A

Accrued Interest

The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date.

Adjusted Cost Basis (ACB)

The basis on which the Canada Customs and Revenue Agency (CCRA, formerly Revenue Canada) determines the change in an asset's book value resulting from improvements, new purchases, sales, payouts, or other factors (e.g., investment deposits will increase the ACB; loans and partial withdrawals will decrease it).

Administrator

An administrator is the person, firm, corporation or other entity appointed by your company to perform certain administrative services on your company's group insurance plan.

Advisor

For the purposes of this website an 'advisor' is a licensed sales representative. Advisors may be described by various specified titles, depending on the type of products they are licensed to sell and dictated by the laws of the province where they work. All of the advisors that listed on AdvisorCentre are financial services professionals who offer the products of various financial services companies and who have contracted with us to help them market their products or services.

'Alternate Residual' Definition of Disability

A definition of disability that's applied for individual disability insurance plans if you're unable to perform some important duties in your job, or can only work half your regular hours.

'Any Occupation' Definition of Disability

Some individual disability insurance plans use this strict definition of disability, which requires that you be unable to work at ANY job (generally for which you are qualified).

Group plans can also include an 'any occupation' disability clause under which benefits are paid if you're unable to perform the duties of any occupation for which you are or become reasonably qualified for by virtue of training, education, and experience. (Check your group contract to confirm if such a clause is included.).

Annuitant

The annuitant is an individual on whose life the annuity and guaranteed death benefit are based. The annuitant can be the policyowner or an individual you so designate. If the plan is registered, the policyowner and the annuitant must be the same individual.

If the plan is registered, you can name your spouse as a successor annuitant; if this option is chosen, any guaranteed benefits will be based on the life of the surviving spouse.

Annuities

Annuities provide the assurance of a guaranteed retirement income for a specified period. You can depend on receiving a regular income at the same time each year, and there are no more investment decisions to be made.

Annuity Benefit (Maturity Guarantee)

For investment plans offered through life insurance companies, an annuity benefit is the value of your investments held within the plan on your annuity date and subject to various guarantees provided within your contract.

Annuity Date (Maturity Date)

Simply stated, it's the date your plan matures, or the date on which your annuity or maturity benefit applies for investment plans offered through life insurance companies.

Asset Allocation

The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio.

Assumed Total Disability

You're considered totally disabled, regardless of ability to work or the medical care required, if you suffer the total and permanent loss of sight, hearing, speech, hands or feet.

Averages & Indices

Statistical tools that measure the state of the stock market or the economy, based on the performance of stocks or other meaningful components e.g., the Dow Jones Industrial Average, TSX Composite, the Consumer Price Index, etc.

B

Bank of Canada (BOC)

The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply.

Bankruptcy

The state of being actually or legally bankrupt.

Beneficiary

A beneficiary is the individual who is entitled to receive the value of the plan upon the death of the life insured or annuitant. Beneficiaries are designated when you become a policyholder of any life insurance, segregated funds and/or accidental death & dismemberment plans. If the beneficiary is of a certain family class, for example, spouse, parent or child, or is named irrevocably, the plan may be exempt from seizure by creditors or a trustee in bankruptcy.

You can name an irrevocable beneficiary. If this option is chosen you will generally need to obtain the written consent of the irrevocable beneficiary to make changes or otherwise deal with your policy. Where a minor is named irrevocably, this consent may be impossible to obtain.

Beta

A measure of how sensitive a security or portfolio is to the return of the market. For example, a beta of 1.1 means that a portfolio is expected to increase (or decrease) by 1.1% when the market increases by 1%. Similarly, a beta of 0.9 indicates that a portfolio is expected to increase (or decrease) 9/10ths of 1% when the market increases (or decreases) by 1%.

Bond

A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date.

Book Value

The monetary amount by which an asset is valued in business records, a figure not necessarily identical to the amount the asset could bring on the open market.

Buy/Sell Agreement

Within a business, it is a legal contract with your fellow shareholders or partners to buy out the business interest at death, disability or retirement.

C

Captial

Wealth in the form of money or property, used or accumulated in a business by a person, partnership, or corporation. Can also be material wealth used or available for use in the production of more wealth.

Capital Gains

A profit from the sale of investments or property. Capital Gains can be 'realized' (the sale took place) or 'unrealized' (growth on paper only - no sale took place). Taxes are generally due on realized capital gains.

Cash Value - Investments

The amount that's available for redemption and sometimes referred to as the 'redemption value'. It's equal to the accumulated value (or market value) of your investments less any applicable plan expenses or deferred sales charges.

Cash Value - Life Insurance

The working capital, less any applicable market value adjustment, outstanding premiums, surrender charges and any outstanding loan balance.

Commodities

Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.

Commission

The fee charged by an advisor for buying or selling any number of products as an agent on behalf of a client.

CompCorp

A consumer protection plan for insurance companies. Retirement plans invested in GICs are protected up to $ 60,000.00 per person.

Consumer Price Index

An index that tracks the change in price over time of a set list of consumer goods.

Contingent Life

Similar to joint-first-to-die coverage, but with different insurance amounts on each life.

Coverage Rider

Additional insurance coverage that you can purchase in conjunction with the insurance on the main life or lives (e.g., term rider, children 's coverage rider, disability waiver rider).

Creditor Protection

Provided certain members of a family class are named as beneficiary or that a beneficiary designation is made irrevocable, some policies may be protected from claims of the policyowner's creditors.

Critical Illness

This is a strict list of serious medical conditions that are deemed debilitating and are covered by critical illness insurance. Our basic list includes cancer, heart attack, stroke, and coronary artery by-pass surgery, which will be clearly defined in the policy for benefit purposes.

Critical Illness Insurance

An individual insurance plan specifically to help offset the unexpected costs that can arise if you're diagnosed with a critical illness. Basic coverage includes cancer, heart attack, stroke, and coronary artery by-pass surgery, which will be clearly defined in the policy for benefit purposes. You can opt for enhanced coverage that includes approximately 20 impairments.

D

Deferred Sales Charge (DSC)

Often referred to as a redemption charge, this is a fee that is applied to withdrawals (redemptions) that occur during a specified period.

Deferred Profit Sharing Plan (DPSP)

A plan that allows an employer to set aside a portion of company profits for the future benefit of employees.

Defined Contribution (DC) Plan

A pension plan that provides retirement benefits according to the performance of investments made with contributions to the plan.

Deposit

Deposits are defined as the amount that is available for investment or, in other words, to purchase units in a fund. If the initial sales charge option is chosen, the deposit is equal to the amount received for investment less the amount of the initial sales charge paid to the financial advisor. If the deferred sales charge option is chosen, the deposit is equal to the total amount received for investment.

Distribution

A payout of income and net realized capital gains earned and declared on investments held within a segregated fund. On a distribution day, any income or net realized capital gains earned and declared by a given fund is distributed to policyowners investing in that fund in the form of additional units.

Disability

'Disability' is specifically defined in each insurance policy or group contract. In reference to individual life insurance, depending upon the benefit, disability refers to total disability, occupational disability, or a critical condition.

Dollar Cost Averaging

Systematically investing a fixed amount of money in a specific security at regular intervals over a period of time, thereby reducing the average cost paid per unit.

Dow Jones Industrial Average (DJIA)

An average made up of 30 actively traded stocks in the US. The DJIA is calculated by adding the prices of each of the 30 stocks and dividing by a divisor. The DJIA is one of the most widely quoted stock market averages in the media.

E

Elimination Period

This is the number of (consecutive) days of disability that must elapse before benefits begin to accrue.

Some individual disability plans allow separate periods of disability to be accumulated for purposes of satisfying the elimination period.

Estate Planning

The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death.

Equities

The ownership interests in companies, generally represented by share certificates or other evidence.

F

Financial Advisor

An advisor who can provide objective but not always independent opinions to help you choose the options that are best suited to your particular financial circumstance.

Financial Planner

A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. They are specialized in tax planning, asset allocation, risk management, retirement and/or estate planning.

Flexible Premiums

A premium payment in excess of the set premiums for the individual life insurance policy. These can be made regardless of the payment frequency of the policy.

Fund Transfer

The process by which you make a change in your fund allocation within an individual investment plan.

Futures

A contract to purchase (or sell) a specified commodity, security or index during a specified future month at a price agreed upon when the contract is negotiated.

G

Gross Earned Income

Gross earned income is defined as income that depends on the ability to work; salary, bonus, commissions and fees - any amount that you earn before taxes and deductions, but after expenses.

Guaranteed Interest Account (GIA)

Guaranteed interest rate accounts, usually offered by insurance companies, that are similar to GICs offered by banks.

Guaranteed Investment Certificates (GIC)

GICs provide a high level of security. They offer interest rates for a range of investment terms, in which the rate of return and the maturity date of the investment are guaranteed.

Guaranteed Death Benefit

An amount that is guaranteed upon the death of the annuitant.

Guaranteed Maturity Benefit

An amount that is guaranteed on a plan's annuity date (or maturity date).

H

Hedge

A strategy used to limit investment loss by making a transaction that offsets an existing position.

Home Buyers Plan (HBP)

A program set up by the Canada Customs and Revenue Agency (CCRA), under which you can, generally, withdraw up to $20,000.00 from your RRSP to buy or build a qualifying home. These withdrawals are non-taxable, but must be repaid within a period of no more than 15 years.

I

Income Replacement

For individual disability insurance plan, the plan pays you a regular income each month during your disability. Your basic coverage and premiums are linked to your occupation, income and other sources of insurance at the time of application.

For group insurance, benefits are based on the premiums paid as well as on your salary and other income benefits payable. Please note, under most group insurance plans, other income such as Canada Pension Plan, are offset from the disability benefit payment.

Independent Financial Advisor

An advisor who is independent of any financial services company and can provide objective and independent opinions to help you choose the options that are best suited to your particular circumstance.

Inflation

A term used to describe rising prices of goods and services within an economy.

Initial Sales Charge

When an initial sales charge option is chosen, a sales charge is deducted from the amount received for investment and paid to the financial advisor with the remaining amount invested in the chosen investment options.

Insurance Amount

For individual life insurance, 'insurance amount' means the dollar value payable at the death of the life insured. Policy loans and death benefit options may impact the total benefit to the beneficiary.

Investment Advisor

A person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products.

Investment Income Tax (IIT)

A charge levied by the Federal Government on the funds in insurance policies.

Investment Management Fee

The fees you pay to invest in a segregated fund in addition to the operating expenses of the fund.

Investment Mix

The combination of investment options selected by you to grow your investment values.

Investment Only Pension Plan (IOPP)

A pension plan whereby a company provides investment management services with no member level reporting.

J

Joint-First-To-Die

The case in which two lives are covered, with the insurance amount paid when the first death occurs.

Joint-Last-To-Die

The instance in which two lives are covered, with the insurance amount paid when the last death occurs.

K

L

LIF

Similar to a RRIF, a LIF or life income fund is an extension of an RRSP and provides you with greater flexibility to vary your income and control over your investment decisions for your retirement income. It can be created at any time, but only with money transferred from a LIRA, another LIF, or directly from an employer-sponsored pension plan. No other source of funds is allowed. There is a prescribed maximum payment that prevents you from collapsing the plan. This ensures the funds are used to provide a pension income throughout your life as was intended by the pension plan from which the funds originated. By December 31 of the year you turn 80, the LIF must be converted to an annuity that meets the requirements of the applicable pension legislation. Not all provinces or jurisdictions allow LIFs.

LIRA

If deposits originate from a pension plan, they continue to be locked-in under a locked-in retirement account (LIRA) or locked-in RRSP. 'Locked-in' refers to the restrictions and limitations that are imposed by the applicable provincial pension legislation.

Locked-in Registered Income Fund (LRIF)

While similar to a LIF, a locked-in registered income fund's (LRIF) regulation differs in that you aren't required to purchase an annuity at age 80. Minimum payments are calculated differently. The maximum annual payment is equal to the greater of investment earnings in the previous year, the accumulated value less net amount transferred into the plan, or the RRIF minimum payment. Currently, LRIFs are only available if you have pension plans registered in Saskatchewan, Manitoba, and Alberta.

Leveraging

Borrowing against collateral for the purpose of investment, with the expectation that investment growth will exceed cost of borrowing. These concepts are not for use by everyone and require professional expertise and advice.

Locked-in Plans

If deposits originate from a pension plan, they continue to be locked-in under this plan. 'Locked-in' refers to the restrictions and limitations that are imposed by the applicable provincial pension legislation.

M

Management Expense Ratio

A ratio that illustrates fund expenses to fund assets. It's calculated by dividing the total of the investment management fee and the operating expenses paid by the fund over a financial year (as stated in the financial report) by the average net asset value of the fund over that same financial year.

Market Value Adjustment (MVA)

A charge against a fixed interest or income option upon surrender, withdrawal or transfer to another investment option.

Money Purchase Plan (MPP)

N

Nasdaq 100

The Nasdaq Composite Index, including several high-tech companies such as Cisco Systems, Intel, Microsoft, and Qualcomm. Sometimes, returns on investments may be linked to the Nasdaq 100.

Net Assets

The net assets of a fund are determined by calculating the market value of all of its assets (its investments) and subtracting its liabilities (such as the fund's operating expenses).

Nikkei 225

Includes 225 of the largest and most liquid companies listed on the Tokyo Stock Exchange.

'Non-Occupational' Definition of Disability

For individual disability insurance, the definition of total disability is related to the inability to perform the client's regular occupation. If you're unemployed, on leave or sabbatical when an injury or sickness occurs, a total disability claim can still be payable. Under this provision, your disability will be determined based on your ability to perform the regular substantial activities being performed prior to the onset of your disability. Furthermore, if you were scheduled to return to work (e.g., sabbatical, maternity leave), the definition of disability would change to the regular one on the date when you were scheduled to return.

Under group benefit plans, 'non-occupational disability' means a disability not resulting from an injury or illness caused by your employment (as these would normally be covered by Workers' Compensation).

O

'Own Occupation' Definition of Disability

Under an individual disability policy, an 'own occupation' definition means that you will be considered totally disabled if you cannot perform the duties of your usual job, regardless of whether or not you're working at another job. This additional level of protection is typically of interest to professionals, who may wish to return to work in a different field if they were permanently disabled, and want to maintain the income level they enjoyed before their disability.

Group benefit plans can also include a clause that provides benefits if you're unable to perform the essential duties of your own occupation (your type of work, not just your own job). Where such a definition is included, it generally applies for a certain time period (e.g. 24 months) after which benefits will be paid only if you're unable to work at any occupation.

Options

A right to buy or sell specific securities at a specified price within a specified time.

P

'Partial' Definition of Disability

Some individual disability policies contain a 'partial disability' feature, which provides benefits if you're unable, due to injury or sickness, to perform one or more of the important duties of your regular occupation OR are unable to work for more than half the usual amount of time. You must be under regular care and attendance of a physician.

A group benefit plan may also include a clause that provides a 'partial disability' benefit if you're only able to work in a reduced capacity. Please see your group contract for details (if such a clause is included).

Partial Withdrawal

An amount withdrawn from the cash values of an investment policy or certain life insurance policies.

Pension Plan

A pension plan is a promise by a pension sponsor to a plan member to provide a pension upon retirement.

Permanent Life Insurance

Permanent insurance solutions allow you to insure against the unexpected while increasing the value of your investment over time. Advantages include tax-advantaged investment growth and tax-free insurance benefits.

Plan Member

A plan member is a person who participates in and is covered under a group benefits plan, such as an employee of an organization or a member of an association or a union group.

Plan Sponsor

A plan sponsor is an employer, association, labour union or other group offering a benefit plan to its members.

Policy Owner

The policy owner is the individual who is the legal owner of the policy. The policy owner can be a single individual. For non-registered policies, a policy owner can also be a group of individuals, subject to any applicable legislation. The policy owner can be no younger than the age of majority. All policy reporting will be sent to the policy owner.

Policy Lapse

If the conditions for keeping the policy in-force have not been met (for instance, there isn't a cash value and premiums remain unpaid after the grace period) then the policy will lapse, and coverage will end.

Policy Loan

A loan made on the security of the cash value of your policy.

Policy Statement

A report listing current conditions and transactions of the latest reporting period.

Policy Surrender

Request from the policy owner to cease coverage and return the cash value. The policy owner surrenders the contract to the insurance company.

Portfolio

Holdings of securities by an individual or institution. A portfolio may include various types of securities representing different companies and industry sectors.

Premium

The set amount you pay in order to be insured by your individual life, disability or critical illness insurance policy, association plan benefits, or that a plan sponsor (and/or plan members) must pay to maintain a group benefit plan.

Premium Tax

Tax levied by the provincial government on premiums paid.

Principal

The original amount of money invested.

Q

R

Rate of return

The cumulative rate of interest an investor achieves on their investment.

RRIF

When you convert your RRSP to a RRIF or Registered Retirement Income Fund, you continue to enjoy the benefits that you had with your RRSP including tax-sheltered growth, investment control and flexibility. RRIFs bring other benefits: they allow you to vary your income stream from year to year (subject to a minimum amount set by Canada Customs and Revenue Agency) and to make additional withdrawals when needed.

Registered Pension Plan (RPP)

For a pension plan to have tax exempt status, it must be registered under the Income Tax Act and under either the federal Pension Benefits Standards Act or under a provincial Pension Benefits Act. Contributions are tax deductible by an employee and employer within the federal taxation limits.

RRSP

Any Canadian resident who is under age 69 with qualified earned income can contribute to a Registered Retirement Savings Plan (RRSP). The amount you can contribute depends on the income you earned in the previous year and limits established by Canada Customs and Revenue Agency. Benefits include tax-sheltered growth, investment control and flexibility.

Regular Care of a Physician

To be considered totally or residually disabled, you must be under the care of a physician that is appropriate in nature and frequency for the condition.

'Regular Occupation' Definition of Disability

Some individual disability contracts use a 'regular occupation' definition, which means that as long as you're not working because you can't do your regular job, you're considered disabled. However, you're no longer considered totally disabled if you go to work at a new occupation. So, for instance, if you were a dentist and lost the use of your arm, you would be considered disabled. If you later start to work in a different field, your total disability benefits would cease. You'll often find income replacement plans that provide a 'regular occupation' definition but only for the first two or five years of a disability. After that, the definition may switch to an 'any occupation' definition. This allows you a reasonable length of time to change careers and resume a working life. This definition does not apply to group benefit plans.

Recurrent Disability

If your disability recurs within a specified time period from causes that are the same as or related to the cause of your prior disability, the subsequent disability is considered a continuation of the first for the purposes of individual disability insurance plans.

Residual Disability

Some individual disability policies include a residual disability definition, which typically means you're not totally disabled, but due to sickness or injury, have an income loss of 20% or more. Regular care from a physician is required.

Risk Management

The optimal allocation of resources to arrive at a cost-effective investment in defensive measures within a portfolio. Risk management minimizes both risk and costs.

S

S&P 500 Index

Standard & Poor's measure of 500 widely held stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market.

S&P/TSX Composite Index

A capitalization-weighted index stocks listed on the Toronto Stock Exchange. Larger companies have a greater influence on index returns than smaller companies.

Security

Transferable certificate of ownership of investment products such as notes, bonds, stocks, futures contracts and options.

Segregated Fund

A type of annuity that is similar to a mutual fund, is an insurance product and offered only by insurance companies. It is held separate from the insurer's general assets and provides various insurance benefits.

Shareholder

Any person, company, or other institution that owns at least 1 share in a company. A shareholder may also be referred to as a stockholder.

Spousal RRSP

A member of an RRSP may contribute all or part of their allowable RRSP contributions to an RRSP on behalf of their spouse. The contributor spouse gets the income tax deduction. The other spouse actually owns the funds.

Strike price

The price the owner of an option can purchase or sell the underlying security. The purchases and sales are also known as calls and puts.

Survival Period

For a critical illness insurance policy, this is the number of days you must survive following the diagnosis of a covered impairment in order for the benefit to be payable. This period is normally 30 days following diagnosis in the definition of the corresponding covered impairment.

Synthetic Securities (Derivatives)

A security that derives its value in whole, or in part, from an underlying security.

Systematic Withdrawal Plan

If elected, you will receive equal payout amounts at an interval you specify.

T

TSE 300 Index

A capitalization-weighted index of 300 stocks listed on the Toronto Stock Exchange. This index is no longer used. It was replaced by the S&P/TSX Composite Index.

TSX Venture Index

Formerly called the CDNX, this index provides a benchmark to measure the price performance of emerging companies listed on the exchange. TSX Venture companies are active in mining, oil and gas, manufacturing, technology, financial services and other sectors.

Taxable Income

The amount of net income used in calculating income tax.

Tax-Exempt

Investment income within an exempt individual life insurance policy will grow tax-sheltered, maximizing the net worth of the capital invested. Death benefit is paid to the beneficiary tax-free.

Term Insurance

Provides life insurance for a set period of time. Usually has no cash value if the insurance is cancelled or the term expires.

Total Accumulated Value (Market Value)

The total accumulated value (or market value) of your plan is determined as the sum of the accumulated unit value credited to your plan in each segregated fund.

Total Disability

Depending on the specific individual disability insurance policy, the definition for total disability may be based on the regular occupation, own occupation or any occupation, or a combination of these.

For group benefit plans, 'total disability' normally means that solely because of an illness or accidental injury, you're unable to perform the essential duties of your own occupation (type of work, not just your own job) for a certain period of time (often 24 months), and from then on unable to work at any occupation for which you are or may reasonably become, fitted by education, training or experience.

Transfer

Moving a dollar amount to or from one or more of the investment options within an applicable life or investment policy.

U

Underlying Fund

A fund is said to be investing in underlying funds when it invests all or a portion of its assets in units of an existing mutual or segregated fund.

Unit Value

The unit value is used to measure the market value of one unit (or share) of a fund.

Universal Life Insurance

Allows you to tailor an insurance policy by choosing features including premium levels, investment risk exposure for the policy's savings component, and insurance coverage options.

V

Valuation Day

The day on which a fund's assets are valued and for which fund income or expenses are accounted.

Vesting Period

Vesting is the amount of time you must be a member of a pension plan before earning the right to the employer portion of the contributions in the pension plan.

W

Waiver of Premium While Disabled

For an individual disability insurance policy, this feature means that premiums are waived while disability benefits are being paid. The required premium payments made during the elimination period will be refunded. Waiver of premium during disability may also be included with group insurance plans and is an optional feature on many life and critical illness policies.

Warrant

A certificate that gives the holder the right to buy the underlying security at a set price for a specified time directly from the company.

Withholding Tax

Tax required by Canada Customs and Revenue Agency withheld on the payment of interest or dividends, or on income from a registered plan or tax-exempt insurance policy, in order to reduce the amount of income tax owed at the end of the tax year.

Workers' Compensation

Payments required by law to be made to an employee who is injured or disabled in connection with work.

X

Y

Yield

This is the measure of the return on an investment and is shown as a percentage. A stock yield is calculated by dividing the annual dividend by the stock's current market price. For example, a stock selling at $50 and with an annual dividend of $5 per share yields 10%. A bond yield is a more complicated calculation, involving annual interest payments, plus amortizing the difference between its current market price and par value over the life of the bond.

YMPE

Yearly Maximum Pensionable Earnings is an amount established each year under the Canada Pension Plan (CPP). It determines the earnings on which contributions are made and benefits calculated under the CPP and is adjusted annually to approximate the average industrial wage in Canada.

Z