Newsletters
Which are the most tax-advantaged ways to save for kids’ college costs? Will your income stream last through retirement? Is your investment portfolio aligned with the economic and market outlook?
Our financial newsletters are designed to provide helpful information on a wide variety of financial topics. Simply click on one of the newsletter topics below to read an article in its entirety.
Articles
Welcome to our research center! We've put together a library of information on important financial topics that we believe you'll find helpful.
Simply click on one of the general financial topics below and you'll find a selection of easy-to-understand information sheets about related financial concepts and strategies. This information is updated regularly to reflect the latest facts, figures, legislation, and economic trends.
Calculators
Only 38% of U.S. workers have tried to determine how much they will need to save for a comfortable retirement. Source: Employee Benefit Research Institute, 2018
How much retirement income will you need? How much life insurance is enough? What type of IRA is right for you?
Our financial calculators are designed as educational tools to help you estimate answers to common financial questions. They are not intended to predict future returns or results. Simply click on one of the general financial topics below and you'll find a selection of easy-to-use calculators about related financial topics.
These calculators are hypothetical examples used for illustrative purposes and do not represent the performance of any specific investment or product. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of risk of loss. Actual results will vary.
Cash Management
Cash Flow Analysis
This Cash Flow Analysis form will help you weigh your income vs. your expenses.
Net Worth
A balance sheet summarizes your assets and liabilities and reveals your net worth.
Lifetime Earnings
This calculator is designed to help you attach a dollar figure to your life’s work.
Risk Management
Life Insurance
How much life insurance would you need to produce a sufficient income stream for your family?
Life Expectancy
Knowing your likely life expectancy is an important factor in making long-term financial plans.
Long-Term Care Self Insurance
Will you be able to afford nursing home care?
LTCI Cost of Waiting
Estimate the potential cost of waiting to purchase a long-term care insurance policy.
Disability Income Insurance
How much Disability Income Insurance do you need?
Cost of Retirement
Use this calculator to estimate how much income and savings you may need in retirement.
Required Minimum Distributions
Estimate the annual required distribution from your traditional IRA or former employer's retirement plan after you turn age 70½.
Impact of Inflation
Estimate the future cost of an item based on today’s prices and the rate of inflation you expect.
Retirement Plan Early Distribution
Estimate how much would remain after paying income taxes and penalties if you took an early distribution from a retirement plan.
Retirement Portfolio Lifespan
How Long Will Your Funds Last?
Saving & Investing
College Funding
Use this calculator to estimate the cost of your child’s education, based on the variables you input.
Savings Goals
How much do you need to save each year to meet your long-term financial goals?
Savings Accumulation
Estimate the future value of your current savings.
Taxable Equivalent Yield
Calculate the rate of return you would have to receive from a taxable investment to realize an equivalent tax-exempt yield.
Capital Gains Taxes
Estimate short-term and long-term federal capital gains taxes
Estate Planning
Estate Taxes
Use this calculator to estimate the federal estate taxes that could be due on your estate after you die.
Taxes & IRAs
Federal Income Tax
This calculator can help you estimate your annual federal income tax liability.
Tax-Deferred Savings
Compare the potential future value of tax-deferred investments to that of taxable investments.
IRA Eligibility
Use this calculator to determine whether you qualify for the different types of IRAs.
Roth IRA Conversion
This calculator can help you determine whether you should consider converting to a Roth IRA.
Glossary
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401(k) Plan
A defined contribution plan that may be established by a company for retirement. Employees may allocate a portion of their salaries into this plan, and contributions are excluded from their income for tax purposes (with limitations). Contributions and earnings will compound tax deferred. Withdrawals from a 401(k) plan are taxed as ordinary income, and may be subject to an additional 10 percent federal tax penalty if withdrawn prior to age 59½. -
403(b) Plan
A defined contribution plan that may be established by a nonprofit organization or school for retirement. Employees may allocate a portion of their salaries into this plan, and contributions are excluded from their income for tax purposes (with limitations). Contributions and earnings will compound tax deferred. Withdrawals from a 403(b) plan are taxed as ordinary income, and may be subject to an additional 10 percent federal tax penalty if withdrawn prior to age 59½.
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Actual cash value
The value of property at the time it was stolen or destroyed, arrived at by subtracting depreciation from the replacement cost of the item. -
Adjusted Gross Income (AGI)
An interim calculation in the computation of income tax liability. It is computed by subtracting certain allowable adjustments from gross income. -
Administrator
A person appointed by the court to settle an estate when there is no will. -
After-Tax Return
The return from an investment after the effects of taxes have been taken into account. -
Aggressive Growth Fund
A mutual fund whose primary investment objective is substantial capital gains. The return and principal value of mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. Investments seeking to achieve higher returns also involve a higher degree of risk. Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. -
Alternative Minimum Tax
A method of calculating income tax that disallows certain deductions, credits, and exclusions. This was intended to ensure that individuals, trusts, and estates that benefit from tax preferences do not escape all federal income tax liability. People must calculate their taxes both ways and pay the greater of the two. -
Annuity
An insurance-based contract that provides future payments at regular intervals in exchange for current premiums. Annuity contracts are usually purchased from banks, credit unions, brokerage firms, or insurance companies. Any guarantees are contingent on the claims-paying ability of the issuing company. -
Asset
Anything owned that has monetary value. -
Asset Allocation
The process of repositioning assets in a portfolio to maximize potential return for a particular level of risk. This process is usually done using the historical performance of the asset classes within sophisticated mathematical models. Asset allocation does not guarantee against loss; it is a method used to help manage investment risk. -
Asset Class
A category of investments with similar characteristics. -
Audit
The examination of the accounting and financial documents of a firm by an objective professional. The audit is done to determine the records' accuracy, consistency, and conformity to legal and accounting principles.
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Balanced Mutual Fund
A mutual fund whose objective is a balance of stocks and bonds. Balanced funds tend to be less volatile than stock-only funds. The return and principal value of mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. -
Bear Market
When the stock market appears to be declining overall, it is said to be a bear market. -
Beneficiary
A person named in a life insurance policy, annuity, will, trust, or other agreement to receive a financial benefit upon the death of the owner. A beneficiary can be an individual, company, organization, and so on. -
Blue Chip Stock
The common stock of a company with a long history of profitability and consistent dividend payments. -
Bodily injury liability coverage
Pays for medical expenses, legal expenses, and judgments when the policyholder’s car is involved in an accident that causes property damage and/or the injury or death of another person. -
Bond
A bond is evidence of a debt in which the issuer promises to pay the bondholders a specified amount of interest and to repay the principal at maturity. Bonds are usually issued in multiples of $1,000. -
Book Value
The net value of a company's assets, less its liabilities and the liquidation price of its preferred issues. The net asset value divided by the number of shares of common stock outstanding equals the book value per share, which may be higher or lower than the stock's market value. -
Bull Market
When the stock market appears to be advancing overall, it is said to be a bull market. -
Buy-Sell Agreement
A buy-sell agreement is an arrangement between two or more parties that obligates one party to buy the business and another party to sell the business upon the death, disability, or retirement of one of the owners.
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California Earthquake Authority (CEA)
A state-sponsored partnership between private companies and the government offering earthquake insurance policies in the state. -
Cancellation
When an insurer discontinues an auto policy because a driver fails to pay the premium, loses driving privileges, or has not accurately reported the facts relating to his level of risk. A cancellation may make it difficult to get insurance for a long time to come. -
Capital Gain or Loss
The difference between the sales price and the purchase price of a capital asset. When that difference is positive, the difference is referred to as a capital gain. When the difference is negative, it is a capital loss. -
Cash Alternatives
Short-term investments, such as U.S. Treasury securities, certificates of deposit, and money market fund shares, that can be readily converted into cash. -
Cash Surrender Value
The amount that an insurance policyholder is entitled to receive when he or she discontinues coverage. Policyholders are usually able to borrow against the surrender value of a policy from the insurance company. Policy loans that are not repaid will reduce the policy's death benefit and cash value by the amount of any outstanding loan balance plus interest. -
CERTIFIED FINANCIAL PLANNER® Practitioner
A credential granted by the Certified Financial Planner Board of Standards, Inc. (Denver, CO) to individuals who complete a comprehensive curriculum in financial planning and ethics. CFP®, CERTIFIED FINANCIAL PLANNER® and federally registered CFP (with flame logo)® are certification marks owned by the Certified Financial Planner Board of Standards. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification. -
Certified Public Accountant (CPA)
A professional license granted by a state board of accountancy to an individual who has passed the Uniform CPA Examination (administered by the American Institute of Certified Public Accountants) and has fulfilled that state's educational and professional experience requirements for certification. -
Charitable Lead Trust
A trust established for the benefit of a charitable organization. A grantor who places money, securities, property, and other assets in a charitable remainder trust can designate an income beneficiary, even if it is the grantor herself, to receive payment of a specified amount (at least annually) from the trust. You may also qualify for an income tax deduction on the estimated present value of the remainder interest that will eventually go to charity. -
Charitable Remainder Trust
A trust established for the benefit of a charitable organization. A grantor who places money, securities, property, and other assets in a charitable remainder trust can designate an income beneficiary, even if it is the grantor herself, to receive payment of a specified amount (at least annually) from the trust. You may also qualify for an income tax deduction on the estimated present value of the remainder interest that will eventually go to charity. -
Chartered Financial Consultant (ChFC)
A professional financial planning designation granted by The American College (Bryn Mawr, PA) to individuals who complete a comprehensive curriculum in financial planning. Prerequisites include passing a series of written examinations, meeting specified experience requirements and maintaining ethical standards. The curriculum encompasses wealth accumulation, risk management, income taxation, planning for retirement needs, investments, estate and succession planning. -
Chartered Life Underwriter (CLU)
A professional designation granted by The American College to individuals who complete a comprehensive curriculum focused primarily on risk management. Prerequisites include passing a series of written examinations, meeting specified experience requirements, and maintaining ethical standards. The curriculum encompasses insurance and financial planning, income taxation, individual life insurance, life insurance law, estate and succession planning, and planning for business owners and professionals. -
Claim
A request to an insurer for compensation for a loss. -
COBRA
The Consolidated Omnibus Budget Reconciliation Act is a federal law requiring employers with more than 20 employees to offer terminated or retired employees the opportunity to continue their health insurance coverage for 18 months at the employee's expense. Coverage may be extended to the employee's dependents for 36 months in the case of divorce or death of the employee. -
Coinsurance or Co-Payment
The amount an insured person must pay for a covered medical and/or dental expense if his or her insurance doesn't provide 100 percent coverage. -
Collision coverage
Covers the damage to a policyholder’s vehicle resulting from a collision, regardless of who is responsible. Collision coverage typically requires the payment of a deductible by the policyholder. -
Commodities
The generic term for goods such as grains, foodstuffs, livestock, oils, and metals which are traded on national exchanges. These exchanges deal in both "spot" trading (for current delivery) and "futures" trading (for delivery in future months). -
Common Stock
A unit of ownership in a corporation. Common stockholders participate in the corporation's profits or losses by receiving dividends and by capital gains or losses in the stock's share price. -
Community Property
State laws vary, but generally all property acquired during a marriage -- excluding property one spouse receives from a will, inheritance, or gift -- is considered community property, and each partner is entitled to one half. This includes debt accumulated. Nine states currently have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. (Alaska adopted a community property system in 1998, but it is optional.) -
Compound Interest
Interest that is computed on the principal and on the accrued interest. Compound interest may be computed continuously, daily, monthly, quarterly, semiannually, or annually. -
Comprehensive physical damage coverage
Pays for damage to a policyholder’s car that is not the result of an auto accident, such as theft, vandalism, fire, hail, natural disasters, hitting a deer. Comprehensive coverage requires a deductible, and will only pay as much as the car was worth before sustaining the damage. -
Consumer Price Index
The U.S. Department of Labor's main indicator of inflation. The Consumer Price Index is calculated each month from the cost of some 400 retail items in urban areas throughout the United States.
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Damage depreciation
Commonly used in aviation policies to describe the inherent loss of value to an aircraft that has been damaged and repaired. An identical aircraft that had never been damaged would be worth more in a sale than one that has been repaired, even if the repair work was exemplary. -
Deductible
The amount of a claim that the insured must pay before the insurance company will cover the rest. -
Deduction
An amount that can be subtracted from gross income, from a gross estate, or from a gift, thereby lowering the amount on which tax is assessed. -
Defined Benefit Plan
A qualified retirement plan under which a retiring employee will receive a guaranteed retirement fund, usually payable in installments. Annual contributions may be made to the plan by the employer at the level needed to fund the benefit. The annual contributions are limited to a specified amount, indexed to inflation. -
Defined Contribution Plan
A retirement plan under which the annual contributions made by the employer or employee are generally stated as a fixed percentage of the employee's compensation or company profits. The amount of retirement benefits is not guaranteed; rather, it depends upon the investment performance of the employee's account. -
Depreciation
The loss of an asset’s value over time. -
Diversification
Investing in different companies, industries, or asset classes in an attempt to limit overall risk. Of course, diversification does not guarantee against loss; it is a method used to help manage investment risk. Diversification may also mean the participation of a large corporation in a wide range of business activities. -
Dividend
A pro rata portion of earnings usually distributed in cash by a corporation to its stockholders. In preferred stock, dividends are usually fixed; with common shares, dividends may vary with the fortunes of the company. -
Dollar Cost Averaging
A system of investing in which the investor buys a fixed dollar amount of securities at regular intervals. The investor thus buys more shares when the price is low and fewer shares when the price rises, and the average cost per share is lower than the average price per share. Dollar cost averaging does not ensure a profit or prevent a loss. Such plans involve continuous investments in securities regardless of fluctuating prices. You should consider your financial ability to continue making purchases during periods of low and high price levels. However, this can be an effective way for investors to accumulate shares to help meet long-term goals. -
Durable Power of Attorney for Finances (DPOA)
A durable attorney for finances (DPOA) enables you to authorize someone to act on your behalf in financial and legal matters. Your agent could pay everyday expenses, watch over your investments, and file taxes, among other tasks. A DPOA may become effective immediately or when a triggering event occurs, such as a doctor certifying that you are physically or mentally incapacitated. -
Durable Power of Attorney for Health Care (HPOA)
A durable power of attorney for health care (HPOA), also known as a health-care proxy, enables you to appoint a representative to make medical decisions for you if you become unable to do so yourself. You can appoint anyone to be your agent as long as the individual is of legal age (usually 18 or older), and you can decide how much power your representative will have. An HPOA should be HIPAA compliant so your representative can access your private medical information.
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Earthquake insurance
A specific policy covering home repair and the replacement of personal property lost to seismic activity. -
Efficient Frontier
A statistical result from the analysis of the risk and return for a given set of assets that indicates the balance of assets that may, under certain assumptions, achieve the best return for a given level of risk. -
Employer-Sponsored Retirement Plan
A tax-favored retirement plan that is sponsored by an employer. Among the more common employer-sponsored retirement plans are 401(k) plans, 403(b) plans, simplified employee pension plans, and profit-sharing plans. -
Endorsement
An agreement added to a policy to change the amount of coverage offered by that policy. Once attached, an endorsement supersedes the original terms of the policy. -
Enrolled Agent (EA)
An enrolled agent is a person who has passed the appropriate examination in order to represent taxpayers before the Internal Revenue Service. Enrolled agents, like attorneys and certified public accountants, are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. -
Equity
The value of a person's ownership in real property or securities; the market value of a property or business, less all claims and liens against it. -
ERISA
The Employee Retirement Income Security Act is a federal law covering all aspects of employee retirement plans. If employers provide plans, they must be adequately funded and provide for vesting, survivor's rights, and disclosures. -
ESOP (employee stock ownership plan)
A defined contribution retirement plan in which company contributions must be invested primarily in qualifying employer securities. -
Estate Conservation
Activities coordinated to provide for the orderly and cost-effective distribution of an individual's assets at the time of his or her death. Estate conservation often includes the use of wills and trusts. -
Estate Tax
Upon the death of a decedent, federal and state governments impose taxes on the value of the estate left to others (with limitations). -
Executive Bonus Plan
The employer pays for a benefit that is owned by the executive. The bonus could take the form of cash, automobiles, life insurance, or other items of value to the executive. -
Executor
A person named by the probate courts or the will to carry out the directions and requests of the decedent.
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Federal Income Tax Bracket
The range of taxable income that is taxable at a certain rate. The brackets for tax years 2019 and 2020 are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. -
First-party claim
Request to an insurance company by one of its policyholders for compensation for a loss. -
Fixed Income
Income from investments, such as CDs, Social Security benefits, pension benefits, some annuities, or most bonds, that is the same every month. -
Floater
A separate policy designed to extend the coverage of the basic insurance policy for an item or collection of items. It's called a floater because sometimes the asset may “float” from location to location with the owner’s use. -
Flood insurance
A private or government-sponsored policy covering home repair and the replacement of personal property damaged by a flood. Normally not included in basic homeowner's policies. -
Flood insurance rate map (FIRM)
A map developed by the National Flood Insurance Program showing base flood elevations, risk zones, and floodplain boundaries; used in determining flood insurance premiums. -
Flood zone
Area in which the likelihood of a flood is much higher than average. -
Fundamental Analysis
An approach to the stock market in which specific factors - such as the price-to-earnings ratio, yield, or return on equity - are used to determine what stock may be favorable for investment.
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Gift Taxes
A federal tax levied on the transfer of property as a gift. This tax is paid by the donor. For 2019 and 2020, the first $15,000 a year from a donor to each recipient is excluded from tax. Most states also impose a gift tax. The gift tax exclusion is indexed for inflation.
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Holographic Will
A will entirely in the handwriting of the testator. Without witnesses, holographic wills are valid and enforceable only in some states. -
Homeowner's insurance
An insurance policy that covers a home and its contents against loss, and helps protect the insured from liability claims, up to the policy limits. -
Hull insurance
Portion of an aircraft or a yacht policy that covers physical damage to the insured craft.
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Individual Retirement Account (IRA)
Contributions to a traditional IRA are deductible from earned income in the calculation of federal and state income taxes if the taxpayer meets certain requirements. The earnings accumulate tax deferred until withdrawn, and then the entire withdrawal is taxed as ordinary income. Individuals not eligible to make deductible contributions may make nondeductible contributions, the earnings on which would be tax deferred. -
Inflation
An increase in the price of products and services over time. The government's main measure of inflation is the Consumer Price Index. -
Intentional misconduct
Willful damage to property or injury to others; distinct from negligence. -
Intestate
A person who dies without leaving a valid will. State law then determines who inherits the property or serves as guardian for any minor children. -
Investment Category
A broad class of assets with similar characteristics. The five investment categories include cash alternatives, fixed principal, equity, debt, and tangibles. -
Irrevocable Trust
A trust that may not be modified or terminated by the trustor after its creation.
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Joint and Survivor Annuity
Most pension plans must offer this form of pension plan payout that pays over the life of the retiree and his or her spouse after the retiree dies. The retiree and his or her spouse must specifically choose not to accept this payment form. -
Joint Tenancy
Co-ownership of property by two or more people in which the survivor(s) automatically assumes ownership of a decedent's interest. -
Jointly Held Property
Property owned by two or more persons under joint tenancy, tenancy in common, or, in some states, community property.
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Liability
Any claim against the assets of a person or corporation: accounts payable, wages, and salaries payable, dividends declared payable, accrued taxes payable, and fixed or long-term obligations such as mortgages, debentures, and bank loans. -
Lienholders interest endorsement
Also called “breach of warranty”; optional coverage in an aviation policy that pays a lienholder the balance of a loan in the event the aircraft is damaged in a manner that also voids the policy; favors the lienholder, not the policyholder. -
Limited Partnership
Limited partnerships pool the money of investors to develop or purchase income-producing properties. When the partnership subsequently receives income from these properties, it passes the income on to its investors as dividend payments. Limited Partnerships are subject to special risks such as illiquidity and those risks inherent in the underlying investments. There are no assurances that the stated investment objectives will be reached. At redemption, the investor may receive back less than the original investment. Individuals must meet specific suitability standards. These standards, along with the risks and other information concerning the partnership, are set forth in the prospectus, which can be obtained from your financial professional. Please consider the investment objectives, risks, charges, and expenses carefully before investing. Be sure to read the prospectus carefully before deciding whether to invest. -
Liquidity
How quickly and easily an asset or security can be converted into cash. -
Living Trust
A trust created by a person during his or her lifetime. -
Living Will
A living will, which is another type of advance medical directive, can be used to outline which medical procedures you want to be used to prolong your life, typically in the event of a terminal illness. It generally does not become effective until you become incapacitated. Even if your state does not authorize a living will, you may still want one as a way to document your wishes. -
Loan/lease gap insurance
Covers the difference between a car’s actual cash value and the amount still owed on a loan or lease. -
Lump-Sum Distribution
The disbursement of the entire value of an employer-sponsored retirement plan, pension plan, annuity, or similar account to the account owner or beneficiary. Lump-sum distributions may be rolled over into another tax-deferred account.
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Marginal Tax Rate
The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate. -
Marital Deduction
A provision of the tax codes that allows all assets of a deceased spouse to pass to the surviving spouse free of estate taxes. This provision is also referred to as the "unlimited marital deduction." The marital deduction may not apply in the case of noncitizens. -
Market Capitalization
Market Capitalization, or market cap, is the total value of the shares outstanding of a publicly traded company. It is calculated by multiplying a company’s number of shares outstanding by the current market price per share. -
Medical payments coverage
Covers the medical bills incurred by policyholders and their passengers after an auto accident, regardless of who is at fault. -
Money Market Fund
A mutual fund that specializes in investing in short-term securities and tries to maintain a constant net asset value of $1. Money-market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money when investing in a money market fund. -
Municipal Bond
A debt security issued by municipalities. The income from municipal bonds is usually exempt from federal income taxes. It may also be exempt from state income taxes in the state in which the municipal bond is issued. Some municipal bond interest could be subject to the federal alternative minimum tax. If you sell a municipal bond at a profit, you could incur capital gains taxes. The principal value of bonds fluctuates with market conditions. Bonds sold prior to maturity may be worth more or less than their original cost. -
Municipal Bond Fund
A mutual fund that specializes in investing in municipal bonds. Bond funds are subject to the same inflation, interest-rate, and credit risks associated with their underlying bonds. As interest rates rise, bond prices typically fall, which can adversely affect a bond fund's performance. The principal value of bond funds fluctuates with changes in market conditions. Shares, when sold or redeemed, may be worth more or less than their original cost. Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. -
Mutual Fund
A collection of stocks, bonds, or other securities purchased and managed by an investment company with funds from a group of investors. The return and principal value of mutual funds fluctuate with changes in market conditions. Shares when sold, or redeemed, may be worth more or less than their original cost. Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
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National Flood Insurance Program (NFIP)
Coverage against flooding for personal and business property under the National Flood Insurance Act of 1968, provided by a partnership of private insurers and the government. -
Negligence
Failure to exercise care, resulting in injury to others or damage to property. -
Net Asset Value
The per-share value of a mutual fund's current holdings. The net asset value is calculated by dividing the net market value of the fund's assets by the number of outstanding shares. -
No-fault laws
Regulations in some states that require each person involved in an auto accident to pay his or her own medical expenses and lost wages. Stricter versions disallow certain pain-and-suffering lawsuits. -
Non-renewal
Means only that a company does not want to offer the driver a policy any longer, possibly because of the driving or claims record over the last three to five years. More than likely, other insurers will provide insurance at a higher price.
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Open pilot clause
Minimum competency required by an aviation policy for a pilot to be covered under the policy.
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Peril
A specific cause of loss, such as fire or vandalism. There are 17 named perils in most homeowner's policies. -
Personal injury protection (PIP)
Auto insurance required in many no-fault states, which pays extensive medical expenses, lost wages, and a small death benefit for the driver and all passengers. PIP usually comes with a 20 percent deductible. -
Personal liability insurance
The part of a homeowner's policy that covers the insured from legal expenses and claims for compensation should the insured accidentally injure others or damage their property. -
Personal property
In regards to homeowner's insurance, the possessions of the insured. -
Personal watercraft
A small but powerful motorized watercraft sold under brand names such as Jet Ski or Wave Runner. Distinct from a boat or yacht. -
Policyholder
Person who buys and maintains an insurance policy; also called the "insured". -
Pooled Income Fund
A trust created by a charitable organization that combines the contributions of several donors and distributes income to those donors based on the earnings of the trust. The trust is managed by the charitable organization, and contributions are partially deductible for income tax purposes. -
Portfolio
All the investments held by an individual or a mutual fund. -
Preferred Stock
A class of stock with claim to a company's earnings, before payment can be made on the common stock, and that is usually entitled to priority over common stock if the company liquidates. Generally, preferred stocks pay dividends at a fixed rate. -
Premium
Payment required to initiate and continue an insurance policy. -
Prenuptial Agreement
A legal agreement arranged before marriage stating who owns property acquired before marriage and during marriage and how property will be divided in the event of divorce. ERISA benefits are not affected by prenuptial agreements. -
Price/Earnings Ratio (P/E Ratio)
The market price of a stock divided by the company's annual earnings per share. Because the P/E ratio is a widely regarded yardstick for investors, it often appears with stock price quotations. -
Principal
In a security, the principal is the amount of money that is invested, excluding earnings. In a debt instrument such as a bond, it is the face amount. -
Probate
The court-supervised process in which a decedent's estate is settled and distributed. -
Profit-Sharing Plan
An agreement under which employees share in the profits of their employer. The company makes annual contributions to the employees' accounts. These funds usually accumulate tax deferred until the employee retires or leaves the company. -
Property and indemnity coverage
Common name for liability portion of a yacht insurance policy. -
Property damage liability coverage
Pays for damages to the property of others caused by the policyholder in his or her vehicle. -
Prospectus
A document provided by investment companies to prospective investors. The prospectus gives information needed by investors to make informed decisions prior to investing in a specific mutual fund, variable annuity, or variable universal life insurance. The prospectus includes information on the minimum investment amount, the investment company's objectives, past performance, risk level, sales charges, management fees, and any other expense information about the investment company, as well as a description of the services provided to investors in the investment company.
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Qualified Domestic Relations Order (QDRO)
At the time of divorce, this order would be issued by a state domestic relations court and would require that an employee's ERISA retirement plan accrued benefits be divided between the employee and the spouse. -
Qualified Retirement Plan
A pension, profit-sharing, or qualified savings plan that is established by an employer for the benefit of the employees. These plans must be established in conformity with IRS rules. Contributions accumulate tax deferred until withdrawn and are deductible to the employer as a current business expense.
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Rental reimbursement coverage
Pays a set amount per day for transportation expenses or car rental while the insured’s car is being repaired due to a covered loss. -
Renter's insurance
Policies available to those who rent a dwelling; usually covers personal possessions and liability, but not the dwelling itself. -
Rent-loss provision
Portion of a policy that would reimburse an owner for rent that is lost while repairs are being made to rental property. -
Replacement cost
The cost of replacing a lost or destroyed item; does not factor in depreciation or market value. -
Revocable Trust
A trust in which the creator reserves the right to modify or terminate the trust. -
Rider
A provision attached to a policy that adds or changes coverage. -
Risk
The chance that an investor will lose all or part of an investment. -
Risk
Potential for loss or injury. -
Risk-Averse
Refers to the assumption that rational investors will choose the security with the least risk if they can maintain the same return. As the level of risk goes up, so must the expected return on the investment. -
Rollover
A method by which an individual can transfer the assets from one retirement program to another without the recognition of income for tax purposes. The requirements for a rollover depend on the type of program from which the distribution is made and the type of program receiving the distribution. -
Roth IRA
A nondeductible IRA that allows tax-free withdrawals when certain conditions are met. Income and contribution limits apply.
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Security
Evidence of an investment, either in direct ownership (as with stocks), creditorship (as with bonds), or indirect ownership (as with options). -
Self-Employed Retirement Plans
In the past, the terms “Keogh plan” and “H.R. 10 plan” were used to distinguish a retirement plan established by a self-employed individual from a plan established by a corporation or other entity. However, self-employed retirement plans are now generally referred to by the name of the particular type of plan used, such as SEP IRA, SIMPLE 401(k), or self-employed 401(k). The contribution amount is indexed annually for inflation. -
Simplified Employee Pension Plan (SEP)
A type of plan under which the employer contributes to an employee's IRA. Contributions may be made up to a certain limit and are immediately vested. -
Single-Life Annuity
An insurance-based contract that provides future payments at regular intervals in exchange for current premiums. Generally used as a supplement to retirement income and pays over the life of one individual, usually the retiree, with no rights of payment to any survivor. -
Special flood hazard areas (SFHA)
A categorization of the different risk areas associated with floods, used in determining premiums for flood insurance. “V” is the most hazardous. -
Split-Dollar Plan
An arrangement under which two parties (usually a corporation and employee) share the cost of a life insurance policy and split the proceeds. -
Spousal IRA
An IRA designed for a couple when one spouse has no earned income. The maximum combined contribution that can be made each year to an IRA and a spousal IRA is $12,000 or 100 percent of earned income (whichever is less) for the 2019 and 2020 tax years. The total may be split between the two IRAs as the couple wishes, provided that the contribution to either IRA does not exceed the maximum annual contribution limit ($6,000 for 2019 and 2020).
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Tax Credit
Tax credits, the most appealing type of tax deductions, are subtracted directly, dollar for dollar, from your income tax bill. -
Tax Deferred
Interest, dividends, or capital gains that grow untaxed in certain accounts or plans until they are withdrawn. -
Taxable Income
The amount of income used to compute tax liability. It is determined by subtracting adjustments, itemized deductions or the standard deduction, and personal exemptions from gross income. -
Tax-Exempt Bonds
Under certain conditions, the interest from bonds issued by states, cities, and certain other government agencies is exempt from federal income taxes. In many states, the interest from tax-exempt bonds will also be exempt from state and local income taxes. If you sell a tax-exempt bond at a profit, you could incur capital gains taxes. Some tax-exempt bond interest could be subject to the federal alternative minimum tax. The principal value of bonds fluctuates with market conditions. Bonds sold prior to maturity may be worth more or less than their original cost. -
Technical Analysis
An approach to investing in stocks in which a stock's past performance is mapped onto charts. These charts are examined to find familiar patterns to use as an indicator of the stock's future performance. -
Tenancy in Common
A form of co-ownership. Upon the death of a co-owner, his or her interest passes to the designated beneficiaries and not to the surviving owner or owners. -
Term Insurance
Term life insurance provides a death benefit if the insured dies. Term insurance does not accumulate cash value and ends after a certain number of years or at a certain age. -
Testamentary Trust
A trust established by a will that takes effect upon death. -
Testator
One who has made a will or who dies having left a will. -
Third-party claim
Claim made to an insurance company for damage or injury caused by one of its policyholders. -
Total Return
The total of all earnings from a given investment, including dividends, interest, and any capital gain. -
Total, totaled
Classification for a vehicle in need of repairs that will cost more than the vehicle’s actual value. -
Towing and labor coverage
Provides emergency road service and pays for towing charges. This coverage is not limited just to accidents, but can be used any time the insured’s car breaks down. -
Trust
A legal entity created by an individual in which one person or institution holds the right to manage property or assets for the benefit of someone else. Types of trusts include: Testamentary Trust – A trust established by a will that takes effect upon death; Living Trust – A trust created by a person during his or her lifetime; Revocable Trust – A trust in which the creator reserves the right to modify or terminate the trust; Irrevocable Trust – A trust that may not be modified or terminated by the trustor after its creation -
Trustee
An individual or institution appointed to administer a trust for its beneficiaries. -
Trustee-to-Trustee Transfer
A method of transferring retirement plan assets from one employer's plan to another employer plan or to an IRA. One benefit of this method is that no federal income tax will be withheld by the trustee of the first plan.
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Umbrella liability policy
An extra protection against liability that covers the amount above the maximum limits of homeowner's and auto policies. -
Unearned premium
Portion of a premium that may be returned to the policyholder if a claim resulting in a total loss takes place before the end of the policy term and eliminates the need for continued coverage. -
Uninsured/underinsured motorist (UM/UIM) coverage
Covers the costs associated with damage or injury caused by an uninsured, underinsured, or hit-and-run driver. -
Universal Life Insurance
A type of life insurance that combines a death benefit with a savings element that accumulates tax deferred at current interest rates, subject to change, but with a guaranteed minimum. Under a universal life insurance policy, the policyholder can increase or decrease his or her coverage, with limitations, without purchasing a new policy.Universal life is also referred to as "flexible premium" life insurance. Access to cash values through borrowing or partial surrenders can reduce the policy's cash value and death benefit, increase the chance that the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. Policy loans or withdrawals will reduce the policy's cash value and death benefit. Additional out-of-pocket payments may be needed if actual dividends or investment returns decrease, if you withdraw policy values, if you take out a loan, or if current charges increase. There may be surrender charges at the time of surrender or withdrawal and are taxable if you withdraw more than your basis in the policy. Any guarantees are contingent on the claims-paying ability of the issuing company. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased.
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Variable Universal Life Insurance
A type of life insurance that combines a death benefit with an investment element that accumulates tax deferred. The account value can be allocated into a variety of investment subaccounts. The investment return and principal value of the variable subaccounts will fluctuate; thus, the policy's account value, and possibly the death benefit, will be determined by the performance of the chosen subaccounts and is not guaranteed. Withdrawals may be subject to surrender charges and are taxable if the account owner withdraws more than his or her basis in the policy. Policy loans or withdrawals will reduce the policy's cash value and death benefit and may require additional premium payments to keep the policy in force. There may also be additional fees and charges associated with a VUL policy. Any guarantees are contingent on the claims-paying ability of the issuing company. Variable universal life is sold by prospectus. Please consider the investment objectives, risks, charges, expenses, and your need for death-benefit coverage carefully before investing. The prospectuses, which contains this and other information about the variable universal life policy and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. -
Volatility
The range of price swings of a security or market over time.
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Welfare Benefit Plan
An employee benefit plan that provides such benefits as medical, sickness, accident, disability, death, or unemployment benefits. -
Whole Life Insurance
A type of life insurance that offers a death benefit and also accumulates cash value tax deferred at fixed interest rates. Whole life insurance policies generally have a fixed annual premium that does not rise over the duration of the policy. Whole life insurance is also referred to as "ordinary" or "straight" life insurance. Access to cash values through borrowing or partial surrenders can reduce the policy's cash value and death benefit, increase the chance that the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. Policy loans or withdrawals will reduce the policy's cash value and death benefit. Additional out-of-pocket payments may be needed if actual dividends or investment returns decrease, if you withdraw policy values, if you take out a loan, or if current charges increase. There may be surrender charges at the time of surrender or withdrawal and are taxable if you withdraw more than your basis in the policy. Any guarantees are contingent on the claims-paying ability of the issuing company. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. -
Will
A legal document that declares a person's wishes concerning the disposition of property, the guardianship of his or her children, and the administration of the estate after his or her death.
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Yacht
Typically, a recreational watercraft that is 26 feet or more in length; distinct from a boat or a personal watercraft. -
Yield
Generally, the yield is the amount of current income provided by an investment. For stocks, the yield is calculated by dividing the total of the annual dividends by the current price. For bonds, the yield is calculated by dividing the annual interest by the current price. The yield is distinguished from the return, which includes price appreciation or depreciation.
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Zero-Coupon Bond
This type of bond makes no periodic interest payments but instead is sold at a steep discount from its face value. Because these bonds do not pay interest until maturity, their prices tend to be more volatile than bonds that pay interest regularly. Interest income is subject to ordinary income tax each year, even though the investor does not receive any income payments. Bonds sold prior to maturity may be worth more or less than their original cost.
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