Glossary: I

IDENTITY

Your identity is who you are. You may be asked to show documents that prove that you are who you say you are. There are lots of different documents that can be used as proof of your identity, for instance your birth or adoption certificate, a valid passport or a marriage certificate. Any papers that show your address, date of birth or photo may be useful. The official you are talking to can give you a full list of documents that you can use.

INCOME

Your income is the money you have coming in. It includes things like wages, benefits (like income support or child benefit) and child maintenance payments.

IN CREDIT

‘In credit’ means that there is money available to spend in the account.

INDEX-LINKED

Index-linking means that the value of the financial product or service (e.g. pension, savings certificate) is increased in line with an index (e.g. the Retail Price Index, or inflation). With some types of contents insurance the insurer works out how much you need to increase your cover by each year.

INSTALMENTS

Weekly or monthly repayments made to pay off goods bought on credit or to pay off a loan taken out to buy them.

INSTANT ACCESS

Means you can get your money back immediately without having to wait for any notice period.

INSURANCE COVER

Insurance cover describes the situations you are insured against. For example, if you have a car you might have comprehensive cover or only be covered for third party, fire and theft.

INSURANCE PREMIUMS

This is the money you pay to the insurance company to make sure you are covered. Some premiums are paid monthly; others are paid quarterly or annually.

INTEREST

The reward you get for lending your money to say, a bank or a building society. Also the cost you pay when you borrow money through a loan or credit agreement. It is usually worked out as a percentage of the money you have borrowed. For instance, if an interest rate is 10 per cent and you borrowed £100, the interest you have to pay will be 10 per cent of £100, or £10.

INTEREST RATES

This is the percentage that is paid on savings or loans. For example, a savings account offering an interest rate of 10% would give you a better return than one offering 5%. Similarly a loan with an interest rate of 20% will cost more than one with a rate of 15%.

ISA

ISAs (Individual Savings Accounts) are tax favoured savings and investment accounts. You can use them to save cash, or invest in stocks and shares. The maximum you can put in to an ISA is £15,240 in the tax year 2016-17, and the entire amount can be saved in cash if you wish.

You don’t pay any tax on the interest or dividends you receive from an ISA and any profits from investments are free of Capital Gains Tax. But this does mean that you can’t use losses on ISA investments to reduce Capital Gains Tax on profits from investments outside the ISA.