This glossary is arranged in alphabetical order. Click on a letter in left column or scroll down to search.
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Term Life Insurance:
This is a low-cost form of life insurance that stays in effect for a specific period of time. If the insured dies during the coverage period, the beneficiary will receives the death benefit. If the insured survives the specified time period, the policy expires and the obligations terminate. Term insurance works best when the coverage is needed for only a specific period of time or near-term cost is an overriding factor. In early years, term insurance costs are less then a Whole Life or other cash value policies. Term insurance becomes increasingly expensive, as the insured grows older. There are a number of variations of term life insurance.
Your income is not all taxed at one rate. It is partially taxed in each of the tax brackets up to the highest bracket in which your taxable income falls. The applicable income ranges for these tax brackets differ depending on your filing status, but the percentages are the same. Brackets are expressed by their marginal rate.
Tax credits are subtracted directly from the tax a family owes, rather than reducing taxable income like a tax deduction; they are deducted directly, dollar for dollar, from your income tax bill. A family must file a tax return and owe taxes in order to claim these available Tax credits. The tax credits reduce taxes payable to the same extent for all taxpayers, regardless of their income level and marginal tax rate. Deductions from taxable income, however, are more valuable as your income and tax rate increases.
The term tax deferred refers to the deferral of income taxes on interest, dividends, or capital gains that grow untaxed in certain accounts or plans until they are withdrawn from the investment.
By leaving the interest in the investment untaxed, your compound rate of return in the investment is increased. Some investments that enjoy this special tax treatment include permanent life insurance, annuities, and any investment held in RRSPs
The Adjusted gross income minus itemized deductions and personal exemptions (on an individual income tax return). On a business return, it is total business income minus allowable deductions (business expenses and net operating losses carried forward).
The study of all factors related to the supply and demand of stocks. Unlike fundamental analysis, technical analysis doesn't look at underlying earnings potential of a company when evaluating a stock. Rather, the technical analyst uses charts and computer programs to study the stocks trading volume and price movements in hopes of identifying a trend. Technical analysts don't care about a businesss intrinsic value, only the movements of its stock. Most technical analysis is used for short-term investing.
Tenancy in Common:
It is a form of co-ownership, whereby property ownership is an arrangement in which two or more persons own property jointly and each one is free to dispose of his or her share as they wish. It is not necessary that the ownership consist of equal shares or percentages of the property. Generally, there is no right of survivorship when a co-owner dies. The share of the property belonging to the deceased co-owner passes to his or her heirs and the shares of the remaining original co-owners do not change.
Term life insurance provides life insurance coverage for a specific time period (a term). It is often referred to as temporary insurance or pure insurance. Common premium structures are for 5, 10, 15, and 20 year periods, whereby the initial rate is guaranteed and locked in for that term period. Most term policies have a renewable and convertible feature. Renewable means that the plan can be automatically renewed at the expiry of the initial term period. Convertible means that the term policy can be converted to another type of policy.
With term insurance, the face amount of the policy is paid out only if the insured dies during the term of the policy. If the term of the insurance coverage expires before the insured does, then no face amount is paid.
Term insurance is appropriate in situations when there is a high need for insurance but not much cash flow to pay for it. For example, a young family with limited cash resources may have require survivor income to provide for living expenses, education and other day-to-day needs. In situations such as this, term insurance affords a family the ability to purchase the insurance protection it needs with a minimal cash outlay. If you are relatively young and healthy, you can usually purchase a term insurance policy with a substantial death benefit at a much lesser cost than other types of life insurance policy.
Term insurance starts out to be the least expensive, but the insurance is kept for any length of time the premiums will become unaffordable.
A testamentary trust is a trust created under an individuals Will and comes into effect at the death of the individual. When a testamentary trust is set up under the Will the executor and the trustee are directed to hold all or a portion of the estate assets for a specified period of time and for specified people (beneficiaries).
A Testamentary Trust can consolidate an estate plan for the heirs. Upon death, the assets are retained in trust and administered according to the instructions given in the Will. All testamentary trusts are irrevocable.
For tax purposes a Testamentary Trust is treated as a separate taxpayer and is taxed at normal marginal tax rates on any income earned by the trust and accumulated as capital. Testamentary trusts allow individuals to delay the distribution of their assets after death and to save taxes by taxing some of the trust's income in the trust, which is taxed at the four graduated rates applicable to individuals. Any income distributed by the trust to a beneficiary is taxed in the hands of the beneficiary and not the Trust.
One who has made a will or who dies having left a will.
The full amount an investment earns over a specific period of time. When dealing with mutual funds or securities, total return takes into consideration three factors: changes in the NAV or price; the accumulation/reinvestment of dividends; the compounding factor over time. The return is presented as a percentage and is usually associated with a specific time period such as six months, one year or five years. Total Return can be cumulative for the specific period or annualized. If it is cumulative, it describes how much your investment grew in total for the entire period. If it is annualized, it describes the average annual return over the period of years described. For example, a utility stock that rose in price 5% over the past year and paid a dividend of 6% would have a total return of 11%.
A trust is an equitable obligation, binding a person (trustee) to deal with property over which he has control, for the benefit of persons (beneficiaries) of whom the trustee may be one. In other words a trust is one person (or more than one person) holding property for the benefit of someone else.
There is separation between; the legal owner of the property; the trustee(s); and the person(s) who enjoys the benefits of the property, the beneficiary. One of the trustees main roles is to make prudent investments decisions with the money or property that is held inside the trust. It is the beneficiary (ies) who enjoys the benefit and value of the trust.
Types of trusts include: Testamentary Trust A trust established by a will that takes effect upon death; Living Trust A trust created by a person during his or her lifetime; Revocable Trust A trust in which the creator reserves the right to modify or terminate the trust; Irrevocable Trust A trust that may not be modified or terminated by the settlor after its creation
The trustee is the key person to any successful trust. It is the "trust" placed upon them by the settlor that is the basis of the trust. They are responsible for managing the trust and making decisions regarding its operation. It is their duty to ensure the terms of the trust as written in the trust document are carried out. It is a responsibility of honour and integrity, because the trustee manages the property not for their own benefit, but for the beneficiary. There is no prohibition against a trustee also being the, or one of, the beneficiaries. However where a trustee is also a beneficiary, all conflicts of interests must be avoided because the primary duty of the trustee is to protect the property to the benefit of all of the beneficiaries even the decisions made may hinder the trustee's own private interests. Lawyers say that the trustee's duties are Fiduciary, which implies acting for another's benefit and with candor and honesty.
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