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Financial Terms | |
Beneficiary (Credit Insurance) |
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Definition of Beneficiary (Credit Insurance)Beneficiary (Credit Insurance)The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit insurance, the beneficiary will always be the creditor.
Related Terms:Accidental Dismemberment: (Credit Insurance)Provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident. Amortization (Credit Insurance)Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity. BeneficiaryThis is the person who benefits from the terms of a trust, a will, an RRSP, a RRIF, a LIF, an annuity or a life insurance policy. In relation to RRSP's, RRIF's, LIF's, Annuities and of course life insurance, if the beneficiary is a spouse, parent, offspring or grand-child, they are considered to be a preferred beneficiary. If the insured has named a preferred beneficiary, the death benefit is invariably protected from creditors. There have been some court challenges of this right of protection but so far they have been unsuccessful. See "creditor Protection" below. A beneficiary under the age of 18 must be represented by an individual guardian over the age of 18 or a public official who represents minors generally. A policy owner may, in the designation of a beneficiary, appoint someone to act as trustee for a minor. Death benefits are not subject to income taxes. If you make your beneficiary your estate, the death benefit will be included in your assets for probate. Probate filing fees are currently $14 per thousand of estate value in British Columbia and $15 per thousand of estate value in Ontario. BeneficiaryThe person designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Borrower (Credit Insurance)A consumer who borrows money from a lender. Canadian Deposit Insurance CorporationBetter known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds. ![]() Canadian Life and Health Insurance Association (CLHIA)An association of most of the life and health insurance companies in Canada that conducts research and compiles information about the life and health insurance industry in Canada. Child Insurance Rider (CIR)insurance or insurability provided on current or future children of insured. Co-insuranceIn medical insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced. Coinsurance effectRefers to the fact that the merger of two firms decreases the probability of default on Commercial Business Loan (Credit Insurance)An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes. Comparative credit analysisA method of analysis in which a firm is compared to others that have a desired Consumer creditcredit granted by a firm to consumers for the purchase of goods or services. Also called Consumer Credit Protection ActA federal Act specifying the proportion of Contingent BeneficiaryThis is the person designated to receive the death benefit of a life insurance policy if the primary beneficiary dies before the life insured. This is a consideration when husband and wife make each other the beneficiary of their coverage. Should they both die in the same car accident or plane crash, the death benefits would go to each others estate and creditor claims could be made against them. Particularly if minor children could be survivors, then a trustee contingent beneficiary should be named. Cost of InsuranceThe cost of insuring a particular individual under the policy. It is based on the amount of coverage, as well as the underwriting class, age, sex and tobacco consumption of that individual. CreditMoney loaned. CreditBuying or selling goods or services now with the intention of payment following at some time in CreditOne side of a journal entry, usually depicted as the right side. CreditA rating of a company's credit (ability to payback debt), usually by a third party credit agency. creditOn your bank statement, 'credit' represents funds that you have deposited into your account. The opposite of a credit is a debit. Credit analysisThe process of analyzing information on companies and bond issues in order to estimate the credit analysisProcedure to determine the likelihood a customer will pay its bills. credit bureauAn organization that provides financial institutions with credit information concerning existing or potential customers who are looking to obtain credit services. credit cardA revolving source of credit with a pre-established limit. You have to pay interest on a credit card if you have an outstanding balance. Credit CrunchA decline in the ability or willingness of banks to lend. Credit enhancementPurchase of the financial guarantee of a large insurance company to raise funds. Credit LossA loan receivable that has proven uncollectible and is written off. credit memoA record of the funds which have been credited to your account. Credit periodThe length of time for which the customer is granted credit. credit policyStandards set to determine the amount and nature of credit to extend to customers. Credit RationingRestriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans. Credit riskThe risk that an issuer of debt securities or a borrower may default on his obligations, or that the Credit RiskFinancial and moral risk that an obligation will not be paid and a loss will result. Credit scoringA statistical technique wherein several financial characteristics are combined to form a single Credit spreadRelated:Quality spread Credit TermsConditions under which credit is extended by a lender to a borrower. Credit Unioncredit unions are community based financial co-operatives and most offer a full range of services. All are owned and controlled by members who are also shareholders. credit unions are regulated provincially and insured by a stabilization fund, deposit insurance or guarantee corporation. Crediting rateThe interest rate offered on an investment type insurance policy. CreditorLender of money. CreditorPerson or business that is owed money. Creditor (Credit Insurance)A lender or lending institution that offers financing and loans to a borrower, for the purpose of acquiring a commodity. Creditor Proof ProtectionThe creditor proof status of such things as life insurance, non-registered life insurance investments, life insurance RRSPs and life insurance RRIFs make these attractive products for high net worth individuals, professionals and business owners who may have creditor concerns. Under most circumstances the creditor proof rules of the different provincial insurance acts take priority over the federal bankruptcy rules. CreditorsPurchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a Critical Illness InsuranceCoverage that provides a lump-sum payment should you be diagnosed with a critical illness and survive a pre-determined period of time. There are no restrictions on how you use your benefit. Critical Illness Insurance (Credit Insurance)Coverage that provides a lump-sum payment should you become seriously ill with a specified illness. The payment is made to your creditors to pay off your debt owing. Dead Peasants InsuranceAlso known as "Dead Janitors insurance", this is the practice, where allowed, in several U.S. states, of numerous well known large American Corporations taking out corporate owned life insurance policies on millions of their regular employees, often without the knowledge or consent of those employees. Corporations profiting from the deaths of their employees [and sometimes ex-employees] have attracted adverse publicity because ultimate death benefits are seldom, even partially passed down to surviving families. Debt (Credit Insurance)Money, goods or services that someone is obligated to pay someone else in accordance with an expressed or implied agreement. Debt may or may not be secured. Demand line of creditA bank line of credit that enables a customer to borrow on a daily or on-demand basis. Disability Insuranceinsurance that pays you an ongoing income if you become disabled and are unable to pursue employment or business activities. There are limits to how much you can receive based on your pre-disability earnings. Rates will vary based on occupational duties and length of time in a particular industry. This kind of coverage has a waiting period before you can begin collecting benefits, usually 30, 60 or 90 days. The benefit paying period also varies from 2 years to age 65. A short waiting period will cost more that a longer waiting period. As well, a long benefit paying period will cost more than a short benefit paying period. Disability Insurance (Credit Insurance)Group insurance designed to cover monthly obligations due to a borrower being unable to work due to sickness or injury. Equity-based insuranceLife insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio. Errors and Omissions Insuranceinsurance coverage purchased by the agent/broker which provides protection against loss incurred by a client because of some negligent act, error, oversight, or omission by the agent/broker. EurocreditsIntermediate-term loans of Eurocurrencies made by banking syndicates to corporate and Evergreen creditRevolving credit without maturity. Export Credit InsuranceThe granting of insurance to cover the commercial and political risks of selling in foreign markets. Federal credit agenciesAgencies of the federal government set up to supply credit to various classes of Federal Deposit Insurance Corporation (FDIC)A federal institution that insures bank deposits. Federal Insurance Contributions Act of 1935 (FICA)A federal Act authorizing the government to collect Social Security and Medicare payroll taxes. Five Cs of creditFive characteristics that are used to form a judgement about a customer's creditworthiness: Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign Formalized Line of CreditA contractual commitment to make loans to a particular borrower up to a specified maximum during a specified period, usually one year. Full Credit PeriodThe period of trade credit given by a supplier to its customer. Full faith-and-credit obligationsThe security pledges for larger municipal bond issuers, such as states and Group Life InsuranceThis is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates. Guaranteed insurance contractA contract promising a stated nominal interest rate over some specific time Health Insurance Portability and Accountability Act of 1996 (HIPAA)A federal Act expanding upon many of the insurance reforms created by Income beneficiaryOne who receives income from a trust. Individual Insuranceinsurance that is offered to individuals rather than groups. Insurance ActIn Canada, a general statute that contains most of the insurance law of a common law province, and regulates the conduct of insurers and insurance agents within the province. Insurance CompanyA firm licensed to sell insurance to the public. Insurance Policy (Credit Insurance)A policy under which the insurance company promises to pay a benefit of the person who is insured. Insurance principleThe law of averages. The average outcome for many independent trials of an experiment Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment Tax CreditA reduction in taxes offered to firms to induce them to increase investment spending. Irrevocable BeneficiaryLegal designation that cannot be contested. (See beneficiary) Job Loss Insurance (Credit Insurance)Coverage that can pay down your debt should you become involuntarily unemployed. The payment is made to your creditors to reduce your debt owing. Lease (Credit Insurance)Contract granting use of real estate, equipment or other fixed assets for a specified period of time in exchange for payment. The owner or a leased property is the lessor and the user the lessee. Lender (Credit Insurance)Individual or firm that extends money to a borrower with the expectation of being repaid, usually with interest. Lenders create debt in the form of loans. Lenders include financial institutions, leasing companies government lending agencies and automobile dealers. Letter of credit (L/C)A form of guarantee of payment issued by a bank used to guarantee the payment of Letters of CreditA letter of credit is a guarantee of payment by a bank (issuing institution)to a third party for a specific amount of money, if certain conditions are met. Level Premium Life InsuranceThis is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years. Life Insuranceinsurance that provides protection against an economic loss caused by death of the person insured. Life Insurance (Credit Insurance)Group Term life insurance that pays or reduces the balance due on a loan if the borrower dies before the loan is repaid. Line of credit An informal arrangement between a bank and a customer establishing a maximum loan Line of creditAn informal arrangement between a bank and a customer establishing a maximum loan line of creditAgreement by a bank that a company may borrow at any time up to an established limit. Line of CreditAn agreement negotiated between a borrower and a lender which establishes the maximum amount against which a borrower may draw. The agreement also sets out other conditions, such as how and when money borrowed against the line of credit is to be repaid. line of creditA revolving source of credit with a pre-established limit. You access the funds only as you need them, and any amount that you pay back becomes accessible to you again. Unlike a personal loan, a line of credit permits you to write cheques and make bank machine withdrawals, and requires you to pay interest only on the funds that you actually use. Mortgage (Credit Insurance)An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for purposes of purchasing a loan secured by a home. Mortgage InsuranceCommonly sold in the form of reducing term life insurance by lending institutions, this is life insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional life insurance companies. No matter where it is purchased, the reducing term insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage. Mortgage Life insurance (Credit Insurance)Decreasing term life insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage. Operating Line of CreditA bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year. Personal Line of credit (Credit Insurance)A bank's commitment to make loans to a borrower up to a specified maximum during a specific period, usually one year. personal line of credit (PLC)A revolving source of credit with a pre-established limit. You access the funds only as you need them, and any amount that you pay back becomes accessible to you again. Unlike a personal loan, a PLC permits you to write cheques and make bank machine withdrawals, and requires you to pay interest only on the funds that you actually use. Portfolio insuranceA strategy using a leveraged portfolio in the underlying stock to create a synthetic put Pre-existing medical condition (Credit Insurance)A medical condition that existed before you became insured. Most policies exclude benefits if the condition is related to the event that triggers a claim if occurs within a certain period (6-12 months) after you became insured. Preferred BeneficiaryUsed in older contracts to confer the same rights as an irrevocable beneficiary. Applied to family members. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |