recommend a range of investments that they feel would best suit your needs. Most stockbrokers will charge a fee for their advisory services.
Allocation rate
This is the percentage of your money that is used to buy units in a pension or other type of investment fund.
For example, an allocation rate of 97% means that for every €100 you invest, €97 is actually used to buy units. So, in effect, you pay €3 (or 3%) as a charge to the investment firm.
Annual equivalent rate (AER)
AER shows you what the interest on a savings account would be if the interest was compounded and paid out to you each year.
You may earn less than the AER because your money may not be invested for as long as a year.
Annual percentage rate (APR)
The APR is the annual rate of interest you will be charged on a loan. It takes account of all the costs involved over the term of the loan, such as any set-up charges and the interest rate.
You can use the APR to compare different loans, as long as you compare them over the same term, for example three‑year loans.
Annuity
An annuity is a financial product that provides you with a regular income after you retire. You usually buy an annuity using your pension savings, and in return, it pays you a fixed amount, often for the rest of your life.
The income you receive depends on factors such as your age, the amount of money you invest and the annuity rates available at the time.
Approved Retirement Fund (ARF)
An Approved Retirement Fund (ARF) is a retirement fund that lets you keep your pension invested after you retire while taking withdrawals as income. Your money remains invested and can continue to grow, but the value may also go down depending on investment performance.
You can choose how much to withdraw, but you may have to take out a minimum amount each year and pay tax on withdrawals.
B
Balance transfer
This is the transfer of debt from one credit card to another. Some introductory offers include a 0% balance transfer for six months, which would give you the chance to pay off your credit card (with no interest) for up to six months on your new card.
Balloon payment
This is a large final payment due at the end of some hire purchase agreements including car finance deals. It is used to keep monthly repayments lower and must be paid to finish the agreement and allow you to become the owner of the goods.
Benefit statement
This is a statement giving details of your pension plan that is sent out to you, usually once a year.
Bank Identifier Code (BIC)
This is the unique identification code given to banks, also known as a SWIFT code.
If you transfer money from one person’s bank account to another, you will need the BIC of the bank that will receive the money transfer. Your code can usually be found on your bank account statements or within your banking app.
Bid-offer spread
This is an investment charge and refers to the difference between the buying and selling price of a unit in an investment or pension fund.
A typical bid-offer spread would be 5%. For example, if you invested €100 in a pension or investment fund, its value would become €95 (€100 less 5%) if you withdrew the money immediately.
Boiler rooms
This is the name given to an unauthorised investment company that uses fraudulent high-pressure sales tactics to sell worthless or high-risk shares, foreign currency or other investments to unsuspecting investors.
Bonds
Some life insurance companies offer guaranteed bonds. These typically run for a fixed term, usually five years.
Depending on the product, the bond may offer a guaranteed return of your original investment at the end of the term and may provide either a guaranteed level of bonus or a guaranteed level of income throughout the term.
Buildings insurance
This insurance pays the cost of repairing or rebuilding your home if it is damaged by unforeseen events, as detailed in your insurance policy.
Buy-out bond
If you leave or move jobs, you can transfer the value of your employer pension to an individual fund, where your money grows tax free until you retire.
This fund usually invests in a mix of assets including property, stocks, cash and bonds. You can also choose to transfer the money to a personal pension plan instead.
C
Capital
Also called principal, this means the original amount you borrowed.
Capital gains
This means any profit you make if you sell an asset, such as shares, for a higher price than you originally paid.
Capital gains tax (CGT)
This is a government tax that you must pay if you make a profit, known as a capital gain, of more than €1,270 in any tax year if you sell an asset, such as shares or investment property.
If you make a loss, you can subtract the amount of the loss from any amount that you owe in CGT.
Chargebacks
A chargeback is a reversal of a disputed sales transaction on a credit or debit card.
For example, you can contact your card provider to ask them to refund the cost of a purchase if you paid for goods you did not receive, never ordered, or if a business fails to cancel recurring payments.
The card provider will decide if you are entitled to a refund based on the circumstances.
Children’s protection benefit
This is a benefit included on some life insurance policies. When you take out life cover for yourself, your children may also be covered up to a smaller specified amount.
Collateral
Collateral is something that a lender accepts as security for a loan. This is usually an asset such as an existing property or investment.
If the loan is not repaid, the lender can sell the collateral to cover the outstanding debt.
Collective investment
See pooled investment.
Commission
This is a payment that a financial services company gives to a financial intermediary, such as a broker or financial adviser, for selling their financial product.
Compound annual return (CAR)
CAR shows the average yearly rate of return on a deposit or investment, taking account of compound interest.
It tells you how much your capital grows each year on average, assuming any interest or gains are reinvested.
CAR is useful for comparing investments over time. For example, if you lodge €100 and have €110 after one year, your return, or CAR, is 10%. Over longer periods, CAR shows the average yearly return after compounding.
Compound interest
Compound interest is interest that is calculated on both the original amount of money and any interest already added. This means you earn interest on interest, which can significantly increase savings or investments over time.
It can also work against you on loans or debts, as the amount you owe can grow faster if interest is added to the balance.
Contents insurance
This insurance covers the loss or damage of property within your home, such as furniture, clothing and personal possessions.
Contents cover is separate from buildings insurance, which covers the structure of your property.
Contingency fund
This is a fund or an amount of money put aside to cover unexpected expenses.
Contributory occupational pension scheme
This is a type of work pension scheme to which employees are required to contribute, usually a fixed percentage of their pensionable pay, to meet part of the cost of the benefits.
Conveyancing
This is the term for the legal process of transferring the ownership of property from seller to buyer.
Cost of credit
The cost of credit shows you the real cost of borrowing. It is the difference between the amount you borrow and the total amount you will repay, including interest, by the end of the loan period.
Credit history
This tracks your record in repaying loans. Most lenders use the Central Credit Register, run by the Central Bank of Ireland, to check your credit history.
The register keeps files on borrowers and uses information from lenders to build up each borrower’s credit history.
Credit transfer
This is an order from you to your bank to transfer a sum of money to another account. A credit transfer can be made on paper, by phone or online.
Crest
Crest is the electronic settlement system used to buy and sell shares traded on the London and Irish stock exchanges.
It also allows investors to hold shares electronically in their own name.
Critical illness cover
This is an insurance policy that pays out a lump sum if you are diagnosed with a specified critical illness covered by your policy.
Cross-border handling fee
This is a fee you may have to pay to your credit card provider when using your credit card abroad in a non-euro area.
It is usually charged as a percentage of the transaction value.
Crypto exchange
A crypto exchange is a digital platform where you can buy, sell and trade cryptocurrency.
Crypto exchanges are not currently regulated in Ireland.
D
Death-in-service benefit
If your occupational pension plan has death-in-service benefit, the benefit is the amount paid out to your dependants if you die while you are still employed.
Debt consolidation
This means taking out a single loan to pay off a number of other loans. Also called wrapping up your debt, the single loan is often a mortgage used to pay off smaller loans.
Default
This is when a payment or a series of payments on a loan or mortgage are missed.
Deferred period
This is the length of time you must be out of work due to sickness or disability before your income protection insurance policy pays out.
Defined benefit pension plan
This is a type of pension plan where the income you get when you retire is related to your final salary and years of service with your employer.
Defined contribution pension fund
With a defined contribution pension plan, your pension income depends on the value of your pension fund when you retire.
Deflation
This occurs when prices decline over time. It is the opposite of inflation.
Deposit
This is money you hold in a savings or deposit account at a financial institution that earns interest.
A mortgage deposit is the money you pay upfront to buy a home before you take out a mortgage.
Deposit interest retention tax (DIRT)
This is a tax you pay on any interest you earn on money deposited in a financial institution.
Deposit protection scheme
This is a scheme designed to compensate depositors when a bank, building society or credit union fails, subject to certain limits.
Direct debit
This is a payment taken from your account by a third party to whom you have given permission to do so.
Discretionary service
This is when a stockbroker invests money on your behalf without having to tell you about every trade made.
Dividend
This is a payment that some public companies make to their shareholders as a way of distributing part of their profits.
Dormant account
An account on which there has been no transaction for 15 years or more.
Driver personal accident cover
This provides limited cover for death or loss of sight or limbs as a result of a car accident.
Dual life policy
This is a life insurance policy that provides cover for two people and continues after the first person dies. It pays out benefit on each death.
E
Emergency fund
An emergency fund is money set aside in an accessible savings account for events such as unemployment, medical bills and car repairs.
You should try to build up savings that cover your basic living costs for three to six months.
Equivalent annual rate (EAR)
This is used to show the full price of interest on an account.
EAR takes into account the basic rate of interest charged or earned and any additional charges, such as quarterly fees or set-up charges.
Endowment policy
An endowment policy is an investment plan where you usually pay premiums each month and the money is invested in assets such as shares, bonds, property and cash.
The aim is to grow the value of the policy so that, after a set number of years, it will be enough to pay off your mortgage.
Endowment trader
An endowment trader is an individual or company that specialises in buying endowment policies from policyholders.
If you are thinking of cashing in an endowment policy, you may want to compare selling it to a trader with surrendering it to your insurer.
Entry charge
This is a charge applied when setting up a pension plan or investment.
Equity
Equity is the value of any assets you own after any debts are paid.
For property, equity is the difference between the market value of your home and the mortgage you owe.
Equity release
Equity release schemes allow you to release some of the value built up in your home without having to move out or sell it.
These schemes are usually available to older homeowners.
ESG investing
ESG investing is an approach to investing that considers environmental, social and governance factors, as well as financial performance.
Investors may look at issues such as climate impact, treatment of workers, and how a company is run when choosing investments.
Because ESG standards can vary, investors should be aware of the risk of greenwashing, where claims about sustainability may be unclear or misleading.
Euribor
The Euribor (Euro Interbank Offered Rate) is the interest rate at which euro area banks lend to each other.
Euribor rates can affect the interest rate your bank offers you.
European Central Bank (ECB)
The ECB is the central bank for the euro.
One of its main roles is setting interest rates for countries in the eurozone.
Eurozone
The eurozone is made up of EU countries that use the euro as their currency.
Excess
This is the amount you must pay yourself when making an insurance claim.
The excess is usually a fixed amount and is deducted from the claim payment.
Exchange-traded fund (ETF)
An ETF is an investment fund that tracks a stock market index and is traded on a stock exchange.
Exclusions
Exclusions are events or situations that are not covered by an insurance policy.
Execution-only
This is where a stockbroker carries out a trade on your behalf without giving any advice.
Exit penalty
This is a charge applied when you cash in an investment or repay a loan early.
Exit tax
This is a tax you pay if your investment makes a profit and you withdraw money.
F
Financial adviser
A regulated financial adviser is someone who is authorised by the Central Bank to give advice to individual members of the public.
Advisers can be tied, meaning they advise only on products sold by their employer, or independent, meaning they advise on a range of providers and products.
Financial Services and Pensions Ombudsman
The Financial Services and Pensions Ombudsman (FSPO) is an independent statutory office that deals with complaints from consumers about financial services providers.
The FSPO only deals with complaints that have not been resolved through your provider and its service is free to consumers.
Fixed rate
This means the interest rate on a loan is fixed for a set period of time.
If rates fall, you will not benefit from lower rates during the fixed period, and you may have to pay a fee if you repay the loan early.
Fixed rate penalty
This is a fee you may have to pay if you repay part or all of your loan, or change its terms, before the fixed rate period ends.
Fixed-term deposits
With fixed-term deposits, you place money in an account for a fixed period of time at an agreed interest rate.
You will usually pay a penalty if you withdraw money before the end of the term.
Fund management charge
This is an annual charge you have to pay to get a fund manager to manage your investment. A typical fund management charge would be 1% per annum.
The management charge is often higher if the bid-offer spread is low or zero.
G
Grant of Probate
A Grant of Probate gives authority to deal with a deceased person’s estate.
It is the document that allows the assets of the deceased person to be gathered and distributed.
Greenwashing
Greenwashing is when a company gives a misleading impression that its products, services or practices are more environmentally friendly than they really are.
This can involve unclear claims, selective information or using environmental language without evidence.
Greenwashing can make it difficult for consumers to tell which products or investments are genuinely sustainable.
Guaranteed insurability option
This is a benefit included in some life insurance policies.
It allows you to take out additional life cover at certain stages, such as having children or increasing your mortgage, without providing further evidence of good health.
Guaranteed minimum future value
This is the agreed minimum value of your car at the end of a car finance agreement.
It is based on factors such as estimated mileage and the condition of the car at the end of the agreement.
Guarantor
A guarantor is a person who agrees to pay off a loan if the borrower fails to repay it.
I
Income protection
Income protection is insurance that pays you a regular income if you are unable to work due to illness or injury.
It usually pays out until you return to work or reach retirement, whichever happens first.
Indemnify
When an insurance company indemnifies you, it pays to restore your property or goods to the condition they were in before a loss, or as close as possible.
Indemnity bond
An indemnity bond is a type of insurance policy that may be taken out by a lender when you get a mortgage.
It protects the lender if they repossess your home and the sale does not cover the outstanding mortgage.
Index linking
Index linking increases the benefit of an insurance or investment policy each year to help keep pace with inflation.
Your premium usually increases at the same time.
Inflation
Inflation is the general increase in prices over time, which reduces the purchasing power of money.
Inheritance tax
Inheritance tax is a tax that may be payable on money, property or assets you receive after someone dies.
In Ireland, it is usually charged under Capital Acquisitions Tax (CAT) and depends on the value of the inheritance and your relationship to the person who has died. Different tax-free thresholds apply, and tax is only paid on the amount above the relevant threshold.
Insolvency
An individual is insolvent if they are unable to pay their debts in full as they fall due.
A person may also be insolvent if the total value of their liabilities is greater than the value of their assets.
Insolvency Service of Ireland (ISI)
The Insolvency Service of Ireland (ISI) is an independent government body that helps people deal with serious debt problems.
It provides information on insolvency solutions and supports people in returning from insolvency to solvency.
Internal dispute resolution (IDR)
The process a company uses to handle and try to resolve a complaint directly with you. You usually have to go through the provider’s IDR process before being able to escalate the complaint to an external body.
Interest on loans
This is the amount you pay for borrowing money and is added to the loan balance.
Interest on savings
This is money you earn on savings held in certain bank or deposit accounts.
International bank account number (IBAN)
An IBAN is an international standard used to identify bank accounts.
It is used for both domestic and international payments.
Investor compensation scheme
The investor compensation scheme pays compensation, subject to limits, if an authorised investment firm fails.
Irish Credit Bureau
The Irish Credit Bureau was a credit reference agency that recorded borrowers’ credit histories.
It has been replaced by the Central Credit Register.
Irish Stock Exchange
The Irish Stock Exchange is where shares and other securities are bought and sold.
K
Keys
Public key
A public key allows you to receive crypto transactions.
Anyone can send crypto to your public key, but you need a private key to access and spend the funds.
Private key
A private key is like a password that allows you to access and control your crypto funds.
You should never share your private key. If it is lost, your crypto may be lost permanently.
Joint account
A joint account is a bank account opened in the names of more than one person.
Before opening a joint account, you should consider who can make withdrawals and what happens to the account if one holder dies.
Joint life policy
A joint life policy is a life insurance policy that covers two people.
It pays out once, when either person dies, while the policy is in force.
L
Letter of Closure
If you close a credit card account, you should ask your provider for a letter of closure.
This confirms that the account is closed and that any applicable stamp duty has been paid.
Lifetime Community Rating
Lifetime Community Rating is a system used in health insurance.
The premiums you pay depend on the age at which you first take out private health insurance, rather than your current age.
Liquidity
Liquidity refers to how easily an asset can be converted into cash.
For example, savings are liquid, while property is considered illiquid.
Loading
A loading is an extra charge added to an insurance premium because of a specific risk factor.
This might relate to health, age or other underwriting considerations.
Loan protection insurance
Loan protection insurance is an insurance policy designed to help cover your loan repayments if you are unable to work.
It may pay some or all of your repayments for a limited time if you become ill, injured, unemployed or die, depending on the policy.
Long-term care conversion
This is a benefit included in some life insurance policies.
It allows you to convert your life cover into long-term care cover to help fund future care costs.
M
Market Value Reduction (MVR)
A market value reduction is a reduction that an insurance company may apply to the value of an investment when you withdraw money, except at certain times.
Maturity value
The maturity value is the amount you receive at the end of the term of an insurance or investment policy.
Maturity values are not always guaranteed.
Medium of exchange
A medium of exchange is something that is widely accepted in payment for goods and services.
Common examples include money such as euro, sterling or US dollars.
Mining
Mining is the process by which some cryptocurrencies are created using powerful computers to solve complex mathematical problems.
It requires significant energy and specialised equipment and is generally not profitable for most individuals.
N
National Treasury Management Agency (NTMA)
The National Treasury Management Agency is a government agency that manages the national debt and administers the national pension fund.
It also manages the fund where money from dormant accounts is transferred.
No-claims bonus or discount
This is a reduction in your car or home insurance premium.
It is based on the number of years since you last made an insurance claim.
Non-Fungible Token (NFT)
Non-fungible tokens, or NFTs, are digital assets that represent ownership of items such as artwork, images or in-game items.
They are recorded on a blockchain, which tracks ownership and transactions.
O
Occupational pension scheme
An occupational pension scheme is a pension scheme set up by an employer to provide retirement benefits for employees.
It is also known as a company pension scheme or an employer pension plan.
Ombudsman
An ombudsman is an official appointed to investigate complaints from members of the public.
Complaints about financial services can be made to the Financial Services and Pensions Ombudsman.
Open driving
Open driving means that other people can drive your car with your permission and still be covered by your insurance policy.
They must hold a valid driving licence and meet your insurer’s conditions.
Overdraft
An overdraft occurs when more money is withdrawn from your current account than is available in it.
Your bank may allow this up to an agreed limit and will usually charge interest on the amount overdrawn.
P
Payment protection insurance (PPI)
Payment protection insurance pays you a regular amount if you are unable to work due to illness, injury or redundancy.
It may also cover loan repayments or some household bills for a limited period.
Pay-related social insurance (PRSI)
PRSI is a contribution towards the cost of social welfare and pension benefits.
It is paid by employees, employers and the self-employed and is deducted from earnings.
Pension fund
A pension fund is the total value of your pension, made up of contributions and any investment growth.
Fees and charges reduce the value of your pension fund.
Personal pension plan
A personal pension plan is a pension taken out by someone who is self-employed or not covered by an occupational pension scheme.
Percentage point
A percentage point is the difference between two percentages.
For example, a fall from 10% to 9% is a fall of one percentage point.
Permanent total disablement (PTD)
Permanent total disablement can have different meanings depending on your insurance policy.
It may mean you are permanently unable to do your own job, or unable to carry out everyday activities.
Personal identification number (PIN)
A PIN is a secret number used with your debit or credit card to authorise transactions.
You should keep your PIN secure and never share it.
Personal retirement savings account (PRSA)
A PRSA is a type of personal pension available to employees, the self-employed and those not currently working.
It is flexible and can be taken out up to age 75.
Policy
A policy is a contract between you and an insurance company.
Policy benefit
Also known as the sum assured, this is the amount you may receive if you make a successful insurance claim.
Policy fee
A policy fee is a regular charge applied to some insurance, pension or investment products.
Pooled investment
A pooled investment is one where many people invest money into a single fund.
The fund is managed by a professional fund manager and invested across a range of assets.
Premium
A premium is the amount you pay for an insurance policy.
Principal
Principal is another word for capital, meaning the original amount borrowed.
R
RFID shield
An RFID shield is a protective feature used to block unauthorised contactless scans of cards or devices. It is commonly built into wallets, card holders or sleeves to prevent criminals from reading card details using RFID or contactless technology.
Reduction in yield (RIY)
Reduction in yield is a way to show the effect of charges on an investment over time. It compares the return you would get with no charges to the return you get after charges are applied.
For example, if an investment has a projected return of 5% a year before charges and charges reduce this by 1.5%, the reduction in yield is 1.5% and the projected return after charges is 3.5%.
RIY can be used to compare different investment products.
S
Safeguarding
Safeguarding refers to measures taken by a financial firm to protect customers’ money and assets.
This usually involves keeping customers’ funds separate from the firm’s own money and putting controls in place to reduce the risk of loss, misuse or fraud. Safeguarding is intended to help protect customers if a firm runs into financial difficulty.
Security
Security is an asset that a lender can use to recover money if a loan is not repaid.
This may be a property, an insurance policy or another valuable asset.
Serious illness insurance
This is an insurance policy that pays a lump sum if you are diagnosed with one of the serious illnesses covered by the policy.
Stablecoins
Stablecoins are a type of cryptocurrency designed to reduce price volatility.
They are usually backed by a reserve asset such as a currency or a commodity.
'Unbacked' cryptocurrencies are not backed by any underlying asset. Examples include Bitcoin and Ethereum, which can be more volatile as a result.
Standard excess
This is the portion of an insurance claim that you must pay yourself.
For some claims, such as subsidence, the excess can be much higher.
Stamp duty (Cards)
Stamp duty is a yearly tax charged on ATM, credit and debit cards.
Stamp duty (Share dealing)
This is a once-off tax you pay when buying shares in Ireland.
Standing order
A standing order is an instruction to your bank to make regular payments of a fixed amount to another account.
State Savings
State Savings is a brand name for savings products offered by the National Treasury Management Agency.
Step-back bonus protection
This is a feature of some car insurance policies that limits the loss of your no-claims bonus after a claim.
Sum assured
The sum assured is the amount of money you receive if you make a successful insurance claim.
Surcharge interest
Surcharge interest is extra interest charged by a bank if you exceed an agreed overdraft limit.
Surrender value
The surrender value is the amount you receive if you cash in an insurance or investment policy early.
T
Term insurance policy
This is a life insurance policy that pays out a fixed benefit if you die within a specified period of time.
Terminal illness
Insurance companies usually define terminal illness as an illness that is likely to result in death within 12 months.
Terminal illness benefit
This is a benefit included in some life insurance policies that allows the policy to pay out early if you are diagnosed with a terminal illness.
In some cases, only a percentage of the life cover may be paid at this stage, with the balance paid on death.
Travel insurance
Travel insurance covers you for certain unexpected events when you are travelling, such as cancellation, illness, injury or loss of belongings.
Trustee
A trustee is a person or company appointed to manage an occupational pension scheme.
Two-factor authentication
Two-factor authentication adds an extra layer of security to an online account.
It usually requires something you know, such as a password, and something you have, such as a code sent to your phone.
V
Variable rate
A variable rate is an interest rate that can rise or fall over time.
Variable rate loans usually allow more flexibility, such as making extra repayments without penalties.
Voluntary surrender
Voluntary surrender is when you return a vehicle to a finance company because you can no longer afford the repayments.
The vehicle is sold and you are responsible for paying any remaining shortfall.
Volatility
Volatility describes how much the price of an investment or asset can change over a short period of time.
High volatility means prices can rise or fall sharply and unpredictably.
W
Waiting list benefit
A waiting list benefit is a feature of some health insurance policies. It pays you a fixed cash amount if you are waiting longer than a set period of time for certain public hospital treatments.
Wallets
Digital wallet
A digital wallet is an app or built-in feature on a smartphone or smartwatch that allows you to make contactless payments.
It stores a digital version of your debit or credit card and lets you pay by tapping your device at a contactless payment terminal.
Hosted wallet
A hosted wallet is a digital wallet provided and managed by a third party, such as a crypto exchange.
The provider holds your private keys on your behalf.
Unhosted wallet
An unhosted wallet is a digital wallet that you control yourself.
You hold the private keys and do not rely on a third party to access your crypto assets.
Whole of life policy
A whole of life policy is a type of life insurance that covers you for your entire lifetime.
It pays out a benefit when you die, as long as the policy remains in force.
