Glossary of Terms

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Taxable gift
A voluntary and complete lifetime transfer of property by an individual to another individual or private organization for less than adequate and full consideration; not a bona fide business transaction.

Tax-deferred annuity
A retirement plan, not necessarily an annuity, for employees of non-profit organizations, such as schools and churches. Those who qualify can elect to have a specific percentage of their income set aside for retirement and delay income taxes until the money is withdrawn. Sometimes called tax-sheltered annuity or TSA.

Term insurance
Life insurance protection for a limited number of years and expiring without value if the insured survives the stated period. The protection period may be as short as 30 days (as in temporary insurance agreements) or as long as 20 years or more.

Thrift plan
Any type of retirement plan, pension or profit sharing, in which an employee savings feature is added. Usually, the employer's contributions or the plan's allocations (if profit sharing) are based upon the amount the individual employee elects to save.

Underwriter
Technically, the person who writes his or her name under an insurance agreement, accepting all or part of the risk. In life and health insurance, used to designate that official in the home office who reviews the facts about the risk, accepts or declines the risk and assigns the rate; the home office underwriter. In life insurance, to designate a soliciting agent, the term being somewhat more descriptive than agent, since the agent does exercise underwriting discretion in selecting the risks (prospects) he or she contacts.

Valuation
With respect to life insurance, the act of calculating a policy's reserve. The process of determining the total of policy reserves. Also, the act of determining the value of estate property in the estate settlement process.

Variable annuity
An annuity similar to a traditional fixed annuity in that, on retirement, payments will be made periodically to the annuitant, usually over the remaining years of that person's life, but differing in that payments generally vary in amounts. With the fixed annuity, the dollar amount of each payment is guaranteed by the company. The annuitant may well receive more than the guaranteed amount through dividends, but never less. Under the variable annuity, to the contrary, there is no guarantee of the dollar amount of the payments. The payments, rather, will fluctuate up and down in accordance with the earnings of an invested account.

Vesting
The right of an employee under a retirement plan to retain part or all of the annuities purchased by the employer's contributions on the employee's behalf or, in some plans, to receive a cash payment of equivalent value on termination of employment after certain qualifying conditions have been met.

Waiting period
In general, the duration of time before a person is eligible for participation, coverage or benefits under a group insurance or retirement plan or for benefits under a health policy or disability provision. For example, the time between the beginning of an insured's disability and the commencement of the period for which benefits are payable; also called elimination period in individual health policies.

Yield to maturity
The rate of return that is expressed in a percentage that will be obtained on an investment if the investment is held to maturity, taking into consideration that few investments are bought exactly at par and thus have a capital gain or loss in addition to the rate of return stated on the face of the instrument.

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