Life Insurance Terms

Investment Terms


Segregated funds

A type of investment available through insurers that is managed separately from other similar pools or funds and the general funds of the life insurance company. Segregated funds provide a guarantee to the investor that either 75% or 100% of deposits will be returned on the death of the policy owner or on maturity of the contract.

Settlement option

A method in which the beneficiary/beneficiaries can receive the death benefit, for instance, at a lump-sum, interest option, instalment option, or life annuity option

Suicide clause

A death benefit that will not be provided to the beneficiary of the policy if the life insured dies because of suicide within two years of the policy's issued date

Sum insured

Refer to Face Amount.

Surrender charges

The amount of money that is deducted when the policy owner cancels the policy for the cash value (cash surrender value), from certain life insurance policies

Surrendered policy

The termination of a policy due to the non-payment of premiums in which there is either a cash value or other non-forfeiture value

Sales charge

In the case of mutual funds, these are commissions charged to holder of fund units, usually based on the purchase or redemption price. Sales charges are also known as "loads."

Securities Act

Provincial legislation regulating the underwriting, distribution and sale of securities.


A document signifying part ownership in a company. The terms "share" and "stock" are often used interchangeably.

Shareholders' equity

The amount of a corporation's assets belonging to its shareholders (both common and preferred) after allowance for any prior claim.

Short selling

The sale of a security made by an investor who does not own the security. The short sale is made in expectation of a decline in the price of a security, which would allow the investor to then purchase the shares at a lower price in order to deliver the securities earlier sold short.

Simplified prospectus

An abbreviated and simplified prospectus distributed by mutual funds to purchasers and potential purchasers of units or shares (see prospectus).

Specialty fund

A mutual fund that concentrates its investments on a specific industrial or economic sector or a defined geographical area.


The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security.

Stock options

Rights to purchase a corporation's stock at a specified price.

Strip bonds

The capital portion of a bond from which the coupons have been stripped. The holder of the strip bond is entitled to its par value at maturity, but not the annual interest payments.

Systematic withdrawal plan

Plans offered by mutual fund companies that allow unitholders to receive payment from their investment at regular intervals.

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