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Definition of Policyholder
This is the person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation. There are instances in marriage breakup (or relationship breakup with dependent children) where appropriate life insurance on the support provider, owned and paid for by the ex-spouse receiving the support is an acceptable method of ensuring future security.
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.
Life insurance payable to the policyholder, if living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date. For example, some Term to age 100 policies offer the option of taking the face amount of the policy as a cash payout at age 100 if the policyholder is still alive and paying all required income taxes on the amount received or leaving the policy to pay out upon death whereupon the payout is tax free.
This policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.
Policies which are sold but do not remain in force because the policyholder fails to pay premiums.
A pool of assets held by the insurer, to back a specific liability to a policyholder. Segregated Funds flucuate in value depending on the market value of a specific group of assets the company must maintain separately.
income 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.
A signed statement of facts made by a person applying for Life Insurance and then used by the Insurance company to decide whether or not to issue a policy. The application becomes part of the Insurance contract when the policy is issued.
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.
This is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the Value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her Lifetime as well as disposal of interest upon death or disability. Life Insurance, critical illness coverage and disability Insurance are major considerations to help fund This type of agreement.
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.
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.
A licensed Insurance agent who sells Insurance for only one company.
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.
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.
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.
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.
As the Term dividend relates to a corporation's earnings, a dividend is an amount paid per share from a corporation's after tax profits. Depending on the type of share, it may or may not have the right to earn any dividends and corporations may reduce or even suspend dividend payments if they are not doing well. some dividends are paid in the form of additional shares of the corporation. dividends paid by canadian corporations qualify for the dividend tax credit and are taxed at lower rates than other income.
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.
Fiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, There is a loss of confidence. Even so, governments print it routinely when they need it. The Value of fiat money is dependent upon the performance of the economy of the country which issued it. canada's currency falls into This category.
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.
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.
This 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.
This is a provincial government licensed independent businessperson who usually represents five or more Life Insurance companies in a sales and service capacity and who is paid a commission by those Life Insurance companies for sales and service of Life Insurance products. We for example, have been in business for 12 years and regularly place new business with over twenty different Life Insurance companies.
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.
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.]
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."
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.
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.
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.
This is a will which specifically expresses the testator's desire not to be kept alive on Life support machines, should the occasion arise.
This is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to Their illegal origins.
Medical Information Bureau
This organization was established in 1902. The Medical Information Bureau (M.I.B.) is a non-profit association of Life Insurance companies. Its purpose is to detect and deter fraud by providing warnings called, alerts, to member companies. For example, if an Insurance applicant advised one Insurance company of a heart attack and then applied to another Insurance company omitting This history, codes, reported by the first Insurance company, indicating a heart attack would alert the second Insurance company to the undisclosed history. It is a rarity, however, that the alert is the only notice of a specific medical impairement as most applicants completely disclose Their history.
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.
This is the maximum Value of a policy that an Insurance company will issue without the applicant taking a medical examination, although medical questions are invariably asked during the application process. When a non-medical issue is made through group Insurance, in most cases, medical data is not requested at all.
This is your payment for the cost of Insurance. you may pay annually, semi-annually, quarterly or Monthly. The least expensive method is annually. Using any of the other payment modes will cost you more money. For example, paying Monthly will cost about 17% more. If you pay annually and Terminate your coverage part way through the year, you may not receive a refund for the remaining months to the annual renewal date.
This is an administrative fee which is part of most Life Insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular Monthly, quarterly, semi-annual or annual payment that you make for your policy. Knowing about This hidden fee is important because some Insurance companies offer a policy fee discount on additional policies purchased under certain conditions. sometimes they reduce the policy fee or waive it altogether on one or more additional policies purchased at the same time and billed to the same address. The rules are slightly different depending on the Insurance company. There could be enormous savings if several people in the same family or business were intending to purchase coverage at the same time.
Registered Retirement Savings Plan (Canada)
Commonly referred to as an RRSP, This is a tax sheltered and tax deferred savings plan recognized by the federal and provincial tax authorities, whereby Deposits are fully tax deductable in the year of Deposit and fully taxable in the year of receipt. The ability to defer taxes on RRSP earnings allows one to save much faster than is ordinarily possible. The new rules which apply to RRSP's are that the holder of such a plan must convert it into income by the end of the year in which the holder turns age 69. The choices for conversion are to simply cash it in an pay full tax in the year of receipt, convert it to a RRIF and take a varying stream of income, paying tax on the amount received annually until the income is exhausted, or converting it into an annuity with guaranteed payments for a chosen number of years, again paying tax each year on moneys received.
Registered Retirement Income Fund (Canada)
Commonly referred to as a RRIF, This is one of the options available to RRSP holders to convert Their tax sheltered savings into taxable income.
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.
This could be the person (broker or agent) who helps you choose the proper type of Life Insurance or disability Insurance and the Insurance company for your particular needs. This could also be the person at the Insurance company's head office who reviews your application for coverage to deTermine whether or not the Insurance company will issue a policy to you.
This Term relates to participating whole Life Insurance and the use of the dividend to reduce or completely eliminate the need for future premiums. In the 1980's Life Insurance company's profits from investment were exceedingly high compared to historical experience. It became common for a salesperson to show new prospective clients how quickly his or her Insurance company's dividends would cover the future cost of future premiums. In some cases more emphasis was put on the Value of future dividends than on the fact that future dividends were not guaranteed and could only be projected based on current earnings. Many Life Insurance buyers have since learned that the dividends they expected in the 80's no longer exist in the 90's and they are continuing to dig into Their pockets to pay Insurance premiums.
A dictionary meaning for the word viatica is "the eucharist as given to a dying person or to one in danger of death". In the context of Viatical Settlement it means the selling of one's own Life Insurance policy to another in exchange for an immediate percentage of the death benefit. The person or in many cases, group of persons buying the rights to the policy have high expectation of the imminent death of the previous owner. The sooner the death of the previous owner, the higher the profit. Consumer knowledge about This subject is poor and little is known about the entities that fund the companies that purchase policies. People should be very careful when considering the sale of Their policy, and they should remember a sale of Their Life Insurance means some group of strangers now owns a contract on Their Life. If a senior finds it difficult to pay for an Insurance policy it might be a better choice to request that current beneficiaries take over the burden of paying the premium. The practice selling personal Life Insurance policies common in the United States and is spilling over into canada. It would appear to have a definite conflict with canada's historical view of 'insurable interest'.
Waiver of Premium
This is an option available to the applicant for Life Insurance which sets certain conditions under which an Insurance policy will be kept in full force by the Insurance company without the payment of premiums. Very specifically, a Life insured would have to become totally disabled through injury or illness for a period of six months before the benefit kicks in. When it does, the Insurance company retroactively pays premiums from the beginning of the disability until the time the insured is able to perform some form of regular activity. 'Totally disabled' is highlited here, because that is what is required to receive This benefit.
This is a legal document detailing how you want your assets to be distributed upon your death. you may also stipulate how you wish to be buried or who you would like to take care of any surviving dependent family members. In my opinion, it is very important to be quite specific about your wishes for the distribution of special assets such as the antique grandfather clock, the classic silver tea set or the antique piano. If you think that your beneficiaries may dispute how your things are to be distributed, consider stipulating that an auction be held in which all beneficiaries may bid on the item which they Value and all moneys collected are then shared in the same manner in which you distributed your other liquid assets. your might want to remember that a will is automatically revoked upon marriage unless the will specifically states that the will is made in contemplation of marriage.
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.
Accidental Death and Dismemberment
Coverage that provides a lump-sum payment to you or your survivors if an accident results in the loss of a limb, paralysis or your death.
Accidental Death Benefit (ADB)
Coverage against accidental death usually payable in addition to base amount of coverage.
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.
The sum of all the interest options in your policy, including interest.
An amount of money invested plus the interest earned on that money.
A grouping of sales producers according to region. Compare with Branch.
one who represents canada Life when providing services to clients
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.
Yearly amount payable by a client for a policy or component.
The party applying for an Insurance policy.
Automatic Benefits Payment
Automatic payment of moneys derived from a benefit.
Automatic Waiver of Premium
A benefit that automatically forfeits premium payments.
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.
The amount of cash payable on a benefit.
Borrower (Credit Insurance)
A consumer who borrows money from a lender.
Canada Pension Plan (CPP)
A plan that provides retirement and long Term disability income benefits to residents of canadian provinces (excluding Quebec).
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 Surrender Value
Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.
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.
Cost of Insurance
The 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.
Creditor (Credit Insurance)
A lender or lending institution that offers financing and loans to a borrower, for the purpose of acquiring a commodity.
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.
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.
Daily Interest Accumulation
Account in which interest is accrued daily and credited to the account at the end of a specified time.
amount paid on death of an insured.
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.
Disability Insurance (Credit Insurance)
Group Insurance designed to cover Monthly obligations due to a borrower being unable to work due to sickness or injury.
Unlike dividends which are paid to company shareholders, participating Insurance policy dividends are not based on the company's overall profits. Rather, they are deTermined by grouping policies by type and country of issue and looking at how each class contributes to the company's earnings and surplus.
This policy governs canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.
Life Insurance or annuity product in which the cash Value and benefit level fluctuate according to the performance of an equity portfolio.
A specific condition or circumstance listed in the policy that are not covered by the policy
Guaranteed Interest Certificate (GIC)
Interest bearing investment with fixed rate and Term.
The adjustment of benefits to compensate for the effects of inflation.
Insurance that is offered to individuals rather than groups.
In 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 Policy (Credit Insurance)
A policy under which the Insurance company promises to pay a benefit of the person who is insured.
person whose Life is protected under a specific policy.
one of several investment accounts in which your premiums may be invested within your Life Insurance policy.
Legal designation that cannot be contested. (See beneficiary)
age of an insured as at the policy issue date, using "age nearest" next birthday formula.
date on which a policy is approved.
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.
Joint Policy Life
one 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.
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.
A premium that remains unchanged throughout the Life of a policy
Insurance 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.
The person who's Life is protected by an individual policy.
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