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This glossary is arranged in alphabetical order. Click on a letter in left column or scroll down to search.

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Capital Gain or Loss:

Is the difference between the sales price and the purchase price of a capital asset. When that difference is positive, the difference is referred to as a capital gain. When the difference is negative, it is a capital loss.

Cash Equivalents:

Highly liquid, very safe short-term investments, such as GICs CSB’s, and money market fund shares, that can be readily converted into cash.

Cash Surrender Value:

This is the cash 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. Policyholders are usually able to borrow against the surrender value of a policy from the insurance company. Loans that are not repaid will reduce the policy's death benefit. This does not apply to term insurance, but only to those policies that have a reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit could have tax implications.

Canadian Life and Health Insurance Compensation Corporation:

Better known as CompCorp, this is a group of Canadian Life and Health Insurance Companies, which have formed a pool insuring all policyholders who are Canadian residents against financial failure of any of the members of the pool. CompCorp's press release says "In the event a member company is declared insolvent, CompCorp will guarantee payment under covered policies up to certain specified limits for policyholders of that company. This means annuity and disability income payments continue, claims under life and health insurance policies will be paid, and requests for cash surrender will be honoured.

Policyholders receiving income from annuities and disability insurance with no option of a lump sum cash withdrawal are guaranteed payments up to $2,000 per month. Death claims under covered life insurance policies are protected up to $200,000. Health insurance benefits other than disability income annuities are guaranteed up to $60,000 in total payments. For money accumulation products, CompCorp's limits are similar to those of the Canada Deposit Insurance Corporation (CDIC). Plans registered under the Tax Act, such as RRSP's and RRIF’s are protected up to $60,000 per person. In addition, non-registered plans, and the cash surrender value in life insurance policies are protected up to $60,000 per person." A consumer brochure is available by contacting the Canadian Life and Health Insurance Association Info Centre at 1-800-268-8099.

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 companies, 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.

Captive Agent:

Refers to a licensed insurance agent who sells insurance for only one company, but in certain circumstances may sell another insurance companies policy on a one off basis.

Charitable Purpose Trust:

This trust is used as a method of benefiting a charity (ies) while giving the donor certain tax deductions. The donor donates assets irrevocably to the Trust, with no strings attached, and without the ability to become a beneficiary later. Donations to a Charitable Purpose Trust can include any of the following assets: Art, Common stocks, Real Property, Cash, beneficial interest in a life insurance policy, ownership of an insurance policy. A Charitable Purpose Trust can also form part of a good estate plan.

Charitable Remainder Trust:

A trust established for the benefit of a charitable organization under which the settlor receives income from an asset for a set number of years or for the settlor's lifetime. Upon the termination of the trust, the asset reverts to the charitable organization. The settlor receives a charitable contribution deduction in the year in which the trust is established, and the assets placed in the trust are exempt from capital gains tax.


A change to an existing will. A supplement, amendment, or addition to a will that explains, modifies, adds to, subtracts from, qualifies, alters, restrains or revokes provisions in a will. It becomes a part of the will and must be executed in the same manner as the will, as prescribed by provincial law.


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.


The generic term for goods such as grains, foodstuffs, livestock, oils, and metals which are traded on national exchanges. These exchanges deal in both "spot" trading (for current delivery) and "futures" trading (for delivery in future months).

Common Stock:

Securities which represent an ownership interest in a corporation In the case of a public company, the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in some cases receive dividends on their holdings. Investors who purchase common stock hope that the stock price will increase so the value of their investment will appreciate. Common stock offers no performance guarantees. Additionally, in the event that a corporation is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock take precedence over the claims of those who own common stock. The terms common stock and capital stock are often used interchangeably when the company has no preferred stock

Community Property:

Provincial laws vary, but generally all property acquired during a marriage - excluding property one spouse receives from a will, inheritance, or gift - is considered community property, and each partner is entitled to one half. This includes debt accumulated.

Compound Interest:

Interest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest.


This is the general terms or requirements upon which the insurance is based. For the mutual understanding of the parties the conditions will commonly state such matters as how the policy can be cancelled or renewed, provisions with respect to change of the insured's interest, provisions as to what an insured should do in the event of a loss, and conditions as to what he should do subsequent to a loss etc.

Conditions of the Contract:

Articles in contract defining or describing terms, responsibilities of owner and contractor, performance and payment schedules, and the like.

Conditional Receipt:

Given to policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.


The inducement to a contract; the cause, motive or price, which induces a contracting party to enter into an agreement, act or forbearance or promise thereof. It is an essential part of a binding contract. Consideration is either expressed or implied.

The money, or whatever is being used in substitution of money, paid for the article or contract is "the consideration."

Consumer Price Index:

Is the federal governments main indicator of inflation. The Consumer Price Index is calculated each month from the cost of some 400 retail items in urban areas throughout Canada.

Contingent Beneficiary:

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.

Contingent Owner:

This is the person designated to become the new owner of a life insurance policy if the original owner dies, before the life insured.


An agreement made between two or more persons, which is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him by the other party, to do or to abstain from doing some act. The offer and acceptance may either be expressed or inferred by indication in the conduct of the parties.

Conversion Right:

Term life insurance products are offered as non-convertible or convertible to a certain time in the future. The conversion right has a time limit, usually to the policy holder's age 60 or possibly even age 70. This right means that the policyholder 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 privilege but it is a valuable feature should a policyholder's health change for the worst and continued insurance coverage becomes a necessity.
Most often this right is also granted to individuals covered under employee group benefit policies where individuals leaving the employee group have a limited amount of time, usually 30 days, to convert to a specific permanent individual policy without evidence of insurability.

Creditor Proof Protection:

The creditor proof status of such things as life insurance, non-registered life insurance investments, life insurance RRSP’s 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.

The provincial insurance acts protect life insurance products, which have a family class beneficiary. Family class beneficiaries include the spouse, parent, child or grandchild of the life insured, except in Quebec, where creditor protection rules apply to spouse, ascendants and descendants of the insured. Investments sold by other financial institutions do not offer the same security should the holder go bankrupt. There are also circumstances under which the creditor proof protections do not hold for life insurance products. Federal bankruptcy law disallows the protection for any transfers made within one year of bankruptcy. In addition, should it be found that a person shifted money to an insurance company fund in bad faith for the specific purpose of avoiding creditors; these funds will not be creditor proof.

Critical Illness Insurance:

Critical Illness / Survival Insurance, which is now available in Canada, pays a lump sum amount (the face amount of the insurance policy) to the insured, 30 days after the diagnosis and survival of any one of the 22 specific illnesses, diseases or medical conditions: The coverage can be for life or for a set period’ The most common of these included in a policy of this sort are: Heart attack, Stroke, Cancer, Kidney or liver failure paralysis and multiple sclerosis. AIDS is not usually included.

Cross-Purchase Plan:

An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from a life insurance policy.

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