|Life Insurance (Credit Insurance)
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Definition of Life Insurance (Credit Insurance)
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.
Decreasing term life insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage.
Also referred to as the weighted-average life (WAL). The average number of years that each
The requirement that a claim holder voting against a plan of reorganization
Refers to the fact that the merger of two firms decreases the probability of default on
A method of analysis in which a firm is compared to others that have a desired
credit granted by a firm to consumers for the purchase of goods or services. Also called
The process of analyzing information on companies and bond issues in order to estimate the
Purchase of the financial guarantee of a large insurance company to raise funds.
The length of time for which the customer is granted credit.
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
A statistical technique wherein several financial characteristics are combined to form a single
The interest rate offered on an investment type insurance policy.
Lender of money.
Deferred nominal life annuity
A monthly fixed-dollar payment beginning at retirement age. It is nominal
Demand line of credit
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and
Revolving credit without maturity.
Federal credit agencies
Agencies 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.
Five Cs of credit
Five characteristics that are used to form a judgement about a customer's creditworthiness:
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
Full faith-and-credit obligations
The security pledges for larger municipal bond issuers, such as states and
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time
The law of averages. The average outcome for many independent trials of an experiment
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Letter of credit (L/C)
A form of guarantee of payment issued by a bank used to guarantee the payment of
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
credit granted by a firm to consumers for the purchase of goods or services.
Revolving credit agreement
A legal commitment wherein a bank promises to lend a customer up to a
Revolving line of credit
A bank line of credit on which the customer pays a commitment fee and can take
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.
credit granted by a firm to another firm for the purchase of goods or services.
A whole life insurance product whose investment component pays a competitive interest rate
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Weighted average life
Whole life insurance
A contract with both insurance and investment components: (1) It pays off a stated
Buying or selling goods or services now with the intention of payment following at some time in
Purchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a
An approach to costing that estimates and accumulates the costs of a product/service over
One side of a journal entry, usually depicted as the right side.
life cycle costing
the accumulation of costs for activities that
product life cycle
a model depicting the stages through
The period over which a company expects to be able to use an asset.
The estimated life span of a fixed asset, during which it can be expected to
Procedure to determine the likelihood a customer will pay its bills.
Standards set to determine the amount and nature of credit to extend to customers.
line of credit
Agreement by a bank that a company may borrow at any time up to an established limit.
A decline in the ability or willingness of banks to lend.
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
A program in which workers and firms pay contributions and workers collect benefits if they become unemployed.
Consumer Credit Protection Act
A federal Act specifying the proportion of
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
The time period during which inventory can be retained in stock and beyond
Shelf life control
Deliberate usage of the oldest items first, in order to avoid exceeding
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.
Creditor Proof Protection
The 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.
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.
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.
The 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 Income Fund
Commonly 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.
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 rating of a company's credit (ability to payback debt), usually by a third party credit agency.
A loan receivable that has proven uncollectible and is written off.
Financial and moral risk that an obligation will not be paid and a loss will result.
Conditions under which credit is extended by a lender to a borrower.
credit 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.
Person or business that is owed money.
Export Credit Insurance
The granting of insurance to cover the commercial and political risks of selling in foreign markets.
Formalized Line of Credit
A contractual commitment to make loans to a particular borrower up to a specified maximum during a specified period, usually one year.
Full Credit Period
The period of trade credit given by a supplier to its customer.
A firm licensed to sell insurance to the public.
Letters of Credit
A 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.
Line of Credit
An 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.
Operating Line of Credit
A bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year.
Line of credit against which funds may be borrowed at any time, with regular scheduled repayments of a predetermined minimum amount.
Period of delay allowed by a firm's supplier to pay its invoices. Frequently, the terms are : 2% discount on invoice if paid in 10 days or net if paid in 30 days.
On your bank statement, 'credit' represents funds that you have deposited into your account. The opposite of a credit is a debit.
An organization that provides financial institutions with credit information concerning existing or potential customers who are looking to obtain credit services.
A revolving source of credit with a pre-established limit. You have to pay interest on a credit card if you have an outstanding balance.
A record of the funds which have been credited to your account.
line of credit
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 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.
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.
secured loan or line of credit
A lump sum of funds (loan), or a revolving source of credit with a pre-established limit (line of credit), for which the customer must provide collateral.
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.
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