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Financial Terms | |
Life Income Fund |
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Definition of Life Income FundLife Income FundCommonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement income funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80.
Related Terms:Registered Pension PlanCommonly referred to as an RPP this is a tax sheltered employee group plan approved by Federal and Provincial governments allowing employees to have deductions made directly from their wages by their employer with a resulting reduction of income taxes at source. These plans are easy to implement but difficult to dissolve should the group have a change of heart. Employer contributions are usually a percentage of the employee's salary, typically from 3% to 5%, with a maximum of the lessor of 20% or $3,500 per annum. The employee has the same right of contribution. Vesting is generally set at 2 years, which means that the employee has right of ownership of both his/her and his/her employers contributions to the plan after 2 years. It also means that all contributions are locked in after 2 years and cannot be cashed in for use by the employee in a low income year. Should the employee change jobs, these funds can only be transferred to the RPP of a new employer or the funds can be transferred to an individual RRSP (or any number of RRSPs) but in either scenario, the funds are locked in and cannot be accessed until at least age 60. The only choices available to access locked in RPP funds after age 60 are the conversion to a life income fund or a Unisex Annuity. 12b-1 fundsMutual funds that do not charge an upfront or back-end commission, but instead take out up to Accrued Incomeincome that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual fund or Segregated Equity fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment. Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Adjusted Income from ContinuingOperations Reported income from continuing operations Annual fund operating expensesFor investment companies, the management fee and "other expenses," Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each ![]() Balanced fundAn investment company that invests in stocks and bonds. The same as a balanced mutual fund. Balanced mutual fundThis is a fund that buys common stock, preferred stock and bonds. The same as a Beta equation (Mutual Funds)The beta of a fund is determined as follows: Beta (Mutual Funds)The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means Book IncomePretax income reported on the income statement. 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. Cash Flow–to–Income Ratio (CFI)Adjusted cash flow provided by continuing operations Closed-end fundAn investment company that sells shares like any other corporation and usually does not common-size income statementincome statement that presents items as a percentage of revenues. ![]() Cost of fundsInterest rate associated with borrowing money. Current Income Tax ExpenseThat portion of the total income tax provision that is based on Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred nominal life annuityA monthly fixed-dollar payment beginning at retirement age. It is nominal Disposable Incomeincome less income tax. Dividend incomeincome that a company receives in the form of dividends on stock in other companies that it holds. Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 earned incomeEarned 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. earnings before interest and income tax (EBIT)A measure of profit that Economic incomeCash flow plus change in present value. Economic lifeThe period over which a company expects to be able to use an asset. EFT (electronic funds transfer)funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT. Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit Employee stock fundA firm-sponsored program that enables employees to purchase shares of the firm's Endowment fundsInvestment funds established for the support of institutions such as colleges, private Federal fundsNon-interest bearing deposits held in reserve for depository institutions at their district Federal Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal funds rateThis is the interest rate that banks with excess reserves at a Federal Reserve district bank Federal Funds RateThe interest rate at which banks lend deposits at the Federal Reserve to one another overnight. Fixed-income equivalentAlso called a busted convertible, a convertible security that is trading like a straight Fixed-income instrumentsAssets that pay a fixed-dollar amount, such as bonds and preferred stock. Fixed-income marketThe market for trading bonds and preferred stock. Fixed-income securityA security that pays a specified cash flow over a Forward Fed fundsFed funds traded for future delivery. Fund familySet of funds with different investment objectives offered by one management company. In many Fundamental analysisSecurity analysis that seeks to detect misvalued securities by an analysis of the firm's fundamental analystsAnalysts who attempt to find under- or overvalued securities by analyzing fundamental information, such as earnings, asset values, and business prospects. Fundamental betaThe product of a statistical model to predict the fundamental risk of a security using not Fundamental descriptorsIn the model for calculating fundamental beta, ratios in risk indexes other than Funded debtDebt maturing after more than one year. funded debtDebt with more than 1 year remaining to maturity. Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Funding ratioThe ratio of a pension plan's assets to its liabilities. Funding riskRelated: interest rate risk Funds From Operations (FFO)Used by real estate and other investment trusts to define the cash flow from Global fundA mutual fund that can invest anywhere in the world, including the U.S. 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. growth fundsMutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities. Hedge fundA fund that may employ a variety of techniques to enhance returns, such as both buying and High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. IncomeNet earnings after all expenses for an accounting period are subtracted from all Income beneficiaryOne who receives income from a trust. Income bondA bond on which the payment of interest is contingent on sufficient earnings. These bonds are Income from Continuing OperationsAfter-tax net income before discontinued operations, Income fundA mutual fund providing for liberal current income from investments. income fundsMutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares. Income SmoothingA form of earnings management designed to remove peaks and valleys Income SplittingThis is a tax planning strategy of arranging for income to be transferred to family members who are in lower tax brackets than the one earning the income, thus reducing taxes. Even though attribution rules limit income splitting, there are still a number of legitimate ways to do so, such as through the use of spousal RRSPs. INCOME STATEMENTAn accounting statement that summarizes information about a company in the following format: Income StatementOne of the basic financial statements; it lists the revenue and expense accounts of the company. income statementFinancial statement that summarizes sales revenue Income statementA financial report that summarizes a company’s revenue, cost of income statementFinancial statement that shows the revenues, expenses, and net income of a firm over a period of time. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Income StatementsA financial statement that displays a breakdown of total sales and total expenses. Income stockCommon stock with a high dividend yield and few profitable investment opportunities. INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Income Tax ProvisionThe expense deduction from pretax book income reported on the Incomes PolicyA policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example. Index fundInvestment fund designed to match the returns on a stockmarket index. index fundsMutual funds that aim to track the performance of a specific stock or bond index. This process is also referred to as indexing and passive management. Interest incomeincome that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies. internally generated fundsCash reinvested in the firm; depreciation plus earnings not paid out as dividends. International fundA mutual fund that can invest only outside the United States. international fundA mutual fund that can invest in securities issued anywhere outside of Canada. International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. Investment incomeThe revenue from a portfolio of invested assets. Joint Policy LifeOne insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes. Labour-Sponsored Venture FundsVenture capital corporations established by labour unions. They function as other venture capital corporations but are subject to government regulation. 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. Liability funding strategiesInvestment strategies that select assets so that cash flows will equal or exceed life cycle costingthe accumulation of costs for activities that Life ExpectancyThe average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table. 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. Life InsuredThe person who's life is protected by an individual policy. Life UnderwriterInsurance Agent. Lifecycle costingAn approach to costing that estimates and accumulates the costs of a product/service over Load fundA mutual fund with shares sold at a price including a large sales charge -- typically 4% to 8% of Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |