Life Insurance and Retirement Planning
1. 401(k) – an employer-sponsored retirement plan in which the employee, and usually the employer, make payments into a fund that the employee
manages
2. 403(b) – an employer-sponsored retirement plan for nonprofit organizations in which the employee, and usually the employer, make payments into a
fund that the employee manages
3. AIME - Average Indexed Monthly Earnings; a way of calculating Social Security benefits, based on an average of the 35 years you earned the most.
4. Annuity – a contract sold by an insurance company that provides the investor with a series of regular payments, usually after retirement
5. Beneficiary – a person or legal entity designated to receive a life insurance death benefit
6. Cash Value – the savings accumulated in a whole life insurance policy that you would receive if you cancelled your policy
7. Compound Interest – interest paid on the ever-increasing total of principal and interest
8. Contingent (Secondary) Beneficiary – the person or legal entity who receives the remaining death benefits upon survival of the policyholder and
the primary beneficiary
9. Death benefit - the sum of money paid to your beneficiary or beneficiaries by the insurance company from which you bought the policy; money
paid by workers' compensation insurance to compensate survivors if an on-the-job injury results in death.
10. Deferred Annuity – an annuity paid to the insured in the future, usually in retirement
11. Diversify - to spread risk among many types of investments.
12. Double indemnity - a rider that doubles the death benefit if the insured dies in an accident rather than of natural causes.
13. ERISA - Employee Retirement Income Security Act; sets and enforces minimum standards to ensure employee benefit plans are managed in a fair
and financially sound manner for the benefit of participants and their beneficiaries.
14. Fixed Annuity – an annuity that pays a stable return based on current interest rates; also called a fixed rate of annuity
15. Individual Retirement Account (IRA) – a retirement savings that allows individuals to set aside money in a tax deferred account, subject to
limitations
16. Insurable Interest – represents someone or something of value that, if lost, would cause financial harm to the insured, (includes family members
and business partners who will experience some kind of loss)
17. Life Insurance – insurance that provides funds to the beneficiaries when the insured dies
18. Life pool - in life insurance, the insurance pool into which premiums collected from policyholders are placed; death benefits are paid from this pool .
19. Mortality tables - sophisticated statistical averages of how long a person of your age, gender, ethnic background, and so on, can be expected to live.
20. Mortgage decreasing term - a particular type of decreasing term insurance tied directly to the policyholder's mortgage interest rate and term
and which can be used only to pay off the mortgage.
21. Participating policy - life insurance policy that may pay dividends calculated on the amount of the policy.
22. Pension – the most traditional kind of retirement plan, in which the employee knows in advance how much of a benefit they will be paid
23. Pension Benefit Guaranty Corporation (PBGC) - federal corporation that enforces the provisions of the Employee Retirement Income Security Act.
24. Permanent insurance - life insurance that covers you for your lifetime or until a specified age, such as 100, whichever comes first.
25. Primary beneficiary - in life insurance, the person or organization who receives the death benefits fist.
26. Rider - an amendment or addition to an insurance policy.
27. Rollover - a transfer of 401(k) funds into a retirement plan offered by a new employer or into an IRA you've opened on your own.
28. Severance payment - an employer-offered incentive encouraging older, highly paid employees to retire; examples are a lump sum of a designated
amount, such as a year's salary, and post-retirement medical coverage.
29. Simplified Employee Pension - Individual Retirement Account (SEP-IRA) – a retirement plan set up by employers to which only employers or
self-employed individuals can contribute funds
30. Social Security – a federal insurance program providing aid to those who are eligible for benefits, including the retired, the disabled, or the widow/widower or child of someone deceased who is eligible for benefits
31. Tax-deferred – a term that describes investments on which earnings are not taxed until retirement
32. Term Life – an insurance policy that remains in effect for a specified period of time
33. Underwriting - the process of assessing applicants to determine whether they are good risks for the insurance company.
34. Variable Annuity – an annuity that allows its purchaser to invest in stocks and bonds and manage the annuity based on changing tax needs
35. Vested – the designation for an employee who has earned the right to accumulated retirement benefits
Whole Life – permanent life insurance that remains in effect for the insured’s life time and builds cash value