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In order to help you gain a better understanding of insurance and investments terms, we have compiled this comprehensive Glossary. The definitions in the Glossary are provided for general information purposes only. In the case of any inconsistency between the definitions of our Glossary and wording in your policy, the wording in the policy will always supersede the definitions of the Glossary. We hope you find the Glossary helpful and welcome your feedback or questions. To find a definition, click on the first letter of the word. A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
ABANDONMENT- Relinquishing ownership of a property that has been damaged or lost and "abandoned" to the insurance company for the purpose of claiming a total loss. ABNORMAL RETURN - Investment return above that predicted by general market movements. ABSOLUTE LIABILITY - Liability for damages even in the case when fault or negligence can not be verified. ACCIDENT - An unexpected and undesirable event, especially one resulting in damage or harm, which happens by chance and is not expected in the normal circumstances. ACTION - A civil proceeding alleging bodily injury, property damage, personal injury or advertising injury. ACTIVE PORTFOLIO MANAGEMENT - Attempt by a money manager to earn a return above the risk-free rate or an index through identifying sectors or securities in the market that are over or under priced. ACTUAL CASH VALUE - The current cost of replacing an article with a similar one of the same condition and quality. Actual cash value takes depreciation into consideration. Any article has three values: original cost, actual cash value, and replacement value. For example, if you paid $1000 for your fridge originally (original cost), its actual cash value might be $500, but if it's destroyed in a fire, replacing it may cost you $2000 (replacement value). ACTUARY - A specialist in the mathematics employed by an insurance company who calculates premiums, reserves, dividends, pension and annuity rates, and life expectancy using risk factors obtained from experience tables. ADDITIONAL INSURED OR ADDITIONAL INTEREST INSURED - A person or corporation, other than the named insured or covered person, in the insurance policy who may be liable for an accident involving an insured or an insured vehicle and who is protected by the terms of the policy by being named as an Additional Interest Insured. For example, in an automobile policy this may include anyone driving with the insuredís consent. ADDITIONAL LIVING EXPENSE INSURANCE - Coverage for when an insuredís dwelling has been so damaged by an insured peril that it is not possible to the insured to live in the dwelling until it has been repaired. This coverage will cover the cost of living in a hotel or elsewhere until the insuredís dwelling is repaired. ADDITIONAL PREMIUM - An extra charge for an adjustment during the policy period which increases the risk or liability of the Company. ADJUSTER (INSURANCE ADJUSTER) - A representative of an insurer who investigates insurerís liability for loss and settlement of claims. The insurer may employ its own salaried adjuster or hire an independent adjuster. ADMITTED ASSETS - Assets included in an insurance company's annual statement, as permitted by law. Regulators use this measurement when determining insurance companyís solvency. The admitted assets include mortgages, real estate, stocks, and bonds. ADVERTISING LIABILITY - Injury from slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan. AFTER-TAX - The final cost of an investment to an investor after calculating the effect of income tax. AGENT - Individual who sells and services insurance policies on behalf of the insurance company. AGGREGATE LIMIT - The amount of coverage that the insured has under the contract for the contract period regardless of how many separate accidents might take place. ALARM SYSTEM - Premises protection via a monitoring system guarding against intrusion, sprinkler activation and/or rising water levels. ALL PERILS (AUTOMOBILES) - An optional coverage that can be purchased in addition to the mandatory coverages, that is designed to provide most complete protection for insuredís vehicle for all types of losses and damage except those specifically excluded in the policy. AMORTIZATION - Paying back a debt by spreading the payments over a period of time in order to reduce the value of an asset to zero. AMOUNT OF INSURANCE - The maximum value of payment for which an insurer is liable under a policy. ANNUITY - A continuous payment of a fixed amount of money during a given period of time. Annuities can be fixed, which offer a constant rate of interest, or variable which offer payments based on the performance of its underlying assets. ANTI-THEFT DEVICES - Devices that help reduce the possibility that a vehicle will be vandalized or stolen, or assist in its recovery. Some of the most common anti-theft devices include car alarms, starter disablers, keyless entry, motion detectors, and recovery systems. APPLICANT - A person or corporation requesting insurance. APPLICATION (APP) - A form used by an insurance company to collect facts from a person or corporation requesting insurance based on which the insurance company decides whether to offer, modify or decline the coverage to the applicant. APPRAISE - To evaluate property in order to determine its insurable value or the amount of loss sustained. APPRAISAL - A valuation of property done in order to determine its insurable value or the amount of loss sustained. ARBITRATION - A process in which a dispute between two or more parties is resolved by impartial persons chosen by the disputing parties to determine their rights and/or obligations. An arbitration agreement is put in place to which all the parties must abide. ARBITRATION CLAUSE - A clause included in an insurance policy that provides arbitration in the event of a dispute. ARSON - The deliberate burning of property by its owner or another party. ASSET ALLOCATION (ASSET MIX) - Allocation of investment capital between various asset classes or allocation of money for investment purposes between different types of investments such as stocks and bonds. ASSETS - What an individual or a corporation owns, and that has a monetary value. ASSET CLASS - A group of assets with similar performance characteristics. Some of the most common asset classes are government and corporate bonds, precious metals, and cash. ASSET MIX (ASSET ALLOCATION) - Allocation of investment capital between various asset classes or allocation of money for investment purposes between different types of investments such as stocks and bonds. ASSUMED (CONTRACTUAL) LIABILITY - Liability which would otherwise not rest upon a person except that he/she has accepted responsibility by contract. ASSURANCE - Same as "Insurance". ASSURED - Same as "Insured". ASSURER - Same as "Insurer" or "Insurance Company". AUTHORIZATION - The permission or power to act on behalf of another party. AUTOMOBILE - A land motor vehicle, trailer or semi trailer that is required by law to be insured under a motor vehicle liability policy. AUTOMOBILE FLEET - A group of five or more vehicles under the same ownership or management. Fleets may be eligible for insurance premium discounts due to the larger number of vehicles in the fleet. AUTOMOBILE INSURANCE - Insurance that protects against losses involving owning or driving an automobile. Some of the coverages provided by the automobile insurance policy are: collision and comprehensive coverage for physical damage to the insured's vehicle, bodily injury liability, property damage liability, and medical coverage. AVOIDANCE OF RISK - Acting to remove a risk or eliminate exposure. BACK-END LOAD FUND - A mutual fund that imposes a charge on the investor if the fund is redeemed before a set period of time after the purchase. The charge will gradually decrease to zero if the fund is not redeemed before the set period of time ends. BAILEE (DEPOSITORY) - A person entrusted by property or goods for exchange for payment or otherwise. BALANCE SHEET - An accounting term referring to†a quantitative summary of a company's assets, liabilities and net worth at a specific point in time. BASIC LIMITS OF LIABILITY - The least amount of liability coverage an insured can purchase as required by law. If the insured wants higher coverage, a new premium for the increased coverage needs to be calculated by the insurance company. BASIS POINT (BPS) - One one-hundredth (1/100 or 0.01) of one percent, where 100 basis points = 1%. This measurement is used for yield differences on assets. BEAR MARKET - A stock market in which prices are generally declining, so that an index of representative stocks (such as TSE 300 Composite Index) is declining in value. BENCHMARK - A predetermined standard used as a comparison in a specific time period. For example, TSE 300 Composite Index can serve as a benchmark against which the performance of individual stocks or industries on the Toronto Stock Exchange (TSE) is compared. BALANCED MUTUAL FUND - A mutual fund that invests in debt and equity holdings such as common and preferred stocks and bonds, in order to achieve both income provision and some capital appreciation with low risk exposure. BENEFICIARY - Anyone benefiting from a contractual or fiduciary relationship, including trusts and proceeds of a will or life insurance. BETA - Statistical term used to measure the relationship between the change in price or rate of return of an individual security or a portfolio compared to the same change in the overall market. BI/PD - Bodily Injury / Property Damage. BID - The highest price offered by a prospective buyer for a trading unit of a security at a specific time. BINDER - A temporary or preliminary proof of insurance of property, that provides coverage until issuance of a policy. The binder has the same value as the policy, and if terminated, all the same rules apply as for an issued policy. BLOCK SALE - A transaction of a minimum of 10,000 shares of a stock. BLUE CHIP - A quality common stock of a nationally known company that has a large market capitalization, a long record of profit growth and dividend payment and a reputation as a reliable investment. BODILY INJURY - Term used in Auto and Casualty policies referring to physical injury, including disease, mental injury, shock or death. BODILY INJURY LIABILITY - Legal liability that pays when physical injury or death is caused to another. This coverage also pays for legal defense in case of a lawsuit. BOND (DEBENTURE) - A financial instrument used to raise capital in which the issuer promises unconditionally to repay lender a principal amount plus fixed or variable interest payments on determined dates. Debenture is not backed by any specific collateral. BOND INDEX PORTFOLIO - A portfolio of bonds that contains all of the available grades, coupons, and maturities of bonds in proportions that resemble the actual bond market. BOND YIELD - Rate of annual income return on a bond expressed as a percentage of either its nominal value or its current price. BOOK VALUE - A value of company's asset as entered in the companyís balance sheet. BOTTOM-UP STRATEGY - A money management style that focuses on individual security selection as its primary strategy and considers economic forecasts as only secondary in the decision-making process. BREAK-AND-ENTER THEFT (B&E) - Forced entry into a building or property and wrongful taking of property, without the consent of its owner. BREAK EVEN POINT - The point at which neither a profit or loss is made. BROAD FORM PROPERTY RIDER - Insurance that covers all loss or damage to insured property that is the result of any risk that is not specifically excluded from the policy. BROKER (INSURANCE) - An independent, commission compensated person or firm who acts on behalf of the insured in placing business with an insurance company, by searching the marketplace to maximize protection and minimize cost to the insured. Broker is responsible for collecting premiums from insured, but does not have authority to give coverage on the insurance company's behalf without the insurerís specific agreement. BROKER (STOCK BROKER) - A broker buying or selling stocks and shares on behalf of a client. BUILDERS RISK INSURANCE - Insurance coverage on property under construction, including loss to buildings and materials accompanying the construction. BULL MARKET - A stock market in which prices are generally rising, so that an index of representative stocks (such as TSE 300 Composite Index) increases in value and is usually accompanied by increased investors confidence, higher earnings and dividends, and increased speculative activity. BURGLARY - Unlawful act of forced entry into a building or other premises with the intent to remove property from premises. BUSINESS INTERRUPTION - Insurance against business expenses and loss of income resulting from fire, flood or other insured risk.
CANCELLATION - A voluntary act of termination of an insurance contract in force by the insurance company or insured in accordance with provisions in the contract or by mutual agreement. CAPITAL - Capital consists of all assets used by an individual or a company to generate income. Insurance companyís capital consists of shareholdersí equity and represents the difference between companyís assets and liabilities. With this value, the interests of the companyís policy owners are protected in case the company has financial problems. The amount of capital owned by a company shows its wealth and demonstrates its ability to earn profit. CAPITAL GAINS - The amount by which the sale price of a capital asset exceeds the original purchase price when the asset is sold or transferred. CAPITAL LOSS - The loss realized when the value of a capital asset when it is sold or transferred is lower than the original value. CAPTIVE AGENT - Representative of a single insurance company who submits business only to that company, or gives that company a first right to refuse a sale. CASUALTY - Liability or loss that results from an accident. CASUALTY INSURANCE - The type of insurance that is primarily concerned with losses and legal liability caused by injury to others or damage to property of others. CATASTROPHE - A sudden disaster resulting in great loss and misfortune. CERTIFICATION - Compliance with criteria defined by safe standards. CLAIM - A request made by the insured, or the insured's beneficiary, for payment of the benefits to recover a loss as covered by an insurance policy. CLAUSE - A term used to identify a particular part of a policy or endorsement. CO-INSURANCE CLAUSE - A clause in an insurance policy that states that the policyholder must maintain insurance equal to or greater than a specified minimum percentage of the total property values stated in the policy. In case of failing to do so, the policyholder must bear, in addition to the deductible amount, a proportionate amount of any partial loss. COLLATERAL - Assets which are pledged by a borrower as insurance against the default of payment of a debt and which are subject to seizure in the event of default on the debt. COLLISION - An accident involving impact of a vehicle against another vehicle or an object. COLLISION COVERAGE - Protection against loss resulting from damage to the policyholderís vehicle that occurs as a result of a collision with another car or object. This is an optional coverage that may be purchased in addition to the mandatory coverages required by law. COMBINED SINGLE LIMIT - One single amount of coverage consisting of Bodily Injury and Property Damage coverages. COMMERCIAL LINES - Insurance for businesses, professionals and commercial institutions. COMMERCIAL OCCUPANCY - The portion of a building used for a transaction of business. COMMERCIAL PAPER - A form of short-term debt issued by large corporations. COMMISSION - A portion of the premium charged by a broker or agent as compensation for their services in facilitating insurance and financial transactions. COMMON STOCK (STOCK) - An equity security representing ownership of a corporation's assets. Commons stock provides its owner with voting rights and entitlement to a share of a corporationís success through dividends and/or capital appreciation. COMPENSATORY DAMAGES - Damages awarded for injury or economical loss (excluding punitive or exemplary damages). COMPREHENSIVE INSURANCE - Protection against loss resulting from damage to the insured vehicle, other than by a collision or overturning, such as fire, hail, earthquakes, windstorms, theft, vandalism, explosions, falling objects and collisions with an animal. COMPULSORY INSURANCE - Any form of insurance that is required by law. CONSEQUENTIAL DAMAGE - An indirect loss which is a result of a covered peril, such as when a windstorm causes a cut in electricity used to power a freezer and the food in the freezer spoils. CONSUMER PRICE INDEX (CPI) - A statistical measure of the average change in the cost of a fixed market basket of goods and services purchased by consumers, such as food, transportation and utilities. It is used to show the inflation that has taken place and thus the change in purchasing power of currency. CONTINUOUS COVERAGE OR CONTINUOUS LIABILITY INSURANCE - The length of time an insured has maintained insurance. CONVERTIBLE - A possibility for the owner of a security such as a bond, debenture or preferred share to exchange that security for common stock of the same company in agreement with the terms of the conversion privilege. CONVICTION - Infraction under the Highway Safety Act or any other legislation governing vehicular traffic. CORD OF WOOD - A unit of measurement defined as "128 cubic feet of stacked roundwood (whole or split, with or without bark) containing wood and airspace with all bolts of similar length piled in a regular manner with their longitudinal axes approximately parallel." This is the amount of wood that can be stacked into a space with the dimensions of 8 ft x 4 ft x 4 ft. CORPORATION - A business firm whose articles of incorporation have been approved, and which is considered a legal entity separate from its owners, empowered to enter into and be bound by agreements. The owners of a corporation have limited liability and are protected from being personally liable in the event the corporation is sued, which is not the case with sole proprietorships and limited partnerships. CORRELATION - A statistical measurement that describes a causal, complementary, parallel, or reciprocal relationship between two comparable variables. For example, a positive correlation between the returns of two securities means that their returns move together, so if the return of one security goes down, the return of the other security will go down as well, and vice versa. A negative correlation in this case would mean that the returns of two securities move in opposite directions, so if the return of one security goes up, the return on the other one will go down. The possible correlations range between -1 and +1. A result of -1 represents a perfect negative correlation, +1 represents a perfect positive correlation, and 0 means there is no correlation at all. COST - The total money, time and resources spent for a purchase of goods or services. COUPON - Interest rate on a fixed income security, determined upon issuance and expressed as an annual percentage of face value, that the issuer promises to pay to the holder until maturity. COVER - To insure. COVERAGE (PROTECTION) - Protection provided†under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, coverage lists living and death benefits. COVERED PERSON(S) - Individuals, such as named insured, spouse, resident relatives, etc., who are insured under a policy contract. CREDITOR - Corporation or individual to whom a sum of money or its equivalent is owed by a debtor. CURRENCY RISK (EXCHANGE RISK, FOREIGN EXCHANGE RISK) - The risk that the exchange rate on a long or short position in a foreign currency will fluctuate in a direction that damages the position of an investor. CUSTOMIZED EQUIPMENT (SPECIAL EQUIPMENT) - Items not included in standard insurance options available for vehicles, such as additional electronic equipment, special paint or exterior items, or amenities added to the inside of a vehicle.
DAMAGE - Any material or bodily loss or harm, resulting in loss of value or the impairment of usefulness. DEATH BENEFIT - The amount stated in policy to be paid by the insurance company to the beneficiary upon proof of death of the insured. DEBENTURE (BOND) - A financial instrument used to raise capital in which the issuer promises unconditionally to repay lender a principal amount plus fixed or variable interest payments on determined dates. Debenture is not backed by any specific collateral. DEBRIS REMOVAL - A provision of property insurance providing coverage for the cost of removal of the debris after a loss. DECLARATIONS (DEC SHEET) - The part of the insurance policy that provides detailed information about the insured, the insurer, and the coverages. This information includes the name and address of the insured, the property insured, its location and description, the policy period, the amount, types, limit and cost for each coverage, the vehicles covered by the policy, applicable premiums, and supplemental representations by the insured. DEDUCTIBLE - The portion of loss that the policyholder must pay before a claim is paid out by the insurance company. DEFAULT RISK - The probability that an organization (bond issuer) will fail to make scheduled payments on its debt, including principal and interest, in due time. DEFERRED PROFIT SHARING PLAN (DPSP) - An employer-sponsored Canadian profit sharing plan that is registered with the Canadian Revenue Agency and that allows an employer to set aside a portion of company profits for the benefit of employees upon retirement. Benefits at retirement are based on the total of the contributions made by the participants and the returns on the money invested. DEFENSIVE DRIVER COURSE (DRIVER EDUCATION) - Classes approved by Department of Motor Vehicles to enhance driving skills. Upon completing these classes, drivers may become eligible for discounts on their insurance premiums. DEFINED BENEFIT PLAN - A company retirement plan where the employer agrees to pay each employee a defined benefit at retirement based on salary history and years of service, and in which the employer is responsible for investing and bears the investment risk. Thus, the exact amount of income that plan members receive at retirement is predetermined. DEFINED CONTRIBUTION PLAN - A company retirement plan where the employer agrees to pay employees a defined contribution at retirement based on a set percentage of the employeeís salary, and in which the employees are responsible for investing in investment products offered by the plan and bear the investment risk. Thus, the exact amount of income that plan members receive at retirement can only be estimated. DEPENDENCIES - Constructions and installations that are accessory to a dwelling but separated from it by a completely free space, or connected to it by a fence or electrical or other connection only. DEPOSITORY (BAILEE) - A person entrusted by property or goods for exchange for payment or otherwise. DEPRECIATION - Reduction in value of property over a period of time through aging, use, deterioration and obsolescence. DIRECT LOSS (OR DAMAGE) - A loss, which is a direct consequence of a particular peril. Fire damage to a refrigerator would be a direct loss. Spoiling of food in the refrigerator as a result of the fire damage would be an indirect loss. DIRECT LOSS - A loss that arises when insured property or goods are damaged or lost as a result of a specific peril. Direct loss does not include other losses or expenses incurred as an indirect result of the damage, e.g. spoiled food in freezer as a result of the fire damage to the freezer. DIRECT WRITER - An insurance company whose policies are sold through it own licensed agents who represent it exclusively, rather than through independent agents, who represent several insurance companies. DISMEMBERMENT - A loss of, or loss of use of a body part resulting from accidental bodily injury. DIVERSIFICATION - A portfolio strategy allocating investment money among several asset classes which are unlikely to move in the same direction, such as stocks and bonds, in order to avoid excessive exposure to one source of risk. With this strategy, both the upside and downside potential are reduced, offering more consistent performance. DIVIDEND - A portion of the profit of a corporation that is paid to its shareholders. DIVIDEND REINVESTMENT PLAN (DRIP) - A plan that allows investors to automatically reinvest their dividends. DOLLAR-COST AVERAGING (DCA) - An investment strategy where the constant dollar value is invested to purchase an investment at fixed intervals, regardless of the fluctuating market price of the investment. With this strategy an investor can purchase more of the investment when prices are down and less when the prices are up, allowing for the average cost of the investment to be lower than it would be if fixed number of shares were purchased at fixed intervals. DRIVE-OTHER-CAR ENDORSEMENT - Optional coverage under auto insurance that includes non-owned vehicles the insured person operates. DRIVER EDUCATION (DEFENSIVE DRIVER COURSE) - Classes approved by Department of Motor Vehicles to enhance driving skills. Upon completing these classes, drivers may become eligible for discounts on their insurance premiums. DRIVER'S LICENCE (DRIVER'S PERMIT) - Official written authorization permitting the bearer to operate a motor vehicle. DRIVING CLASS - A specific category used for rating automobile insurance that indicates age and sex of the operator, and vehicle use. DRIVING RECORD - Each driver is given a record based on the experience, prior accidents, traffic tickets and driver training. Drivers with better driving record are lower risk and thus may be eligible for a lower auto insurance premium. DWELLING - A residential building that can be owned or rented.
EARNED INCOME - Any compensation, wages, salary, and income from an employment source. EARNED PREMIUM - The portion of a premium that has been used up during a policy term. EARNINGS PER SHARE (EPS) - Total earnings for the financial year divided by the number of shares outstanding during the year. Earnings per share is used as a measure of the profitability of a company. EARNINGS RETENTION RATIO - The percentage of earnings retained by a company for reinvestment instead of being paid out to shareholders. Companies with a high earnings retention ratio reinvest the retained money in order to earn a higher rate of return, resulting in an increase in the share value of the stock. EARTHQUAKE - A phenomenon involving sudden shaking and vibrations of the earth's crust that may be violent enough to cause damage to property. EARTHQUAKE INSURANCE - Coverage for damage caused by an earthquake. EBIT - Earnings before interest and taxes. EFFECTIVE DATE - The date on which a coverage begins on an insurance policy or a transaction goes into force, and from which protection is provided. EMBEZZLEMENT - A fraudulent appropriation of funds or property that is entrusted to oneís care but actually owned by someone else. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) - An organized plan that allows and carries out purchases of a company's stock by its employees. EMPLOYERS LIABILITY INSURANCE - Coverage by employers against their liability to employees for injuries arising from accidents or disease in the course of their employment, as distinguished from liability imposed by a workers' compensation law. ENCUMBRANCE - A claim attached to real property, such as a mortgage, a lien for work and materials, or a right of dower. The interest of the property owner is reduced by the amount of the encumbrance. ENDORSEMENT (RIDER) - An amendment added to a written document, such as an insurance policy, used to amend coverage. EQUITY - Excess in the market value of a property over claims or liens held against it. EXCHANGE RISK (CURRENCY RISK, FOREIGN EXCHANGE RISK) - The risk that the exchange rate on a long or short position in a foreign currency will fluctuate in a direction that damages the position of an investor. EXCLUSIONS - Risks, perils, conditions or properties listed in the policy as not covered. EXPENSE RATIO - The ratio of operating expenses to gross income. In insurance, it is the ratio of underwriting expenses, including commissions, to net premiums written. This ratio measures a company's operational efficiency in underwriting its book of business. EXPIRATION - End of insurance policy coverage. EXPIRATION DATE - The date and time insuredís coverage ends. For example, an expiration date of 1/1/2006 at 12:01 a.m. shows that coverage ends after midnight on the date listed. EXPOSURE - The condition of being subjected to a source of risk, measured as a vulnerability to loss, expressed in dollars or units. EXTENDED COVERAGE (EC) - An extension of property insurance beyond coverage for fire and lightning. Additional perils covered are windstorm, hail, explosion, riot, attending a strike, civil commotion, and aircraft, vehicle and smoke damage.
FACE VALUE (PAR VALUE) - The nominal value assigned to a debt instrument by the issuer that the issuer agrees to pay upon the maturity of a debt instrument. FAIR MARKET VALUE - The price that a prospective buyer would pay to a prospective seller on the open market, when both are willing to buy or sell, respectively. FIFO (FIRST-IN, FIRST-OUT) - An accounting method of valuing the cost of goods sold that uses the cost of the oldest items in inventory first. The first units in are sold first and the cost of units sold is entered at the initial price. FINANCIAL RATINGS - Organizationís ability to meet ongoing obligations of policyholders and bondholders as rated by the ratings organizations, such as Standard & Poor's and Moody's, based on the analysis on the organizationís financial condition and profit potential. FINANCIAL RESPONSIBILITY LAWS - Laws that require owners and operators of vehicles to have enough funds, often through liability insurance, to compensate for injuries and harm they may cause on other people. FINANCIAL RISK - A risk that an investment or loan will not be able to bring a return to an investor and may result in a loss. FIRE - A hostile burning that produces a spark, flame, or glow and that is not friendly as a fire in a fireplace. FIRE INSURANCE - Insurance for loss or a damage of a building and/or contents due to fire, usually supplemented by ìExtended Coverage Insuranceî. FIRE RESISTIVE CONSTRUCTION - A building whose exterior walls, floors, and roof are constructed of fire-resistant materials. FLOATER POLICY - Insurance policy that covers a loss of a property which is moved from place to place, regardless of where it may be moved. FLOOD INSURANCE - Coverage that protects property owners from loss due to the defined peril of flood. FORGERY - An illegal modification or reproduction of a document with intent to defraud. FORM - An insurance policy, including any riders and endorsements that may be attached to it. FORTUITOUS EVENT - An unexpected and unforeseen occurrence. FRAUD - Intentional deception and dishonesty carried out in order to deceive, mislead and obtain advantage, to which one is not entitled. FUTURES - Agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price with delivery set at a specified future date.
GENERAL LIABILITY INSURANCE - Coverage that protects business owners and operators from a wide range of liability exposures for injuries or damage caused by the insured's ownership of premises, operations completed by the insured, sale and distribution of products, contractual liability and professional services. GENERAL PROVISIONS - Part of an insurance policy that identifies the obligations of the insurer and insured. GLASS INSURANCE - Coverage for breaking windows in a vehicle or building. GRACE PERIOD - An additional period after the premium due date with which an insurer provides an insured to pay an overdue premium without penalty, with the policy remaining in force. GROWTH STOCK - Stock that is expected to grow its earnings and yield a higher return than the market. GROWTH STRATEGY - An active portfolio management style that invests in stocks of companies which are growing their earnings and yielding a higher return than the overall market. GUARANTEED INVESTMENT CERTIFICATE (GIC) - An investment that pays a guaranteed set rate of return over a fixed period of time. GUARANTEED REPLACEMENT COST - Coverage that pays the full cost of replacing or repairing damage, even if the cost exceeds the policy limit.
HAZARD - A specific circumstance that increases the probability of incurring a loss arising from a peril, or that may influence the extent of the loss. HEDGE - Practice of implementing a strategy to offset investment risk. HIGH RISK AUTO (NONSTANDARD AUTO, SUBSTANDARD AUTO) - Insurance for vehicle operators with poor driving record, and/or a history of canceled or refused insurance, whose premium will be higher than standard auto premium due to the additional risks. HIT-AND-RUN - The failure of the driver of a vehicle to stop to assist and provide information when he or she is the direct or indirect cause of an accident. HOMEOWNER INSURANCE - A combination of coverages that provides protection against the risks of owning a home. HOUSEKEEPING - The general maintenance of an insured property.
IMPROVEMENTS AND BETTERMENTS - Additions or alterations that a lessee makes at his/her own cost to a building that he/she is occupying and which enhance the buildingís value. As improvements and betterments become part of the building, they require special insurance consideration. INCIDENTAL MEDICAL MALPRACTICE - Rendering or failure to render medical or professional service by an individual not engaged in the business or occupation of a medical services provider. INCOME FUND - A mutual fund that invests in fixed income securities such as bonds, preferred stocks and mortgages in order to produce income for investors while raising capital. INCREASE IN PERIL (INCREASE IN HAZARD) - An event causing increase in peril or hazard. INCREASE IN PREMIUM - Increase in premium amount due to changes or renewal of a policy. INDEMNIFY - Pay out a compensation to the victim for a loss incurred. INDEMNITY - Amount paid out as compensation for a loss incurred, the intent being to return a policy holder to the same financial position as they had before the loss. INDEX FUND - A mutual fund that invests in securities with similar weights to those of a broad based market index in order to achieve the same return as the general market. INDIRECT LOSS (OR DAMAGE) - Loss resulting from a peril, but not caused directly by the peril, such as a loss of food in the freezer due to a fire that destroyed the freezer. IN-FORCE - Insurance in effect on which the premiums are paid. In life insurance, it refers to insurance by face amount. In health insurance, it refers to total premium volume being paid to insurance companies. INFRACTION (VIOLATION) - Breaking a law or regulation. INITIAL PUBLIC OFFERING (IPO) - First sale of stock by a private company which leads to the companyís stock being publicly held. INLAND MARINE INSURANCE - An insurance business which developed from the insuring of items which did not involve ocean voyages, such as bridges, tunnels, jewelry and furs. INSPECTION - Independent examination of facts about an applicant or claimant to confirm that the standards of a contract are met. INSTITUTIONAL INVESTORS - Large-scale buyers and sellers of financial instruments. Such large scale buyers are usually pension funds, trust and mutual fund companies. INSURABILITY - Insurance companyís acceptance of an applicant for insurance. INSURANCE - An instrument that reduces risk of individual entities by transferring the risk to an insurer. The insurer promises to reimburse the insured in the case of a covered loss in return for premium payments to the insurer. INSURANCE ADJUSTER (ADJUSTER) - A representative of an insurer who investigates insurer's liability for loss and settlement of claims. The insurer may employ its own salaried adjuster or hire an independent adjuster. INSURANCE ATTORNEY - An attorney practicing the law as it relates to insurance matters. INSURANCE CERTIFICATE - A document that an insurance company or broker issue to the insured to confirm that a particular piece of property is insured. INSURANCE LIMITS - The amount of coverage limited to a set amount according to category of property. INSURANCE POLICY - A legal document issued to the insured that outlines the terms of the insurance contract. INSURANCE TO VALUE - An amount of insurance coverage approximate to the value of the property insured. INSURED - A corporation, partnership or individual protected by an insurance policy against perils that could damage their assets, life, and health. INSURED PERILS (RISKS COVERED) - Perils covered in the insurance contract. INSURER - An insurance company providing insurance coverage. INTEREST RATE RISK - A possibility that fluctuations in interest rates of financial instruments such as securities and bonds, will have the effect of making one financial instrument more appealing than another. INVESTMENT INCOME - A return received by insurers from their investments, including interest, dividends and realized capital gains.† ISSUE DATE - Date on which an insurance contract comes into effect.
JOINT TENANCY - An equal ownership of property shared by two or more parties under which the survivor continues to hold all rights to the complete ownership of the property on the death of one or more tenants. This is different from a ìTenancy in Commonî where the heirs of a deceased tenant inherit his or her share. JUNK BOND - Non investment grade bond with a credit rating of BB or lower that carries a high risk of default. Junk bonds are usually issued by companies without long track records of sales and earnings and are often used to finance takeovers or leveraged buyouts.
LAPSE IN COVERAGE (POLICY LAPSE) - Cancellation or termination of insurance policy due to insuredís failure to pay the premium, or termination of the policy for other reasons. LAY-UP - Suspension of a portion of coverage while a vehicle or other belongings are in storage. LEASEHOLD IMPROVEMENTS - Physical improvements, beyond regular maintenance or repairs, that increase the value of a property. LEGAL LIABILITY - Legal responsibility imposed by law for a payment for material damage or physical injuries done to others. LENDER - A private, public or institutional entity which makes funds available to others to borrow. LESSEE (TENANT) - One who leases a property from its owner. LESSOR - One granting a lease of a property, also known as the landlord, to whom the lessee (tenant) makes lease payments. LEVERAGED BUYOUT (LEVERAGED TAKEOVER) - Taking over of a target company by an acquiring company which uses borrowed funds for the takeover. Usually, the target company's assets serve as security for the borrowed funds, which the acquiring company repays out of cash flow of the acquired company. LIABILITY - Legally enforceable obligation or responsibility. LIABILITY INSURANCE - Insurance covering the insured's legal liability resulting from injuries to other persons or damage to their property, including coverage for insuredís cost of legal defense. LIBEL - A false and malicious written statement about an individual, which defames that individual. LIEN HOLDER (LOSS PAYEE) - A person or entity holding a legally secured claim on another's property as security for a debt. In an event of a loss, the loss payments will be made to the insured and to the loss payee on the insuredís policy. LIFO (LAST-IN, FIRST-OUT) - An accounting method of valuing the cost of goods sold that uses the cost of the most recent items in inventory first. The last units in are sold first and the cost of units sold is entered at the current market price. LIMIT OF LIABILITY - The maximum amount up to which an insurance company protects an insured and agrees to pay out in case of loss. LIQUIDITY - The ability to buy or sell an instrument at a price that is close to its fair market price. LIQUIDITY RISK - The risk of an investor not being able to buy or sell an instrument at a price that is close to its fair market price, and thus incuring a loss. LLOYD'S (LLOYD'S OF LONDON) - An institution providing the support facility to individual underwriters which accept or reject the risks offered to them. LOAD - Fees charged to holders of mutual fund units. LOSS - In insurance, loss refers to a reduction in the value of an insuredís property caused by an insured peril, an amount requested through an insuredís claim, or an amount paid by the insurer to the insured under the terms of the insurance policy. In investment sense, loss refers to a reduction in the value of an investment, or a condition in which a company's expenses exceed its revenues. LOSS ADJUSTMENT EXPENSES - Expenses incurred to investigate and settle losses. LOSS AND LOSS-ADJUSTMENT RESERVES TO POLICYHOLDER SURPLUS RATIO - A company's solvency is dependent upon having and maintaining reserve adequacy when multiple of loss reserves to surplus is high. LOSSES AND LOSS-ADJUSTMENT EXPENSES - The total reserves for unpaid losses and loss-adjustment expenses, including reserves for any incurred but not reported losses, and supplemental reserves established by the company. It includes the total for all lines of business and all accident years. LOSS CONTROL - Any combination of actions taken to reduce the frequency or severity of losses including exposure avoidance, loss prevention, loss reduction, segregation of exposure units and noninsurance transfer of risk. LOSS FREQUENCY - Number of consecutive times a loss occurs over a specific period of time. LOSS OF USE INSURANCE - Coverage that covers an insured for the inability to use property due to a damage by a peril covered by the policy. LOSS OF USE - Inability to use property due to a damage by peril covered by the policy. LOSS PAYEE (LIEN HOLDER) - A person or entity holding a legally secured claim on another's property as security for a debt. In an event of a loss, the loss payments will be made to the insured and to the loss payee on the insuredís policy. LOSS RATIO - The ratio of losses incurred to premiums earned, used to measure the company's profitability or loss on its total book of business. LOSS RESERVE - The estimated liability for unpaid insurance claims or losses that have occurred as of a given evaluation date. For an individual claim, the loss reserve is the estimate of what will ultimately be paid out on that claim. LOSSES INCURRED (PURE LOSSES) - Net paid losses during the current year plus the change in loss reserves since the end of the previous year.
MANAGEMENT EXPENSE RATIO (MER) - The ratio of the sum of all expenses associated with managing a mutual fund to the fund's average net assets. MARKET CAPITALIZATION - The total value of all of a companyís outstanding shares. MARKET RISK (SYSTEMATIC RISK) - Risk that influences the overall market and that can not be avoided by portfolio diversification. MARKET TIMER - A person who believes he or she can anticipate the direction of future movements in the markets and utilize this knowledge for profit. MARKET VALUE - The current price of financial instruments, such as stocks and bonds, in a fair market. MATERIAL MISREPRESENTATION - A false statement of any material fact on an application. MATURITY DATE - The date on which the principal balance of a loan or debt instrument is due and payable to the holder by the issuer of the instrument. MEDICAL PAYMENTS - Coverage for medical and funeral expenses incurred in an auto accident, regardless of fault. Coverage is also provided for injuries incurred by passengers in the insuredís vehicle, or while the insured is operating someone else's vehicle, as well as for injuries that the insured and his/her family members incur as pedestrians. MISREPRESENTATION - Providing false information to an insurer by an insured when informing of loss. MONEY MARKET FUND - A mutual fund consisting of short-term, low-risk, highly liquid debt instruments. MORAL HAZARD - A risk to an insurance company resulting from an insuredís habits that increase the probability of a loss from a peril. MORALE HAZARD - An insured's attitude that increases the probability of loss from a peril. MORTGAGE - A debt secured by property. MORTGAGE BOND - A bond that has a property as security for payment. MORTGAGE INSURANCE POLICY - In life and health insurance, a policy covering a beneficiary with enough benefits to pay off the balance due on a mortgage or to continue mortgage payments upon the insuredís death or disability. MORTGAGEE - A creditor to whom a mortgage is given and who lends money based on the security of the property mortgaged. MORTGAGOR - The debtor who receives money and in turn grants a mortgage on his property as security for a loan. MUTUAL FUND - A managed portfolio of equities and other financial instruments whose units are purchased by a group of investors according to the amount of their investments. These investors have similar investment objectives and are able to obtain increased diversification at a lower cost through mutual funds. The cost of professional money management is split among all investors in the fund. MUTUAL INSURANCE COMPANY - An insurance company whose ownership is made up of its policy holders. MVR (MOTOR VEHICLE RECORD) - A record containing information obtained from an individual's driver license, abstracts of convictions and accidents.
NAMED INSURED - Any person or corporation in whose name the insurance policy is issued. NAMED PERILS - Specific perils covered or listed in the insurance policy. NEGLIGENCE - Failure to act with the prudence expected from a reasonable person under the specific circumstances. NET ASSET VALUE PER SHARE (NAV) - The market value of one unit of a mutual fund calculated as the difference between total assets and total liabilities divided by the number of units outstanding. NET PREMIUM - The total amount of premium less the brokerís commission. Also, the premium needed to cover anticipated losses, before loading to cover other expenses. NET WORTH - Amount by which total assets exceed total liabilities. NO-FAULT INSURANCE - A type of auto insurance where an insurer pays for insuredís losses such as medical expenses and lost wages that are a result of an accident, regardless of who is at fault. No-fault insurance speeds up claims payouts and reduces the number of lawsuits for minor claims, thus lowering the cost of auto insurance. NO LOAD FUND - A mutual fund that does not charge an investor a load fee or sales commission for buying, selling or redeeming of the fund units. NONSTANDARD AUTO (HIGH RISK AUTO, SUBSTANDARD AUTO) - Insurance for vehicle operators with poor driving record, and/or a history of canceled or refused insurance, whose premium will be higher than standard auto premium due to the additional risks.
OCCASIONAL DRIVER - An operator of the vehicle who is not the primary or principal driver of the vehicle, but operates the vehicle occasionally. OCCUPANCY - The type and nature of the use of property. OCCURRENCE - An event that results in an insured loss. In liability insurance, occurrence is distinguished from accident in that the loss does not have to be sudden and can result from continuous exposure which results in bodily injury or property damage that is neither expected nor intended by the insured. OPTION - Right but not the obligation, acquired for a price, to buy (a call option) or sell (a put option) a specified asset at an agreed price, within a specified time period or at a specific moment. If the right is not exercised by a specified date the money paid to obtain the option is forfeited. OVER-THE-COUNTER MARKET (OTC MARKET) - Market outside an organized exchange that exists for securities not listed on organized exchanges and in which transactions are conducted through a telephone or computer network connecting the dealers.
PAR VALUE (FACE VALUE) - The nominal value assigned to a debt instrument by the issuer that the issuer agrees to pay upon the maturity of a debt instrument. PARTIAL LOSS - A loss covered by an insurance policy which does not completely destroy or render worthless the insured property. PASSIVE PORTFOLIO MANAGEMENT - Investing of funds in a market index portfolio. This investment strategy reduces the management costs as the money manager doesnít perform any research to find underpriced or growth securities. PER OCCURRENCE LIMIT - The maximum amount an insurance company will pay for all claims arising from a single occurrence. PERIL - An event that is a cause of a possible loss. PERSONAL ARTICLES FLOATER - Insurance that covers a loss of a property which is moved from place to place, subject to reasonable exclusions for valuable items such as jewelry, furs, silverware, fine arts, etc. PERSONAL EFFECTS FLOATER - An inland marine policy covering personal articles of travelers world-wide, except in the insured's domicile. PERSONAL INJURY - Injury other than bodily injury arising from false arrest or detention, wrongful entry or eviction, malicious prosecution, libel or slander, or violation of a person's right to privacy committed other than in the course of advertising, publishing, broadcasting or telecasting. PERSONAL LIABILITY - A form of liability insurance, other than auto liability, in the event that insured becomes liable for loss or injury caused to others. PERSONAL LINES - Insurance for individuals and families, such as private-passenger vehicle insurance and homeowners insurance. PERSONAL PROPERTY - Any property of an insured, excluding real property. PERSONAL PROPERTY FLOATER - Insurance covering all personal property world-wide, including insured's domicile. PHYSICAL DAMAGE - Actual damage to a property. PHYSICAL HAZARD - The material, structural, or operational risk. PILFERAGE - Petty theft of part of the contents of a shipping package. POLICY - Legal contract between the insured and the insurer setting out the terms and conditions of the insurance contract and specifying the rights and obligations of each party. POLICY LAPSE (LAPSE IN COVERAGE) - Cancellation or termination of insurance policy due to insuredís failure to pay the premium, or termination of the policy for other reasons. POLICY LIMIT - The maximum amount a policy will pay. POLICY PERIOD (POLICY TERM) - The time period during which the insurance policy is in effect and provides protection. POLICYHOLDER - The policy owner who pays insurance premiums or those protected under the policy. PORTFOLIO - Combined holdings of a set of stocks, bonds, real estate, commodities and other assets by individuals or institutions. POWER OF ATTORNEY - A legal instrument authorizing a person to execute legal documents and manage affairs indicated in the instrument on behalf of another person. PREFERRED RISK - A risk that is superior to the standard risk on which the premium rate has been calculated and as such is eligible for a reduction in the premium rate. PREFERRED STOCK - Stock that provides a dividend income, usually has no voting rights, and ranks ahead of common stock for priority of asset distribution in the event of company going bankrupt. PREMISES - The particular location of property or a portion of the property insured in a policy. PREMIUM (RATE) - The price of insurance protection an insured person pays to an insurance company for coverage of a specified risk for a specified period of time. PRICE-EARNINGS RATIO (P/E RATIO) - The ratio of a company's stock price to its earnings per share, which is commonly used as a measure of how expensive a stock is. PRINCIPAL OPERATOR (PRINCIPAL DRIVER) - The person who drives the vehicle most often, usually the named insured. PRIMARY RESIDENCE - The place where an insured lives for the majority of a policy term. PRIVATE PASSENGER AUTOMOBILE - A motor vehicle operated for personal use that is subject to motor vehicle registration. PRO RATA CANCELLATION - A cancellation of an insurance policy before its expiration date that returns a portion of the premium to the insured in an amount equal to the daily earned premium multiplied by the days the policy was in effect. PROFESSIONAL LIABILITY INSURANCE - Liability insurance that protects professionals such as doctors, lawyers, and architects against loss resulting from claims due to bodily injuries resulting from actions performed as part of the practice of a profession such as malpractice, error, or mistake committed or alleged to have been committed by the insured. PROHIBITED RISK - Any risk which an insurance company will not insure under any circumstances. PROOF OF LOSS - A formal statement made by the insured providing information required by an insurance company to determine that a valid claim exists. PROPERTY DAMAGE UNINSURED (UNDERINSURED) MOTORIST - Coverage through an insuredís policy that protects the insured against loss resulting from the insuredís vehicle being damaged by another driver who doesn't have adequate insurance and is not able pay for the losses. PROPERTY OF EVERY DESCRIPTION - Coverage for buildings and contents shown as one inclusive limit. PROPERTY INSURANCE - Coverage that protects an insured against direct and indirect losses when the insuredís property is stolen, damaged, or destroyed by a covered peril. PROSPECTUS - A legal document explaining the asset content of a mutual fund, its past performance and management expense ratios that mutual fund companies issue to investors and prospective investors as required by the securities acts. PROTECTION (COVERAGE) - Coverage provided†under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, coverage lists living and death benefits. PUBLIC ADJUSTER - A claims adjuster who represents the policy holder as opposed to a "company" or "independent" adjuster who represents the insurance company. PUBLIC LIABILITY - Legal obligation to cover damages caused to other individuals or companies.
QUALIFYING EVENT - An occurrence that activates an insured's coverage. QUOTE - Estimate of the insurance premium or the current price of a security, based on information supplied by the applicant.
RATE (PREMIUM) - The price of insurance protection an insured person pays to an insurance company for coverage of a specified risk for a specified period of time. RATED - A policy issued with an extra premium charge, as pertaining to life insurance. REAL RATE OF RETURN - The rate of return adjusted for inflation. RECIPROCAL INSURANCE EXCHANGE - An unincorporated group of subscribers who mutually insure one another, each separately assuming his or her share of each risk. Itís chief administrator is an attorney-in-fact. RECONSTRUCTION COST - Appraisal of the replacement cost of a dwelling. REFUND - Repayment of a portion of the insurance premium. REIMBURSEMENT - Payment of a claim to or on behalf of the insured in the event of a defined loss. REINSTATEMENT - The resumption of coverage under a policy which has lapsed and restoration of insurance following lay-up. REINSURANCE - Placing a part of the insurance risk with another insurance company, the reinsurer, which assumes the part of responsibility in return for a portion of the premium paid by the insured. REINVESTMENT RISK - The risk that future returns will be lower than current returns due to a reinvestment of future proceeds at a lower interest rate. RENEWAL - The continuation of an insurance policy upon payment of a premium. REPLACEMENT COST - The cost of replacing or repairing a property without deduction for depreciation. REPRESENTATION - Statements made by a person on his/her insurance application, which are considered true to the best of his/her knowledge. RESERVE - An amount representing actual or potential liabilities that an insurance company needs to keep in order to be able to cover debts to policyholders . RETIRING ALLOWANCE - An amount received upon retirement in recognition of long service or amount received upon loss of employment RETURN - A measure of performance expressed as the amount of change in initial value of the investment over a given period of time. RIDER (ENDORSEMENT) - An amendment added to a written document, such as an insurance policy, used to amend coverage. RIOT - Disturbance of the peace by an unruly mob. RISK - A chance of loss. In insurance risk is referred to as the possibility of certain perils occurring or as the person or item insured. In investing, it is a possibility that an investmentís original value will partially or totally decrease. RISK MANAGEMENT - Management of risks through identification, measurement and minimization of all exposures to the possibility of loss. RISK PREMIUM - Additional rate of return that risky assets offer in order to compensate investors for higher risk. RISK TOLERANCE - The level of risk an investor is willing to handle. RISK UNDERWRITING - Analysis of a risk to determine its possibility of happening. RISK-FREE RATE - A guaranteed rate of return on a risk-free investment such as a Government of Canada treasury bills. ROBBERY - The taking, or attempting to take the personal property of another either by force or by fear of force.
SALVAGE - The remaining value of property or goods saved after severe damage or destruction by fire or other peril. SECURITY - An investment instrument that provides evidence of equity ownership position in a corporation, or a creditor position with a corporation or governmental body. SETTLEMENT - A claim payment or a policy benefit payment as agreed by all parties in terms of an insurance contract. SEVERITY - Size of a loss. SHARE - One unit of ownership in a corporation. SHAREHOLDER (STOCKHOLDER) - Owner of one or more shares of corporationís stock or owner of one or more units in a mutual fund. SHORT RATE CANCELLATION - The cancellation of the policy by the insured before its expiration date, which results in higher payments by the insured for each day of coverage as a penalty due to the fixed expenses incurred by the insurance company. SOLVENCY - Having sufficient assets to satisfy financial obligations on time. SPECIAL CONDITIONS - Specific criteria of a policy that determine the purpose of the insurance, the terms of coverage, and the amount of premium. SPECIFIC INSURANCE - Coverage for items individually or specifically listed in the policy. SPECIFIED PERILS - An optional coverage for loss or damage on insuredís vehicle due to specific incidents stated in the policy. STACKING OF LIMITS - Applying more than one policy limit to the same loss. STANDARD CONDITIONS - Basic conditions applicable to all policyholders holding the same type of policy. STANDARD DEVIATION - A statistical measure of spread or variability. In finance, standard deviation measures the spread of returns of an asset over a period of time. Higher standard deviation results from a wider spread of returns and thus indicates higher investment volatility (risk). STATED AMOUNT CO-INSURANCE - Allows for the standard co-insurance clause to be deleted in favour of a ìstated amount of insuranceî - subject to the acceptance by the insurer of a completed and signed Statement of Values. STATEMENT OF CLAIM - A written statement where a plaintiff alleges the facts that support the claim against the defendant and outlines the compensation sought. STATUTORY RESERVE - A reserve required by law. STOCK (COMMON STOCK) - An equity security representing ownership of a corporation's assets. Commons stock provides its owner with voting rights and entitlement to a share of a corporationís success through dividends and/or capital appreciation. STOCK CERTIFICATE - Documented evidence of ownership of shares in a corporation, indicating the class of stock, the number of shares and voting rights. STOCK INSURANCE COMPANY - An incorporated insurer that is owned by investors who buy shares of the company's stock and who receive dividends and earnings distributions. STOCK SPLIT - Dividing a company's stock into a greater number of shares of lower value without affecting the total capital amount. STOCKHOLDER (SHAREHOLDER) - Owner of one or more shares of corporationís stock or owner of one or more units in a mutual fund. STOP LOSS - A rider in an insurance policy that allows for a cut off of an insurer's losses at a specified point. SUBROGATION - Process by which an insurance company tries to recover the cost of settling an insuredís claim by suing a third party responsible for the loss. SUBSTANDARD AUTO (HIGH RISK AUTO, NONSTANDARD AUTO) - Insurance for vehicle operators with poor driving record, and/or a history of canceled or refused insurance, whose premium will be higher than standard auto premium due to the additional risks. SURCHARGE - An increase in premium amount imposed on an insured according to perils. SURPLUS - The amount by which total assets exceed total liabilities. SYSTEMATIC RISK (MARKET RISK) - Risk that influences the overall market and that can not be avoided by portfolio diversification.
TAX DEFERRAL - Delaying, but not eliminating the payment of taxes until a later date through various legal means. TENANT (LESSEE) - One who leases a property from its owner. TENANTS POLICY - A Homeowners policy specifically designed for people who rent property. TERM - The time period during which a policy or bond is in effect. TERM DEPOSIT - A cash deposit in a savings account for a fixed period of time at a guaranteed interest rate, where a financial penalty may be imposed for early withdrawal of the deposit. TERM LIFE INSURANCE - Life insurance that provides coverage for a defined period of time, and which pays the stated benefit if the holderís death occurs within the term of the policy. The policy doesn't build up any cash or surrender value. THEFT - The act of unlawful taking of property without the consent of its owner or any act of stealing including robbery, burglary and larceny. THIRD PARTY - Person other than the insurance company who has a claim against the insured and the insured who is involved in a loss. THIRD PARTY INSURANCE - Coverage of the insured for liability for damage or destruction of the property or bodily injury of others. TREASURY BOND - A long term debt obligation issued by the government of a sovereign country. THRESHOLD LEVEL - The level of injury expressed verbally and/or as dollar amount a claimant must establish before suing the negligent party. TOP-DOWN MANAGEMENT STRATEGY - A money management style that focuses on economic forecasts to select securities that are expected to benefit from the projected economy events. TORT - An intentional or accidental private injury against a person or property, other than a breach of contract, resulting in legal liability. Liability insurance protects against unintentional torts. TORT FEASOR - A person committing a tort. TOTAL ADMITTED ASSETS - The sum of all admitted assets reported by the company in its financial statements, valued according to applicable laws and regulations. TOTAL DISABILITY - Complete loss of physical ability which prevents an insured from performing the essential and material duties of his/her occupation. TOTAL LOSS - The total destruction of the property which leaves nothing of value or the loss which requires the maximum policy payout. TOWING AND LABOR COSTS - Coverage that provides reimbursement for towing of an insuredís vehicle and labor costs involved, up to a specified limit. TRAILER FEE - A percentage fee that mutual fund companies pay to the sales representative that sold the funds to investors. TRANSFER OF RISK - Transferring all or part of the risk of loss to another party, as in insurance, which is the most common way of risk transfer. TREASURY BILL (T-BILL) - A short-term government debt instrument with a maturity of one year or less. TRUST - A legal agreement in which one party, the trustor, gives fiduciary control of an asset to another party, the trustee, for the benefit of beneficiaries.
UMBRELLA LIABILITY POLICY - A policy that pays for liability losses in excess of those covered under a primary liability insurance policy. UNDERINSURANCE - Insurance amount that is less than the full value of the item insured, and thus wouldnít be able to properly reimburse the loss of the insured item. UNDERWRITER - An individual evaluating risks for insurance and determining the rates and coverages of those risks. UNDERWRITING - The process of evaluating risks for insurance and determining the rates and coverages of those risks or rejecting of the risks that do not qualify. UNEARNED PREMIUMS - That portion of the premium remaining on the unexpired part of the policy term. UNINSURED (UNDERINSURED) MOTORIST COVERAGE - Insurance that pays the insured and passengers in his/her vehicle for bodily injury caused by the owner or operator of an uninsured or underinsured vehicle. UNIT - An equal part of ownership into which a mutual fund is divided. UNIVERSAL LIFE INSURANCE - A life insurance policy that combines the death benefit and premium level of a term insurance policy with cash values and investment options. UNOCCUPIED BUILDING - A building with contents, but no occupant, where the occupant intends to return to the building. UNSATISFIED JUDGMENT FUND - Reimbursement fund established for parties injured in auto accidents that have not been able to get reimbursement for their loss from the responsible party. USAGE - The primary function for which an insured operates a vehicle. UTMOST GOOD FAITH - A standard of an insurance contract by which all parties to the contract agree to exercise good faith by fully disclosing all information pertinent to the contract.
VACANT - Status of a building whose occupants have left the building and do not intend to return. Also a status of a newly built building before the first occupants move in. VACANT BUILDING - A building with no occupants or contents. VALUABLES - Personal property items that have a great value. VANDALISM - Deliberate destruction or damaging of a property. VALUATION - Appraisal or calculation of the value of items such as policy reserve in life insurance, financial condition of a pension plan or value or securities. VARIABLE LIFE INSURANCE - Life insurance whose death benefit and cash value of the policy fluctuate depending on the investment performance of the securities supporting the policy. Usually, the death benefit is guaranteed not to fall below a specified minimum amount, while the cash value of the policy is not guaranteed. VARIABLE UNIVERSAL LIFE INSURANCE - Life insurance contract that combines the features of variable life insurance, such as investment flexibility, with features of universal life insurance, such as death benefit and premium, and depends on the investment performance of the securities supporting the policy. VIN (VEHICLE IDENTIFICATION NUMBER) - A 17-digit alpha-numeric code that provides the vehicle's serial number, make, model, options, and year in official records. VIOLATION (INFRACTION) - Breaking a law or regulation. VOLATILITY - The rate at which securities or markets fluctuate in price. VOLUNTARY MEDICAL PAYMENTS - Coverage to the insured for medical expenses resulting from bodily injury suffered by a third party. VOLUNTARY PROPERTY DAMAGE PAYMENT - Coverage to the insured for expenses resulting from repair or replacement of the third partyís property. VOLUNTARY RESERVE - A reserve not required by law that insurance companies accumulate to strengthen their financial position.
WAIVER - Deliberate surrender of a right or claim, such as liability for an accident or premium payment during disability period. WHOLE DOLLAR PREMIUM - Rounding up of the insurance premium to the nearest dollar. WHOLE LIFE INSURANCE - Life insurance that provides coverage until, and pays a benefit upon the death of the policy holder and that may pay out the savings portion of the policy before the death of the policyholder. WINDSTORM - Very strong winds capable of damaging insured property. WRAP ACCOUNT - An account in which investment dealers charge investors an annual management fee based on a total portfolio of invostor's assets managed, instead of charging separate fees for each transaction.
YIELD - An annual percentage rate of return on an investment. YIELD CURVE - A diagram showing the relationship of short-term and long-term rates. "YOU" AND "YOUR" - "You" or 'Your" refers to insured parties named in the insurance contract.
ZERO-COUPON BOND - A security issued below face value that appreciates over a specified term to offer a payment at maturity, but does not offer any interest payments during the term. |
