Actuary:

An actuary is a business professional with strong mathematical skills. Actuaries are generally involved in pricing insurance products and defined benefit pension plans.

Actuarial Present Value:

The actuarial present value is the value placed on future contingent payments and is the methodology forming the core of actuarial science.

Essentially, future payments are discounted with interest and the probability the payments will occur. Assumptions must be made by the actuary as to probabilities and discount factors.

Annuitant:

An individual who purchases an annuity and will receive payments from that annuity.

Annuity:

A series of regular periodic payments comprising principal and interest. An annuity is a contract providing for a series of payments. In the case of retirement, an annuity is usually purchased from an insurance company who then pays the purchaser a monthly amount while still alive. Annuities may have more complicated features such as indexing, guarantee periods and benefits payable to a spouse or other beneficiary after death.

When an individual purchases an annuity, they usually pay a lump sum from their RRSP, or other source of funds, to an insurer. The insurer then takes this (premium) and divides by an annuity factor based on mortality, current interest rates and payment features.

Annuitize: The accumulated value of the annuity is converted into a guaranteed stream of income.

Beneficiary:

One who is to receive the benefits of any type of contract.

Bequest:

A disposition of personal property by will.

Binding Agreement (Insurance):

A form of buy-sell agreement. a binding agreement is the most effective means of guaranteeing a fair price from the point of view of the deceased family or the disabled shareholder. The compulsory purchase of the deceased or selling shareholder's interest by the remaining shareholders protects the surviving or remaining shareholders in that no other parties can become involved in the business without their consent.

Buy-Sell Agreement:

An agreement between shareholders or business partners to purchase each others' shares in specified circumstances.

Cash-Value Life Insurance:

Combines basic life insurance protection with tax-deferred investing. The larger portion of your annual premium pays for insurance, while a smaller amount goes into the policy's investment or cash-value account. Your investment earnings accumulate free of taxes until you withdraw them, it may takes over 10 years or more for the tax-deferral benefits to overcome the drag of the commissions charged by insurers.

Convertible Term Insurance:

Common Disaster (Insurance):

An event, or series of events, causing the death of both spouses within a specified amount of time.

Comprehensive General Liability Insurance:

A broad liability insurance policy designed to protect you from a wide range of liabilities risks, including product and professional liability.

Concealment:

Failure of the insured to disclose to the company a fact material to the acceptance of the risk at the time application is made.

Critical Illness Insurance:

A form of health insurance that provides payments to replace income when an insured person is unable to work as a result of a critical illness.

Disability Insurance:

Insurance that is designed to replace earned income in the event that accident or illness prevents you from pursuing your livelihood.

Disability Income Rider: A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury.

Domicile:

The "official" residence of an individual.

For insurance contracts, the province of domicile determines under which provincial laws the deceased estate will be probated.

Everyone has a "domicile of origin" until they adopt a "domicile of choice".

Estate:

All assets owned by an individual at the time of death. The estate includes all funds, personal effects, interest in business enterprises, titles to property, real estate and chattels, and evidence of ownership, such as stocks bonds and mortgages owned, and notes receivable.

Estate Planning:

The orderly arrangement of one's financial affairs to maximize the value transferred at death to the people and institutions favored by the deceased, with minimum loss of value because of taxes and forced liquidation of assets.

Executor:

The person named in a will to manage the estate of the deceased according to the terms of the will.

Family Trust:

An inter vivos trust established with family members as beneficiaries:

Fiduciary:

An individual or institution occupying a position of trust. An executor, administrator or trustee. Hence, "fiduciary" duties.

Fixed Term - Annuities:

Fixed Term Life Annuity: An annuity under which payments are guaranteed for the life of the annuitant.

A series of regular periodic payments comprising principal and interest. An annuity is a contract providing for a series of payments. In the case of retirement, an annuity is usually purchased from an insurance company who then pays the purchaser a monthly amount while still alive. Annuities may have more complicated features such as indexing, guarantee periods and benefits payable to a spouse or other beneficiary after death.

Grantor:

The person establishing and transferring assets to a trust or individual, also known as the settlor.

The original owner of a property.

Grace period:

A period of time after the due date of a premium during which the policy remains in force without penalty

Guaranteed Interest Annuities (GIA):

A type of debt security contract sold to individuals by life insurance companies. Much like the GIC, it carries deposit insurance. Comcorp is the name of the industry insurance scheme. GIAs are offered in both redeemable and non-redeemable formats, and pay interest at a fixed rate.

Guaranteed Term:

The length of time for which annuity payments are guaranteed. If the annuitant dies before the specified term, payments to the beneficiary will continue until the term ends.

Guardianship Provisions:

Are used to designate who will physically care for a child should the parents die, and typically found in a will. Legal advice is recommended and the successor designates should be unable and willing to become the guardian.

Income Averaging Annuity:

A special type of annuity to spread the impact of income tax on certain types of taxable lump sum receipts.

Indexed Plan:

A benefit plan whose level of benefits is related to a recognized index.

Insurance (Life):

Life insurance is one way to provide financial security for you, your dependents or business partners.

Term Insurance: This is a life insurance pure and simple. You choose the number of years (the term) you are insured and the amount your survivors get if you die within that term. The term you choose can be for a given number of years, for example 10 or 20, or up to a certain age, for example 65 or 100. The main features of term-to-100 policy are: 1. Fixed premiums, 2. Fixed death benefits, 3. No cash value.

Increasing Term Insurance: Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.

Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

Convertible Term: Contract that may be converted to a permanent form of insurance without medical examination.

Annually Renewable Term: A form of renewable term insurance that provides coverage for one year and allows the policy owner to renew their coverage each year, without evidence of insurability. Also called Yearly Renewable Term (YRT).

Permanent Life Insurance:The most common types are whole and universal . Both offer lifetime protection. Renewal is not necessary as long as you pay the premiums. Some of the main features of eac

Whole Life: 1. Fixed premiums, 2. Fixed death benefits, 3. Fixed cash value

Universal Life:- 1. Flexible premiums, 2. Flexible death benefits, 3. Cash value (depends on how the premiums have been invested) 4. Policyholder directs where the premium funds are invested.

Insurer:

A group or agency that shares another party's risk in return for the payment of a premium.

Inter Vivos:

From the Latin for "between living persons," usually refers to a trust established during the lifetime of the person setting up the trust (the "settlor"), as opposed to a "testamentary" trust in a will which takes effect only at death.

Inter Vivos Trust:

A trust created while the person making the trust is still alive.

Intestacy Laws:

The provincial laws governing distribution of the assets of a person who dies without a will.

Intestate:

Not having made and left a valid will. The term is also used to refer to a person who dies without leaving a valid will.

Joint and Last Survivor:

1) A type of annuity that pays benefits until both annuitant and the annuitant's spouse die.

2) The Banking industry will register a Guaranteed Investment Certificate with the same type of effect, the certificate is with the words "JTWRS" (Joint Tenants With Rights to Survivor) allows the full ownership the be transferred to the other registered person named on the note.

Letters of Administration:

A certificate confirming the authority set out in the will to administer a particular estate, issued to an administrator by the proper court.

Letters Probate:

A certificate of authority to administer a particular estate, issued to an executor by a proper court.

Life Annuity:

An annuity under which payments are guaranteed for the life of the annuitant.

Life Annuity (With a Guaranteed Term):

An annuity with a special clause that guarantees payments will continue for a specified period, even if the annuitant dies before the end of the term.

Life Estate (Insurance):

Title to a property only for the duration of the life of some specified party. A life tenant is the holder of a life estate.

Life Expectancy:

Life expectancy represents the average future time an individual can expect to live. To perform this calculation assumptions are made as to the mortality table the life will follow. Life expectancies have been increasing steadily over the past century and may continue to increase in the future. As people are living longer the cost of retirement is increasing.

Life Expectancy Adjusted Withdrawal Plan:

A plan though which a mutual fund investor's holdings are fully depleted while providing maximum periodic income over the investor's lifetime.

Life Insurance:

Life insurance is a policy agreement (contract) between you and an insurance company. You agree to pay a specified amount (premium) to the company for the policy coverage, and in return, the company agrees to pay you or your beneficiaries based on the terms of the policy. Most life insurance is designed to provide funds to your heirs in the event of your death.

Lifestyle Expenditures:

The cost you incur to sustain your lifestyle, including the money you spend on housing, food, clothing, household expenses, transportation, insurance, entertainment and gifts. Also included are the interest charges associated with financing a major capital purchase such as a house or a car. Lifestyle expenditures do not include income tax expense or any capital transactions.

Living Will:

If you become incapacitated this document will preserves your wishes and act as your voice in medical decisions, if you are unable to speak for yourself as a result of medical reasons.

Medical Power of Attorney:

This special power of attorney document allows you to designate another person to make medical decisions on your behalf, also review the Substitution Decisions Act in the Money Management Newsletter Library.

No Fault Insurance:

Government-mandated insurance designed to provide automatic compensation for automobile accident victims, regardless of who is to blame.

Ordinary Annuity:

A series of equal payments over a fixed number of years where the payments are made at the end of each period.

Permanent Life Insurance:

The most common types are whole and universal . Both offer lifetime protection. Renewal is not necessary as long as you pay the premiums.

Per Capita (Life Insurance):

The death proceeds of a contract or policy are divided equally among the living beneficiaries. For example if three beneficiaries are named but one is no longer living, the remaining to will each receive 1/2 of the proceeds. For contrast see per stirpes.

Per Stirpes (Life Insurance):

The death proceeds of a contract or policy are divided equally among the named beneficiaries. The share of any deceased named beneficiary is distributed to his/her living dependents. For contrast see per capita.

Power of Attorney:

Gives signing authority for your affairs to a spouse or other trusted person in case of accidental or other circumstances that leave your own unable to manage your own affairs.

Pre-Authorized Chequing Arrangement (PAC):

An arrangement you can make with your bank to remove a predetermined amount from your account at regular intervals and place it elsewhere. This method is a convenient means of savings.

Premium:

The amount of money that is required to be paid to the insurance company for insurance coverage.

Preferred Risk:

A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age. (See standard risk.)

Private Health Insurance:

Insurance plans provided by private insurance companies, in contrast to health insurance provided by government or public agencies such as Blue Cross.

Probate:

The process used to make an orderly distribution and transfer of property from the deceased to a group of beneficiaries. The probate process is characterized by court supervision of property transfer, filling of claims against the estate by creditors and publication of a last will and testament.

Public Liability Insurance:

Insurance designed to indemnify you of losses that arise out of negligence in your work, volunteer activists.

Public Trustee:

The official appointed by the provincial government to supervise the administration of assets owing to a charity, or mental incompetent in an institution or a public trust.

Registered Annuity:

An annuity purchased from registered funds.

Renewable Term:

A term life insurance policy that may be renewed at prescribed rates without evidence of insurability.

Right of Survivorship:

The right to succeed to the ownership or part ownership of property as the result of the death of an owner or part owner.

Salary Continuation Plan:

An arrangement whereby an income, usually related to an employee's salary, is continued upon his or her death; often paid to the employee's beneficiary.

Term Insurance:

Life insurance which pays if death occurs within a stated period of time. There is not usually a cash value under a term insurance policy.

This is a life insurance pure and simple. You choose the number of years (the term) you are insured and the amount your survivors get if you die within that term. The term you choose can be for a given number of years, for example 10 or 20, or up to a certain age, for example 65 or 100. The main features of term-to-100 policy are: 1. Fixed premiums, 2. Fixed death benefits, 3. No cash value.

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.

Testamentary Trust:

A trust created under the terms of a will and takes effect on the death of the testator.

Testator:

The person who is making a will in their own name.

Underwriter (Life):

The Insurance company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, a company employee who job is to decide whether the company should assume a particular risk.

Undivided Interest:

When two or more people hold title to property are tenants in common, this refers to their equal entitlement to use the entire property.

Universal Life Insurance:

Universal life insurance (like whole life insurance) provides coverage for your entire life and builds up savings over time. Unlike whole life, you can use the interest from your accumulated savings to help pay your premiums, which are flexible. The people you name as beneficiaries collect a death benefit if you die while covered.

Variable Life Annuity:

An annuity providing a fluctuating level of payments, depending on the performance of its underling investments.

Variable Life Insurance:

This type of insurance provides coverage for your entire life and builds up savings over time, much like "whole life insurance". People you name as beneficiaries collect a death benefit if you die while covered. Unlike "whole life" and "universal life insurance", you can invest your savings in one of several mutual funds, which often are managed by the insurance company.

Vested:

You are vested if you are entitled to receive benefits (normally a pension plan or a deferred profit sharing plan) from a current or former employer.

Some companies may grant full benefits, others gradually increase the benefits ("percentage of vesting") after you work for them a predefined number of years.

Vesting:

The process by which an employee obtains full credit for the employer contributions into a benefit plan (normally a pension plan or a deferred profit sharing plan).

Viatical Settlement:

The proceeds received from the sale of a life insurance policy, on the life of a terminally ill individual, to a third party.

Settlement companies purchase these policies at a discount of the face vale and the insured receives a lump sum payment.

The company becomes the owner and beneficiary of the policy, pay all future premiums and collects the proceeds when the insured dies.

Whole Life:

Life insurance which pays whenever death occurs. Whole life insurance has cash values. (Also called straight life or ordinary life.)

Will Executing:

The process of making your will valid. Usually involves formalities in regard to signing by the testator and witnessing of that signature.

Will:

A legally enforceable declaration of a person's wishes relating to matters to be dealt with after his death and inoperative until his death. A will is revocable or can be amended by a codicil up to the time of death, and is applicable to the situation which exists at the time of death.

This Glossary of financial terms was created by Fiscal Agents Financial Information Services, Research Department. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, electronic, photocopying, recording, or otherwise, without the prior written permission of Fiscal Agents. Copyright Fiscal Agents © 2000. All Worldwide Rights Reserved. See Notes and Credits or see permissions page.