Life Insurance Terms

Investment Terms


Paid up insurance

Life insurance policy where all the required premium payments have been paid

Permanent life insurance

A type of life insurance that will take place until the insured's death. These include Term-to-100, whole life, and universal life.


The document that is held by the insured that provides information about the terms and conditions of the insurance. Also referred to as contract.

Policy loan

A loan that is made by the insurer, life insurance company, on the security of the cash value of the policy provided to the policyholder

Policy reserves

Estimated funds that are needed, with future premiums and investment income, to pay future benefits and expenses under insurance and annuity contracts, with an allowance provided for adverse experience in future assumptions

Preferred rates

A cheaper cost of insurance for people that is able to demonstrate a better risk to the insurance company.


The periodic payment that the owner of the policy must make in order to continue being protected by the insurance policy

Par value

The principal amount, or value at maturity, of a debt obligation. It is also known as the denomination or face value. Preferred shares may also have par value, which indicates the value of assets each share would be entitled to if a company were liquidated.

Pension adjustment

An amount that reduces the allowable contribution limit to an RRSP based on the benefits earned from the employee's pension plan or deferred profit sharing plan.

Pension plan

A formal arrangement through which the employer, and in most cases the employee, contribute to a fund to provide the employee with a lifetime income after retirement.


All the securities which an investment company or an individual investor owns.

Preferred share

An ownership security, senior to the common stock of a corporation, with preferred claim on assets in case of liquidation and a specified annual dividend.


The amount by which a bond's selling price exceeds its face value. Also, the amounts paid to keep an insurance policy in force.

Present value

The current worth of an amount to be received in the future. In the case of an annuity, present value is the current worth of a series of equal payments to be made in the future.

Price earnings ratio

The market price of a common share divided by its earnings per share for 12 months.

Primary distribution

A new security issue, or one that is made available to investors for the first time.


The person for whom a broker executes an order, or a dealer buying or selling for his or her own account. Also, an individual's capital or the face amount of a bond.


The document by which a corporation or other legal entity offers a new issue of securities to the public.

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