IMMEDIATE CARE PLAN
A type of long term care insurance where you pay for the cost of your care once you need to go into a care home. It's designed to cover care costs for the rest of your life, but won't necessarily cover everything. Most policies pay out an amount that rises in line with inflation every year, but if care costs rise above inflation you might have to make up the difference.
INCOME MULTIPLES
Mortgage lenders traditionally work out how much they will lend you according to the amount that you earn. Although income multiples are still used, an increasing number of mortgage lenders base the amount they lend on affordability, which takes into account your existing debts as well.
INCOME PROTECTION INSURANCE
This pays out a monthly income if you cannot work due to serious illness or because you've been injured. The payments normally continue until you're able to work again or you retire. They can kick in after a relatively short time (a few weeks) or after a year or longer.
INCOME WITHDRAWAL
Instead of converting your pension fund into a monthly retirement income by buying an annuity, you take income directly from the fund. It's not suitable for everyone, so take specialist advice if you're thinking about it.
INDEPENDENT FINANCIAL ADVISER
An adviser who is able to look at what's available across the whole market (not just the products sold by a handful of companies). They must let you pay for the advice by fee or commission. If you pay by fee you know they're under no pressure to sell you something to pay their own bills.
INDEX LINKED
Premiums into or payments from an investment or insurance policy that rise in line with inflation (based on a particular inflation index).
INDEX TRACKER
An investment fund that's designed to mirror the performance of a particular stock market index (such as the FTSE 100) by buying the same or similar shares. These funds generally have much lower charges than those where a fund manager decides which shares to buy and sell.
INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)
A legally binding agreement that is an alternative to going bankrupt. The person owing money agrees to pay off a percentage of their debts every month for a fixed period of time. The consequences of taking out an IVA are not as serious as those of going bankrupt, but it's not always the answer to debt problems that it can be portrayed as.
INHERITANCE TAX (IHT)
A tax that your heirs must pay if your money and property are worth more than a certain amount when you die, once any debts you have are taken into account. You can leave money and property up to a certain value and there will be no inheritance tax to pay. The current inheritance tax rate is 40%.
INHERITANCE TAX ALLOWANCE
The value of assets (such as cash, shares, property etc.) that you can leave to others when you die without them having to pay inheritance tax on it. Money and/or property you leave to your husband or civil partner are free of inheritance tax so aren't included in your inheritance tax allowance.
INHERITANCE TAX THRESHOLD
If the money and property etc. that you leave when you die is worth less than the inheritance tax threshold, there will be no inheritance tax to pay. In the current tax year, 2009-2010, the inheritance tax threshold level is £325,000. Anything you leave to your husband or civil partner are free of inheritance tax so aren't included.
INITIAL CHARGE
An upfront charge that is taken from your premiums when you first take out a policy (such as a unit trust). The level of initial charge varies between different products and different companies, but it can be up to 5%. It's possible to avoid some or all of the initial charge by going direct to a discount or execution-only broker.
INTEREST-FREE PERIOD
The period before your credit card provider starts charging interest. It runs from when you buy something with your card until the date you settle your bill and can be up to 56 days. It only applies if you pay your bill in full every month.
INTEREST-ONLY MORTGAGE
A home loan where you only pay the interest. The original amount you borrow - called the capital - has to be repaid separately, usually by an investment plan.
INTESTACY RULES
A complex set of rules that set out who should inherit the money and property you leave behind if you die without a will. In very simple terms, money goes to your husband or civil partner and family (while friends and step-children will not inherit). There is one set of rules covering England and Wales and another for Scotland.
INTESTATE
If you die without a will, you die intestate. It means that money and property etc. that you own will be distributed to your family according to intestacy rules, which may mean friends and some family members miss out.
INVESTMENT TRUST
A pooled fund (often made up of shares or a mixture of shares and bonds) which itself issues shares to investors. Investment trusts tend to have relatively low charges but may be riskier than some other pooled funds (such as OEICS and unit trusts) as fund managers are allowed to borrow against its value. It's like buying a property with a mortgage: if prices move up, you could make big profits from a relatively small deposit, but if prices fall your losses could be much larger than the original deposit you put down.
ISA (INDIVIDUAL SAVINGS ACCOUNT)
A tax-efficient account. There are two different types of ISA, a cash ISA, which is a tax-free savings account and a stocks and shares ISA, where you don't have to pay any extra tax when you cash it in. There are limits on how much you can pay into your ISAs every year.
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