Absolute Assignment : The transfer of all rights and obligations of a life insurance contract to another party. A pension plan can not be assigned in this way.
Accrued interest: Interest that has been earned but not received.
Accumulation plan: An arrangement which enables an investor to purchase mutual fund shares regularly in large or small amounts.
Annuity: A contract under which a series of periodic payments are made by a financial institution to an individual for a specified period of time. These payments are usually made monthly.
Annuity Certain: An annuity that is payable for a specified number of years regardless of any unforeseen event or circumstances.
Annuitant: An individual who purchases an annuity and will receive payments from that annuity.
Assuris: Assuris mission is to mitigate the impact on Canadian policyholders in the event of the financial failure of a life insurance company. It works in partnership with regulators on any necessary interventions, seeking to both minimize long-term costs and preserve consumer perceptions of industry strength. Current and prospective policyholders are advised to read the Assuris brochure for more information on the nature and extent of this protection.
Balanced fund: A mutual fund which has an investment policy of "balancing" its portfolio generally by including bonds and shares in varying proportions influenced by the fund's investment outlook.
Bank Rate: The rate at which the Bank of Canada makes short-term loans to chartered banks and other financial institutions, and the benchmark for prime rates set by financial institutions.
Bear market: A declining financial market.
Beneficiary: Individual other than the policyowner designated to receive benefits under an insurance contract.
Benefit: Amount paid by an insurer pursuant to a life, income, or accident and health insurance policy. The benefit is paid to the policyowner, the insured person, or the beneficiary as the case may be. A claim must be filed for the insurer to pay the benefit. In the case of a pension plan, this term refers to the accrued benefits a member is entitled to under the plan.
Blue chip: A descriptive term usually applied to high grade equity securities.
Bonds: A long-term debt instrument/certificate acknowledging indebtedness by which the issuer promises to pay the bearer a certain amount of interest for a specified period of time and to repay the principal at maturity. Property is generally pledged as security for the loan, except in the case of government bonds. However, the term is often used to designate all types of loan securities.
Bond fund: A mutual fund whose portfolio consists primarily of bonds.
Bull market: An advancing financial market.
Buying on margin: Purchasing a security partly with borrowed money.
Canada Pension Plan: A Canadian federal program that provides a pension for retirees who reside in all provinces except Quebec and who have contributed money into the plan during their working years.
Capital loss: The loss that results when a capital asset is sold for less than its purchase price.
Capital stock: All ownership shares of a company, both common and preferred.
Capitalized Value: The value of an asset or business determined by capitalization of the earnings or profits it generates.
Cash equivalent: Assets that can be quickly converted to cash. These include receivables, Treasury bills, short-term commercial paper and short-term municipal and corporate bonds and notes.
Cash Surrender Value: The amount available when a life insurance policyowner voluntarily surrenders a policy before maturity or the death of the person insured. The surrender value is only recoverable with certain types of life insurance.
Certificate: A document providing evidence of ownership of a security such as a stock or bond.
Chattel: An asset that is moveable (eg: furniture) and not attached to land (eg: a house) or real property.
Cheque: A negotiable bank instrument, payable on demand, that instructs a bank to pay the indicated amount to the party named on the cheque from funds held on deposit.
Clause: Provision of an insurance contract. A policy is made up of contractual clauses (i.e., the items on which the parties have agreed).
CLHIA: The Canadian Life and Health Insurance Association Inc. (CLHIA) is an organization that represents the majority of life and health insurance companies active in the Canadian market. The CLHIA handles the important and urgent issues that concern its member companies and represents the industry at the various levels of the government. The CLHIA provides consumers with brochures, guide books, manuals, and information leaflets covering a vast array of subjects, including individual, disability, and travel insurance, financial planning for retirement, etc.
Closed-end fund: A fund company that issues a fixed number of shares. Its shares are not redeemable, but are bought and sold on stock exchanges or the over-the-counter market.
Collateral: Any asset or property - for example, a term deposit, Canada Savings Bond or automobile - that you have given or committed as security or a guarantee for a loan. The creditor has a lien or mortgage on the collateral and can seize it if payment is in default.
Collection Agency: A company that collects debts for other people or companies called creditors.
Common stock: A security representing ownership of a corporation's assets. Voting rights are normally accorded to holders of common stock.
Compounding: The process by which income is earned on income that has previously been earned. The end value of the investment includes both the original amount invested and the reinvested income.
Consolidation Loan: A loan obtained in order to combine multiple debts into one, typically at a lower rate of interest..
Conversion: Clause in a temporary individual life insurance policy authorizing the policyowner to convert term insurance into whole life insurance without providing proof of insurability. Also, in group insurance, a clause allowing a member whose policy is ending for a predetermined reason to convert a group insurance contract into an individual insurance contract without providing proof of insurability.
Credit Bureau (or Credit Reporting Agency): Commonly known as credit bureaus, credit reporting agencies are companies that receive, maintain, and provide information about consumers' credit history. Three national agencies - Equifax, Experian, and TransUnion - dominate the credit reporting industry. They issue credit reports to credit bureau members - upon request and for a fee - that list how individuals manage their debts and make payments, how much unused credit they have available and whether they have applied for any credit.
Debt: An obligation to repay a sum of principal, plus interest. In corporate terms, debt often refers to bonds or similar securities.
Deferral: A form of tax sheltering that results from an investment that offers deductions during the investor's high-income years, and/or postpones capital gains or other income until after retirement or during another period when the income level is expected to change.
Deferred Profit Sharing Plan: A plan that allows an employer to set aside a portion of company profits from the benefit of employees. A corporation makes a contribution to the plan on behalf of an employee.
Defined benefit pension plan: A registered pension plan that guarantees a specific income at retirement, based on earnings and the number of years worked.
Defined contribution pension plan: a registered pension plan that does not promise an employee a specified benefit upon retirement. Benefits depend on the performance of investments made with contributions to the plan.
Deferred Annuity: Annuity payments that will begin at some future date determined pursuant to a group plan or an individual contract.
Deferred Profit-Sharing Plan (DPSP): A profit-sharing plan whereby an employer makes contributions based on the organization's annual profits to a trust for the benefit of employees.
Defined Benefit Pension Plan (DBP): A pension plan that guarantees members a certain level of pension income, often calculated using a formula established by the plan based on the member's income and years of service.
Defined Contribution Pension Plan (DCP): A pension plan that does not guarantee a specific level of retirement income to members. Benefits are based on the amount of contributions to the member's account plus the income from investments made with these contributions.
Delayed Retirement: Retirement after the normal retirement age.
Demand Loan: A loan where the balance must be repaid immediately upon the lender's request at any time. If you are a low-risk customer, that is, if you will have little trouble repaying the loan or if you have assets ('security') to cover the loan, you may get a demand loan. The interest rate with demand loans is usually variable. You repay over time as with installment loans. Loan payments can vary from month to month but you will have to make a minimum payment.
Deposit: Means the gross premium, that is, the sum of money, paid to the Company for the purpose of attributing Units to a Contract; or, any periodic or other amount paid or payable to a Contract, less proportional reductions for Units withdrawn
Disability: Generally, a condition resulting from an illness or accident that temporarily or permanently prevents an individual from performing occupational duties. Disability can be covered by an insurance policy that guarantees benefits to the insured person under the terms and for the period of time stipulated in the contract. Note that the definition of disability varies from one contract to another. See the definition in your contract.
Disability Insurance: A type of insurance that allows for payments of a benefit to the insured party if the individual is unable to work due to illness or injury. Also called: disability coverage - income, salary insurance, weekly indemnity, short or long term salary insurance, and short or long term disability, depending on the type of insurance.
Dismemberment: Total or partial loss of a limb or external organ.
Distribution Fees: Amount paid to an investment firm adviser or manager to administer and/or oversee an investment portfolio.
Distributions: Payments to investors by a mutual fund from income or from profit realized from sales of securities.
Diversification: The investment in a number of different securities. This reduces the risks inherent in investing. Diversification may be among types of securities, companies, industries or geographic locations.
Dividend: A per-share payment designated by a company's board of directors to be distributed among shareholders (in proportion to their holdings). For preferred shares, it is generally a fixed amount. For common shares, the dividend varies with the fortunes of the company and the amount of cash on hand. It may be omitted if business is poor or the directors withhold earnings to invest in plant and equipment.
Dividend fund: A mutual fund that invests in common shares of senior Canadian corporations with a history of regular dividend payments at above average rates, as well as preferred shares.
Dividend tax credit: An income tax credit available to investors who earn dividend income through investments in the shares of Canadian Corporations.
Dollar cost averaging: A principle of investing which entails the use of equal amounts for investment at regular intervals in the hope of reducing average share cost by acquiring more shares in periods of lower securities prices and fewer shares in periods of higher securities prices.
Due Date: The date on which a payment is owing (e.g., the premium must be paid on the premium due date).
Earned income: For tax purposes, earned income is generally the money made by an individual from employment. It also includes some taxable benefits. Earned income is used as the basis for calculating RRSP maximum contribution limits.
Equity: The net worth of a company. This represents the ownership interest of the shareholders (common and preferred) of a company. For this reason, shares are often known as equities.
Equity fund: A mutual fund whose portfolio consists primarily of common stocks.
Fixed assets: Assets of a long-term nature, such as land and buildings.
Fixed dollar withdrawal plan: A plan that provides the mutual fund investor with fixed-dollar payments at specified intervals, usually monthly or quarterly.
Fixed income investments: Investments that generate a fixed amount of income that does not vary over the life of the investment.
Fixed-period withdrawal plan: A plan through which the mutual fund investor's holdings are fully depleted through regular withdrawals over a set period of time. A specific amount of capital, together with accrued income, is systematically exhausted.
Garnishment: A legal process whereby a creditor can seize a portion of the debtor's liquid assets (wages, bank accounts, etc.). This is usually following obtaining a Judgment (ie: successfully suing the Debtor), although Pre-Judgment Garnishees are sometimes executed, particularly if there exists a possibility the funds may only be available for a short while.
General Clauses: Provisions found in insurance contracts of the same type. A few examples of this are clauses regarding incontestability of a contract, suicide, transfer of rights, and currency of payment.
Grace Period: A specified period granted to the policyowner to make payment after the premium is due. This does not apply to the first premium.
Group Insurance Contract: An insurance contract entered into by an organization buying insurance for a designated group of people. (e.g., employees of a company or members of an association).
Group Registered Retirement Savings Plan (GRRSP): An employer-sponsored RRSP under which each participating employee has an account. Both the employer and the employee can contribute to the plan up to a certain maximum. The employer's contributions are considered taxable income for the employee who may, however, obtain an RRSP tax deduction for the amount involved. For the employer, the contributions are tax-deductible as payroll expenditures.
Growth stocks: Shares of companies whose earnings are expected to increase at an above-average rate. Growth stocks are often typified by their low yields and relatively high price/earnings rations. Their prices reflect investors' belief in their future earnings in growth.
Guaranteed Insurability: A contractual provision that gives the policyowner the right to purchase additional stated amounts of insurance at stated times in the future without further evidence of insurability.
Guaranteed Investment Certificates (GIC's): A certificate issued by most financial institutions requiring a small investment be made for a given period of time at a fixed interest rate. This type of certificate is generally not reimbursable before the maturity date.
Guaranteed Minimum Withdrawal Benefit (GMWB): Means the Optional Guarantee described later in this document under "Optional Guarantees - Guaranteed Minimum Withdrawal Benefit (GMWB)" of the Contract and Information Folder and which provides for a series of payments of a GMWB Amount.
Guarantor: Individual who undertakes to a creditor (e.g., a financial institution) to meet the obligation or discharge the liability of the debtor (borrower) if the latter fails to do so.
Health Insurance: A type of insurance that assumes a portion or all of the costs paid by the insured party for medical care.
Heirs at Law: Individuals who have a right, in law only, to the estate of a relative who dies without a will. Where there is a will, the heirs are said to be legatees or heirs under a will.
Illustration: A document presented to the customer showing the amounts or graphic projections of premiums and the related future value or features of an individual life insurance contract. The purpose of this document is to inform the customer about the terms and features of the policy. An illustration is not a contractual undertaking by the insurer; it is simply a projection based on the various financial terms of the contract.
Immediate Annuity: An annuity that begins its payment stream after a single premium is paid. In a defined benefit pension plan, the immediate annuity is the amount payable by the plan to a retiree.
Income funds: Mutual funds that invest primarily in fixed-income securities such as bonds, mortgages and preferred shares. Their primary objective is to produce income for investors, while preserving capital.
Incontestable Clause: Provision whereby the insurer, after a fixed period of time and subject to certain conditions, renounces the right to contest the validity of an insurance contract due to an irregularity in the declaration of risk.
Indemnity: Amount payable by the insurer to the insured person following a loss; compensation paid by benefit insurance policies: hospitalization, medical expenses, surgical expenses, wage replacement, etc.
Index Fund: A fund whose investment objectives require it to a) hold securities included within an index or indexes and weighted to accurately reflect the index or indexes in question, or b) make investments that exactly reflect the performance of the index or indexes.
Indexation: The adjustment of a financial obligation according to an objective benchmark index such as the price index.
Index fund: A mutual fund that matches its portfolio to that of a specific financial market index, with the objective of duplicating the general performance of the market in which it invests.
Individual Insurance Contract: An insurance contract established to insure the life or health of one or several designated persons.
Inflation: A rise in the average price of goods and services in an economy. In Canada, the consumer price index (CPI) compiled by Statistics Canada is generally used to measure inflation.
Inforce business: Portfolio of inforce, i.e. all the insurance policies taken out by clients of the company that have not expired or been cancelled.
Insurability: Determination by the insurance company as to the eligibility of an individual to be insured. Insurability is based on a report made to the insurer, which enables the insurer to evaluate the risk associated with insuring the proposed insured. This report mainly covers the proposed insured's age, gender, health, possible hereditary illnesses, and lifestyle.
Insurance Contract: A contract whereby the insurer agrees to pay a benefit to the policyholder, the insured party, or to the beneficiary in the event of the realization of a determined risk, in return for payment of a specific sum, called a premium. The contract may comprise the insurance policy, the application, proof of insurability as well as all riders and appendices amending or updating the contract.
Insured Person: Individual whose life or health is insured under an insurance contract.
Insurer: Refers to the insurance company that bears the risk associated with an insurance policy.
Interest: Payments made by a borrower to a lender for the use of the lender's money. A corporation pays interest on bonds to its bondholders.
International fund: A mutual fund that invests in securities of a number of countries.
Investment adviser: Investment counsel to a mutual fund. Also may be the manager of a mutual fund.
Integrated Life Annuity: A life annuity that takes into account the income the annuitant will be receiving from the public pension plan as of age 65. Under such a contract, the benefits normally payable are reduced at age 65 when the annuitant starts receiving public plan benefits. The contract may provide for payments to a survivor and may or may not include a guarantee in case of death.
Irrevocable Beneficiary: Individual designated as beneficiary of an insurance contract who can not be removed from the contract without his/her consent.
Joint and Survivor Annuity: An annuity payable during the life of the annuitant and continued in whole or part after the death of the annuitant to a specified survivor.
Joint Insurance: Life insurance that covers more than one insured.
Joint Life and Survivorship Annuity: An annuity that continues to be payable in whole or in part to a specified survivor for life after the death of the annuitant. The amount may be reduced by a certain percentage upon the death of the annuitant or at the end of a guaranteed period. Note: The percentage of the benefit reduction is subject to prevailing legislation on pension plan benefits payable to surviving spouses.
Lapse: Termination of a life insurance policy for nonpayment of premiums. The policy is then said to have lapsed.
Last-to-Die Insurance: Similar to first-to-die insurance, this is a policy taken out by two or more persons where the benefit is paid upon the death of the last surviving insured person.
Level Premium: A premium that remains fixed for the duration of the contract. Also known as a fixed premium.
Leverage: The financial advantage of an investment that controls property of greater value than the cash invested. Leverage is usually achieved through the use of borrowed money.
Liabilities: All debts or amounts owing by a company in the form of accounts payable, loans, mortgages and long-term debts.
Long-term debt: Debt that becomes due after more than one year.
Life Annuity: An annuity payable until the death of the annuitant.
Life Insurance: A type of insurance that pays a benefit upon the death of the insured party. Also known as death coverage.
Limited Premium: A premium that is only payable for a specified period of time.
Liquid Assets: Amounts that are immediately available. Also known as Cash Assets, Cash and Cash Equivalents.
Liquidity: Refers to the ease with which an investment may be converted to cash at a reasonable price.
Living Wills: A document outlining the life-prolonging measures an individual wants and does not want taken on his/her behalf in the event of a terminal illness. Living wills are often used in conjunction with a healthcare power of attorney, which appoints someone to make healthcare decisions on the individual's behalf.
Locking-In: The freezing of pension plan benefits for retirement purposes.
Loss: An event whose occurrence gives rise to the insurer's liability. Death, disability, illness, etc. can all constitute losses in insurance terms.
Management expense ratio: A measure of the total costs of operating a fund as a percentage of average total assets.
Management fee: The sum paid to the investment company's adviser or manager for supervising its portfolio and administering its operations. These fees are generally based on a fixed percentage of the fund's net asset value..
Marginal tax rate: The rate of tax on the last dollar of taxable income.
Market index: A vehicle used to denote trends in securities markets. The most popular in Canada is the Toronto Stock Exchange 300 Composite Index (TSE 300).
Market price: In the case of a security, market price is usually considered the last reported price at which the stock or bond is sold.
Market Value: Means the value of the Contract that is determined to be the sum of the market value of Units attributed to your Contract as of the Cut-Off Time on a Market - Day.
Maturity: The date at which a loan or bond or debenture comes due and must be redeemed or paid off.
Maturity Date: The date on which a contract ends.
Medical History: List of any illnesses or medical conditions suffered by the applicant or other family members.
Member: 1) Someone participating in a group insurance plan through an employer, association, or other group. 2) A unionized or non-unionized employee who is a member of a private pension plan set up by the employer or union. Also called: participant
Membership: Enrollment in a retirement savings plan or group insurance plan.
Misrepresentation: Misstatement, falsehood, or omission likely to influence the approval or rejection by the insurer of the risk the person to be insured represents. Also known as False Statement, Misstatement, False Declaration, Concealment
Money market: A sector of the capital market where short term obligations such as Treasury bills, commercial paper and bankers' acceptances are bought and sold.
Money market fund: A type of mutual fund that invests primarily in treasury bills and other low-risk, short-term investments.
Morbidity Rate: The total number of people affected by a given disease relative to the total population.
Mortality Rate: The total number of deaths relative to the total population in a specific place and period of time. Also known as Death Rate
Mortgages: The pledge of real property to a creditor as security to guarantee the payment of a debt or the performance of an obligation.
Mortgage fund: A mutual fund that invests in mortgages. Portfolios of mortgage funds usually consist of first mortgages on Canadian residential property, although some funds also invest in commercial mortgages.
Mortgage Insurance: Insurance that liquidates the insured party's mortgage in case of death of the insured party. "Disability insurance" may be added as an option to ensure that the insurer reimburses the insured party for the insured portion of periodic installments for the duration of the insured party's disability period.
Mortgage-backed securities: Certificates that represent ownership in a pool of mortgages. The holders of these securities receive regular payments of principal and interest.
Mutual fund: An investment entity that pools shareholder or unit holder funds and invests in various securities. The units or shares are redeemable by the fund on demand by the investor. The value of the underlying assets of the fund influences the current price of units.
Mutual Fund Company: A company that pools funds collected from investors to invest in securities.
Net asset value: The value of all the holdings of a mutual fund, less the fund's liabilities.
No-load fund: A mutual fund that does not charge a fee for buying or selling its shares.
Nonforfeiture Values: The values acquired by a policy for specific purposes.
Nonparticipating Policy: Policy under which the policyholder does not receive a share of the company's profits i.e. does not participate in the company's profits.
Normal Retirement Age: Prescribed age of retirement under the rules of a retirement savings plan.
Owner: Means a person whose name appears as "Applicant" or "Co-Applicant" in the "Owner" section of a Cotract Application
Paid-up Policy: A policy on which premiums are no longer payable, but for which the full amount of benefits will be paid upon maturity.
Participant: An employee or a unionized employee who belongs to a private pension plan set up by his or her employer or union.
Participating Fund: The equity of policyholders who hold a participating insurance policy.
Participating Policy: A policy under which the policyholder is eligible to receive a share of the company's profits.
Participating Policyholders' Equity: The equity of owners of participating insurance policies that is kept in the insurance company's dividend fund.
Particulars: Conditions mainly dealing with the specifics of the coverage provided by the insurance and the premium that goes with it as well as the effective date and maturity date of a policy. The particulars serve to personalize a contract.
Pension plan: A plan under which members are paid retirement benefits under certain terms starting at a given age. Such plans are usually financed with contributions paid either by the employer alone or by both the employer and the member.
Pension adjustment: An amount that reduces the allowable contribution limit to an RRSP based on the benefits earned from the employee's pension plan or deferred profit sharing plan.
Pension plan: A formal arrangement through which the employer, and in most cases the employee, contribute to a fund to provide the employee with a lifetime income after retirement.
Permanent life insurance: Life insurance coverage for which the policyholder pays an annual premium, generally for the life of the insured. This type of policy features a savings component, known as the cash surrender value.
Plan Sponsor: A company, organization, or other body that takes out a pension plan with an insurer. In many cases, plan sponsors are employers, associations, or unions.
Policy: A written document constituting the evidence of an insurance contract and outlining the terms and conditions thereof.
Policy Dividend Clause: A clause giving holders of participating insurance policy contracts the right to a share of the insurance company's surplus earnings. Policy dividend payments can take various forms, including a reduction in premiums payable, cash payment, an increase in coverage, a paid-up insurance policy, or an interest-bearing deposit in the policyowners's account.
Policyholder Dividend: The portion of an insurance company's surplus from its participating business that is paid to its participating policyholders.
Policyowner: An individual or corporate body that takes out an insurance policy. Also known as the policyholder in individual insurance. In group insurance, the policyowner is the organization that takes out a pension plan or insurance policy, in many cases an employer, association, or labor union.
Portability: The possibility of transferring a member's credits or value thereof from one pension plan to another or to a retirement savings instrument.
Portfolio: All the securities which an investment company or an individual investor owns.
Power of Attorney: A legal document in which the signer authorizes someone to conduct certain specific business in his or her name -signing title documents and cheques, for example Wills: In law, a will or testament is a documentary instrument by which a person (the testator) regulates the rights of others over the testator's property or family after their death.
Preferred share: An ownership security, senior to the common stock of a corporation, with preferred claim on assets in case of liquidation and a specified annual dividend.
Premium: The payment that the policyowner is required to make to maintain the insurance contract in force. This payment represents the cost of the insurance policy and may sometimes include a savings portion. The amount of the premium is directly proportional to the risk the insurer is underwriting.
Premium by Installments: Insurance premiums paid in two, four, or twelve payments depending on the frequency chosen. Premiums can be paid weekly, monthly, or quarterly.
Proof: The provision of evidence in support of a contention.
Proof of Claim: Evidence of the loss suffered. More specific terms like proof of death, proof of disability, etc. may be used depending on the situation.
Prospectus: A legal document describing the securities being issued to the public. It is drawn up in accordance with the rules of the competent securities commission.
Real estate fund: A mutual fund that invests primarily in residential and/or commercial real estate to produce income and capital gains for its unit holders.
Real estate investment trust: A closed-end investment company that specializes in real estate or mortgage investments.
Registered Education Savings Plan (RESP): A plan registered under the Income Tax Act allowing the participant to accumulate tax-sheltered amounts that are held in trust to be used to cover eligible postsecondary education costs for a beneficiary.
Registered Pension Plan (RPP): A pension plan registered by the Registered Plans Directorate of the Canada Customs and Revenue Agency. An employer can offer this plan in the form of a defined contribution plan or defined benefit plan.
Registered Retirement Income Fund (RRIF): A tax-deferral mechanism available to holders of a Registered Retirement Savings Plan (RRSP). Holders invest the amount withdrawn from their RSSP in this fund, from which they withdraw a certain fraction annually. The amount taken out becomes taxable.
Registered Retirement Savings Plan (RRSP): A retirement savings plan to hold amounts deducted from taxable income, within certain limits, in a tax deferred state. There are various investment options and a tax deferral on investment income and gains. Available to individuals to and including 71 years of age, but must be collapsed by the end of the year in which the holder turns 71 years of age.
Registered Segregated Funds: Registered investment offering a principal guarantee at maturity or at death and a return based on the various types of investments made by the Fund Manager.
Reinstatement: The restoration of a lapsed policy (due to nonpayment of premiums) to full force and effect.
Reinsurance: A transaction whereby one insurer transfers a part of the risk it has underwritten to another insurer (the reinsurer).
Renewal: An agreement by which an obligation is extinguished and replaced by a new one.
Retirement fund: A fund consisting of contributions made to a pension/retirement plan and investment income realized by these contributions, which together cover the benefits provided for by the pension plan.
Revocable Beneficiary: Individual designated as beneficiary of an insurance contract who can be removed without his/her consent.
Rider: Document appended to an insurance policy indicating an amendment to the contract. Also known as Policy Rider, Endorsement, Policy Endorsement.
Risk: Uncertainty as to the potential occurrence of an event or the date of its occurrence. In insurance, death is considered a certainty; it is the date of its occurrence that is uncertain
Sales Charge: A portion of the sale price of the shares of most mutual or segregated funds that is used to cover costs incurred to sell or buy securities as well as other related distribution expenses. Sales charges are also known as "loads."
Savings Fund: Fund into which the insurer deposits all premiums paid by the policyowner after the fees used to cover the applicable taxes on premiums have been deducted. This fund is part of a universal life insurance plan.
Segregated Funds: A category of funds administered by an insurance company on the basis of individual, variable-capital contracts offering certain guarantees to the investor such as reimbursement of capital upon death. Segregated funds pursue a variety of investment objectives and invest in various types of securities.
Settlement Options: One of several ways in which the policyowner or beneficiary may choose to have benefits paid by the insurer.
Shares: A document signifying part ownership in a company. The terms "share" and "stock" are often used interchangeably.
Simplified Prospectus: An abbreviated prospectus distributed by mutual fund companies to current and prospective buyers of units or shares.
Specialty Fund: A mutual fund that concentrates its investments on a specific industrial or economic sector or a defined geographical area.
Subrogation: Substitution of one person in the place of another, such as when a person pays a creditor in place of the debtor, thereby succeeding to the rights of the original creditor vis-à-vis the debtor.
Sum Insured: Sum payable at the maturity date of a life insurance contract or upon death of the insured party. This sum represents the capital of the contract or the amount of the benefit.
Surcharge: An additional premium charged when the insured person presents a higher than normal risk.
Surrender: A transaction whereby the insurer buys back the policy in exchange for its cash surrender value. The surrender may be total or partial depending on the contract.
Systematic Withdrawal Plan: Plans offered by mutual fund companies that allow unit holders to receive payment from their investment at regular intervals.
Tax Credit: An income tax credit that directly reduces the amount of income tax paid by offsetting other income tax liabilities.
Tax Deduction: A reduction of total income before the amount of income tax payable is calculated.
Tax Planning: The development of a plan aimed at minimizing the amount of tax payable or at least deferring payment as much as possible while complying with all the tax legislation in effect.
Term Insurance: Temporary life insurance that covers the policyholder for a specific time.
Term to 90 Annuity: An annuity that pays a fixed amount each year until it is exhausted in the year that the annuitant turns 90.
Trade: A securities transaction.
Treasury Bill (T-bill): Short-term government debt. Treasury bills bear no interest, but are sold at a discount. The difference between the discount price and par value is the return to be received by the investor.
Universal Life Insurance: Type of life insurance that offers a savings component in addition to an insurance component. Savings are made through the investment of surplus premiums and yields a return to the policyowner.
Variable Life Annuity: An annuity providing a fluctuating level of payments, depending on the performance of its underlying investments.
Variable Annuity: A life annuity contract under which the periodic payments vary according to the return on fund investments.
Variable Premium: A premium which is not fixed and which may vary over the duration of the insurance contract.
Vesting: A member's right to receive pension benefits (of cash or as a deferred pension) once the conditions for the pension plan are met.
Waiting Period: 1) A period of time, generally beginning either at the time the insurance policy takes effect or on the date of a loss, during which the benefits for certain risks covered are not payable. 2) In health or disability insurance, the waiting period is the period of time that must elapse after the onset of illness or disability or the occurrence of an accident before the insurance company is required to pay benefits to the insured person. 3) In group insurance contracts, a specified period of time that must elapse before new members can exercise a right, avail themselves of a privilege, or be eligible for benefits. Also known as Elimination Period
Waiver of Premium: A provision that under certain conditions (e.g., disability,loss of employment, death etc.) the policyowner will be exempted from paying premiums for certain coverage.
Whole Life Insurance: Life insurance that provides coverage for the entire life of the insured party at a uniform rate, which does not rise with the insured party's age.
Whole Life Premium: Premium payable for as long as the insured person lives.
Wrap Account: An account offered by investment dealers whereby investors are charged an annual management fee based on the value of invested assets.
Year Guaranteed Life Annuity (5,10 or 15): A life annuity contract under which payments to the annuitant, or to the beneficiary if the annuitant is dead, are garanteed for 5, 10 or 15 years.
Yield: Annual rate of return received on investments, usually expressed as a percentage of the market price of the security.