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Definition of Benefit
An instruction that pays a cash amount upon the occurrence of a specific event.
Coverage against accidental death usually payable in addition to base amount of coverage.
An approximate measure of the liability of a plan in the event of a
Automatic payment of moneys derived from a benefit.
The proportion of unemployment benefits paid to a company’s
The amount of cash payable on a benefit.
The proportion of total taxable wages for laid off
a listing of service departments in an order that begins with the one providing the most service
cash or nontaxable benefits
The calculation and comparison of the costs and benefits of a policy or project.
relative costs and benefits that result from a specific course
The net present value of an investment divided by the investment's initial cost. Also called
Amount paid on death of an insured.
A pension plan in which the sponsor agrees to make specified dollar payments to
A pension plan that pays out a predetermined dollar
The equivalent annual annuity for the net present value of an investment project.
Flat benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
Incremental costs and benefits
Costs and benefits that would occur if a particular course of action were
Some insurance companies include this benefit option at no cost to their policy holders. The insurer considers on a case to case basis, the need for insurance funds before death. If the insured can demonstrate a shortened life of less than two years and with some insurers one year, the insurer will consider releasing up to 50% or a maximum of $100,000 of the life insurance coverage held by the insured. Not all insurers offer this benefit for free. The need has resulted in specific stand alone living benefit/critical illness policies coming into existence. Look under "Different types of Life Insurance" for further information. You might have heard of "Viatical Settlements", the practice of seriously ill people selling the rights to their life insurance policies to third parties. This practice is common in the United States but has not caught on in Canada.
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
Pension Benefit Guaranty Corporation (PBGC)
A federal agency that insures the vested benefits of
Target Benefit Plan
A defined benefit plan under which the employer makes
tax benefit (of depreciation)
the amount of depreciation deductible for tax purposes multiplied by the tax rate;
Unit benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
Workers' Compensation Benefits
Employer-paid insurance that provides their employees with wage compensation if they are injured on the job.
Any of several methods that recognize an increased amount
activity based costing (ABC)
A relatively new method advocated for the
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity
an organizational unit that performs management activities benefiting the entire organization;
A resource, recorded through a transaction, that is expected to yield a benefit to a
Probable future economic benefit that is obtained or controlled by an entity as a result of
Assuris is a not for profit organization that protects Canadian policyholders in the event that their life insurance company should become insolvent. Their role is to protect policyholders by minimizing loss of benefits and ensuring a quick transfer of their policies to a solvent company where their benefits will continue to be honoured. Assuris is funded by the life insurance industry and endorsed by government. If you are a Canadian citizen or resident, and you purchased a product from a member life insurance company in Canada, you are protected by Assuris.
attribute-based costing (ABC II)
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
Automatic Waiver of Premium
A benefit that automatically forfeits premium payments.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
This 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.
The person designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event.
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.
A flexible benefits plan authorized under the Internal Revenue
Canada Pension Plan (CPP)
A plan that provides retirement and long term disability income benefits to residents of Canadian provinces (excluding Quebec).
The series of steps one follows when justifying the decision to purchase
One where substantially all of the benefits and risks of ownership are transferred to the lessee. It must be reflected on the company's balance sheet as an asset and corresponding liability.
Cash Surrender Value
This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.
Cash Surrender Value
benefit that entitles a policy owner to an amount of money upon cancellation of a policy.
Request for payment of benefits under the terms of an insurance policy.
Person or party making request for payment of benefits under the terms of an insurance policy.
This 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.
Term life insurance products are offered as non-convertible or convertible to a certain time in the future. The coversion right has a time limit, usually to the policy holder's age 60 or possibly even age 70. This right means that the policy holder has the right to convert their existing policy to another specific different plan of permanent insurance within the specified time period, without providing evidence of insurability. There is a slightly higher cost for a term policy with the conversion priviledge but it is a valuable feature should a policy holder's health change for the worst and continued insurance coverage becomes a necessity.
Critical Illness Insurance
Coverage 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.
Davis-Bacon Act of 1931
A federal Act providing wage protection to nongovernment
Dead Peasants Insurance
Also 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.
A flat amount that an insured must pay before the insurance company makes any benefit payments under a health insurance policy.
Deferred Tax Asset
Future tax benefit that results from (1) the origination of a temporary difference
Defined contribution plan
A pension plan in which the sponsor is responsible only for making specified
Insurance 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.
Investing so that all your eggs are not in the same basket. By spreading your investments over different kinds of investments, you cushion your portfolio against sudden swings in any one area. Segregated equity funds have become a popular and secure way for average investors to get the benefits of greater diversification.
Earned income is generally an individual's salary or wages from employment. It also includes some taxable benefits. Earned income also includes business income if the individual is self-employed. Earned income is used as the basis for calculating RRSP maximum contribution limits.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal Act that sets minimum operational and funding standards for employee benefit
A program, such as social security, under which everyone meeting the eligibility requirements is entitled to receive benefits from the program, so that costs are not known in advance.
Life insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.
Federal Unemployment Tax Act (FUTA)
A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
An expression of economic benefit that motivates behavior that might otherwise not take place.
First To Die Coverage
This means that there are two or more life insured on the same policy but the death benefit is paid out on the first death only. If two or more persons at the same address are purchasing life insurance at the same time, it is wise to compare the cost of this kind of coverage with individual policies having a multiple policy discount.
An account for the investment credit to show all income statement benefits of the credit
a benefits package that is triggered by the
Group Life Insurance
This 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.
A type of contract in which the amount of the benefit to be paid is based on the actual amount of financial loss determined at the time of the loss - for example, hospital expense insurance.
A situation where an increase (or decrease) in the benefits of one
The adjustment of benefits to compensate for the effects of inflation.
Trading by officers, directors, major stockholders, or others who hold private inside
Insurance Policy (Credit Insurance)
A policy under which the insurance company promises to pay a benefit of the person who is insured.
This is the person covered by the life insurance policy. Upon this person's death, a tax free benefit will be paid to that person's estate or a named beneficiary.
Defined benefit pension plans that are guaranteed by life insurance products. Related: noninsured plans
Insured Retirement Plan
This is a recently coined phrase describing the concept of using Universal Life Insurance to tax shelter earnings which can be used to generate tax-free income in retirement. The concept has been described by some as "the most effective tax-neutralization strategy that exists in Canada today."
The party in an insurance contract that promises to pay a benefit if a specified loss occurs. Usually an insurance company.
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual
This refers to the termination of an insurance policy due to the owner of the policy failing to pay the premium within the grace period [Usually within 30 days after the last regular premium was required and not paid]. It is possible to re-instate the coverage with the same premium and benefits intact but the life insured will have to qualify for this coverage all over again and bring up to date all unpaid premiums.
This refers to the practice of some life insurance companies to offer policies which are lower in price because they have assumed a high probability that the policies will be cashed in by their owners for one reason or another before the death benefit becomes available. It is a bold and risky offer by the insurance company because sometimes the purchasers of these policies simply don't lapse them.
Last To Die Coverage
This means that there are two or more life insured on the same policy but the death benefit is paid out on the last person to die. The cost of this type of coverage is much less than a first to die policy and it is generally used to protect estate value for children where there might be substantial capital gains taxes due upon the death of the last parent. This kind of policy is also valuable when one of two people covered has health problems which would prohibit obtaining individual coverage.
Stock in a firm that relies on financial leverage. Holders of leveraged equity face the
A probable future sacrifice of economic benefits arising from present obligations of
McNamara-O'Hara Service Contract Act of 1965
A federal Act requiring federal contractors to pay those employees working on a federal contract at
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Commonly 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.
Two or more death benefits based on one definition with different insureds.
When you buy a mutual fund, you are pooling your money with that of other investors. An investment professional called a portfolio advisor takes that money and invests it for all the investors in a variety of different securities as determined by the investment objectives of the mutual fund. This gives you the benefit of diversification that is, being invested in many different investments at once.
Defined benefit pension plans that are not guaranteed by life insurance products. Related:
Normal annuity form
The manner in which retirement benefits are paid out.
The practice of making a charge in the income account equivalent to the tax savings
One where the risks and benefits, as well as ownership, stays with the lessor.
a potential benefit that is foregone because
benefit or cash flow forgone as a result of an action.
Other long term liabilities
Value of leases, future employee benefits, deferred taxes and other obligations
A fund that is established for the payment of retirement benefits.
A formal agreement between an entity and its employees, whereby the
a fringe benefit provided by the employer
Personal benefits, including direct benefits, such as the use of a firm car or expense account for
An interest in an asset held by a trustee for the benefit of another person.
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