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Definition of Guaranteed Renewal
A promise that a life insurance policy will be renewed without penalty or medical examination after the term has expired. The renewal rate can also be guaranteed.
First issued by Freddie Mac in 1975, GMCs, like PCs, represent
A contract promising a stated nominal interest rate over some specific time
A pure investment product in which a life company agrees, for a
A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time, usually between 30 days and 5 years. GICs are available from banks, trust companies, and other financial institutions.
Interest bearing investment with fixed rate and term.
Interest bearing investment with fixed rate and term.
Project notes are issued by municipalities to finance federally sponsored programs in
Variations of mortgage instruments such as adjustable-rate and variablerate
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
Futures contracts, such as stock index futures, that settle for cash, not involving
mortgage against which no additional debt may be issued.
Refers to the fact that the merger of two firms decreases the probability of default on
A security backed by a pool of pass-throughs , structured so that
Similar to equipment trust certificates except that the lender is either the
A term of reference describing a unit of trading for a financial or commodity future. Also, the actual
The month in which futures contracts may be satisfied by making or accepting a delivery.
A loan based on the credit of the borrower and on the collateral for the mortgage.
Equipment trust certificates
certificates issued by a trust that was formed to purchase an asset and lease it
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
A guaranteed investment contract where the credit rating is tied to some variable
A cash market transaction in which delivery of the commodity is deferred until after the
Forward forward contract
In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
Agreement to buy or sell a set number of shares of a specific stock in a designated future
Futures contract multiple
A constant, set by an exchange, which when multiplied by the futures price gives
GEMs (growing-equity mortgages)
mortgages in which annual increases in monthly payments are used to
Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation
Graduated-payment mortgages (GPMs)
A type of stepped-payment loan in which the borrower's payments
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
A contract that obligates a purchaser of a project's output to make cash
The law of averages. The average outcome for many independent trials of an experiment
A loan secured by the collateral of some specified real estate property which obliges the borrower
A bond in which the issuer has granted the bondholders a lien against the pledged assets.
A modification of standard duration to account for the impact on duration of MBSs of
Mortgage pass-through security
Also called a passthrough, a security created when one or more mortgage
The period from the taking of applications from prospective mortgage borrowers to the
The risk associated with taking applications from prospective mortgage borrowers
The interest rate on a mortgage loan.
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
Securities backed by a pool of mortgage loans.
The lender of a loan secured by property.
The borrower of a loan secured by property.
Most distant futures contract
When several futures contracts are considered, the contract settling last.
Nearby futures contract
When several futures contracts are considered, the contract with the closest
Next futures contract
The contract settling immediately after the nearby futures contract.
Nexus (of contracts)
A set or collection of something.
contracts which have been bought or sold without the transaction having been completed by
mortgage against which additional debts may be issued. Related: closed-end mortgage.
The contract that balances the three types of agency costs (contracting, monitoring, and
A contract that, in exchange for the option price, gives the option buyer the right, but not
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
RAMs (Reverse-annuity mortgages)
mortgages in which the bank makes a loan for an amount equal to a
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Set of contracts perspective
View of corporation as a set of contracting relationships, among individuals
Strip mortgage participation certificate (strip PC)
Ownership interests in specified mortgages purchased
Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the
A contract that obligates the purchaser to take any product that is offered to it (and pay
Term life insurance
A contract that provides a death benefit but no cash build-up or investment component.
Provides a death benefit only, no build-up of cash value.
Turnkey construction contract
A type of construction contract under which the construction firm is
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Whole life insurance
A contract with both insurance and investment components: (1) It pays off a stated
Wholesale mortgage banking
The purchasing of loans originated by others, with the servicing rights
A guaranteed investment contract purchased with deposits over some future designated
an external party that has been granted an outsourcing contract to produce a part or component for an entity
an external party that has been granted an
a contract in which the customer agrees
Agreement to buy or sell an asset in the future at an agreed price.
Exchange-traded promise to buy or sell an asset in the future at a prespecified price.
A contract in which the seller agrees to provide something to a buyer at a specified future date at an agreed price.
An unwritten understanding between two groups, such as an understanding between an employer and employees that employees will receive a stable wage despite business cycle activity.
A program in which workers and firms pay contributions and workers collect benefits if they become unemployed.
Contract Work Hours and Safety Standards Act
A federal Act requiring federal contractors to pay overtime for hours worked exceeding 40 per week.
Federal Insurance Contributions Act of 1935 (FICA)
A federal Act authorizing the government to collect Social Security and Medicare payroll taxes.
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
A federal Act expanding upon many of the insurance reforms created by
McNamara-O'Hara Service Contract Act of 1965
A federal Act requiring federal contractors to pay those employees working on a federal contract at
Walsh-Healey Public Contracts Act of 1936
A federal Act that forces government contractors to comply with the government’s minimum wage and hour rules.
A contract accounting method that recognizes contract revenue
Method of accounting for sales or service agreements where completion
Canadian Deposit Insurance Corporation
Better 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.
In 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.
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.
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.
Errors and Omissions Insurance
insurance 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.
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.
An insured mortgage protects only the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC [Canada mortgage and Housing Corporation] and is required if a person has a high-ratio mortgage. [A mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.]
Level Premium Life Insurance
This 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.
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.
Split Dollar Life Insurance
The split dollar concept is usually associated with cash value life insurance where there is a death benefit and an accumulation of cash value. The basic premise is the sharing of the costs and benefits of a life insurance policy by two or more parties. Usually one party owns and pays for the insurance protection and the other owns and pays for the cash accumulation. There is no single way to structure a split dollar arrangement. The possible structures are limited only by the imagination of the parties involved.
Temporary Life Insurance
Temporary insurance coverage is available at time of application for a life insurance policy if certain conditions are met. Normally, temporary coverage relates to free coverage while the insurance company which is underwriting the risk, goes through the process of deciding whether or not they will grant a contract of coverage. The qualifications for temporary coverage vary from insurance company to insurance company but generally applicants will qualify if they are between the ages of 18 and 65, have no knowledge or suspicions of ill health, have not been absent from work for more than 7 days within the prior 6 months because of sickness or injury and total coverage applied for from all sources does not exceed $500,000. Normally a cheque covering a minimum of one months premium is required to complete the conditions for this kind of coverage. The insurance company applies this deposit towards the cost of a policy at its issue date, which may be several weeks in the future.
Term Life Insurance
A plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term.
Yearly Renewable Term Insurance
Sometimes, simply called YRT, this is a form of term life insurance that may be renewed annually without evidence of insurability to a stated age.
A loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest.
A formal written statement of the rights and obligations of each party to a transaction.
Export Credit Insurance
The granting of insurance to cover the commercial and political risks of selling in foreign markets.
A firm licensed to sell insurance to the public.
Debt instrument by which the borrower (mortgagor) gives the lender (mortgagee) a lien on property as security for the repayment of a loan.
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.
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.
Borrower (Credit Insurance)
A consumer who borrows money from a lender.
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.
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.
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