ANNUITY
A contract sold by a life insurance company that provides periodic income payments for a lifetime, or for a defined period of time, or both.
ASSET ALLOCATION
Investment among a variety of asset classes to help reduce risk and increase the potential for positive returns.
BALANCED FUND
A mutual fund which has an investment policy of "balancing" its portfolio generally by including bonds and shares in varying proportions influenced by the fund's investment outlook.
BENEFICIARY
The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
BOND
An interest bearing government or corporate security that obligates the issuer to pay the bondholder specified interest payments at specific intervals and to repay the principal at maturity.
BOND FUND
A mutual fund that invests in a collection of similar bond types, typically with the objective of providing income.
CASH VALUE
The savings portion of an insurance policy that can be borrowed against or cashed in.
CERTIFICATE OF DEPOSIT (CD)
A debt instrument issued by a bank that pays interest until the maturity date.
CONVERTIBILITY
Option to convert from one type of insurance policy (term) to another (whole life), usually without a physical examination.
DIRECT ROLLOVER
A distribution from a qualified plan such as a 401(k), 403(b) or 457 plan or IRA that is sent directly to the trustee, custodian or issuer of the receiving IRA or other qualified retirement savings plan.
DIRECT TRANSFER
The movement of tax-deferred retirement assets from a qualified plan or custodian to another plan, custodian or IRA. A transfer does not constitute a withdrawal and does not generate any taxes.
DIVERSIFICATION
Spreading risk by investing in a variety of asset categories.
EMPLOYER MATCHING CONTRIBUTION
The amount that an employer may contribute to its employees retirement accounts (usually expressed as a formula based on employee contributions).
FACE VALUE
The original death benefit amount in an insurance policy.
INVESTMENT OR RETIREMENT SAVINGS STRATEGY
A plan to help you choose which investment options are right for your situation so you can stay on track and save for retirement.
IRA
Individual Retirement Account. An account that allows an employed person to set aside money on a tax-deferred basis. Depending on income, annual contributions to an IRA may be made on a pre-tax basis. After-tax contributions are also permissible. Contribution amounts depend on the year and age. Any earnings on an IRA are tax-deferred until withdrawn.
GROWTH STOCKS
Shares of companies whose earnings are expected to increase at an above average rate, often paying no dividends as extra cash is reinvested back into the company.
IN-SERVICE WITHDRAWAL
A withdrawal from a retirement savings plan by a participant who remains employed.
LARGE-CAP COMPANY STOCKS
Stocks issued by the largest companies in the United States, typically with a market capitalization of $5 billion or more.
LIQUIDITY
The ability with which an asset may be converted to cash without significant loss.
LUMP-SUM DISTRIBUTION
A single payment representing an employee's interest in a retirement savings plan, resulting from termination of service, death, disability or the attainment of age 59 1/2.
MARKET VALUE
The current price of a security as indicated by the latest trade reported.
MONEY MARKET
Short-term debt securities such as Treasury Bills, commercial paper and certificates of deposit. These securities, which are for short-term time horizons, are generally very safe and offer a relatively low interest rate.
MUTUAL FUND
An open-ended fund operated by an investment company which pools the investments of individual investors and invests in a group of assets in accordance with stated investment objectives.
PAID UP
An insurance policy requiring no further premium payments due to prepayment or earnings.
PENDING FINANCIAL DECISION
Retirement plan distribution, deferred compensation options, D.R.O.P. payment, opening an IRA/Roth IRA, evaluating various investments, renewing a CD, etc.
PRE-TAX CONTRIBUTIONS
A portion of an employee's salary contributed to a retirement plan before federal income taxes are deducted; reducing the individual's gross income for federal tax purposes.
PREMIUMS
Monthly, quarterly, or yearly payments required to maintain insurance coverage.
PROTECTION PLANNING PRODUCTS
Variable Life, Term and Disability insurance, Long Term Care Insurance.
RETIREMENT INCOME STRATEGY
A plan to help you prioritize how and when to take income from your accumulated assets so that it will keep pace with inflation, avoid unnecessary taxation, and last as long as you do.
ROLLOVER IRA
An individual retirement account established for the purpose of receiving the assets from a qualified plan, in order to preserve the tax-deferred status of the account and so that the assets can be subsequently rolled over into another qualified plan. A rollover is tax free provided it takes place within 60 days after the distribution is received.
ROTH IRA
An individual retirement account in which contributions are made with after tax dollars. Earnings accumulate tax-free. Withdrawals of earnings are tax-free after age 59 ½ and the account has been open for five years. Original contributions may be made at any time with no income or penalty tax. Annual contributions may be made by an employed person; contribution amounts depend on the year and age.
SMALL-CAP COMPANY STOCKS
Stocks of companies generally with a market capitalization of $250 million to $1 billion. These stocks are generally more volatile than larger capitalization stocks but may offer higher potential returns.
S&P 500
The Standard & Poor's 500 is a composite stock index of 500 widely held stocks, weighted by market value. The index is often used to measure broad stock market performance.
STOCK
A portion of ownership in a corporation.
STOCK FUND
A mutual fund that invests primarily in individual common stocks. The specific types of stocks in which a stock fund invests will determine the fund's style and specific investment objective.
TAX-DEFERRED
An investment with earnings and/or contributions that are taxed at a later date. For example, taxes on annual contributions to a retirement savings plan or IRA may be deferred until the money is withdrawn.
UNIT (OR SHARE) VALUE
The price of an interest in any investment option. The value of a unit fluctuates on a daily basis.
VALUE STOCKS
Stocks of companies that are considered low in price relative to it fundamentals (dividends, earnings, sales, etc.), generally with a high dividend yield.
VARIABLE ANNUITY
A contract sold by an insurance company whose value and rate of return fluctuates with that of the underlying securities.
VESTING
The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's retirement plan. Vesting is based on various eligibility factors, as defined in the plan.
