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GLOSSARY

By Joel Cleverley

 

NOTICE:  The following terms, definitions and examples are NOT intended to recommend or offer ANY product or service and are for basic information only.  They are NOT a substitute for legal, tax, or other professional advice.  Choose a term by clicking the symbol it begins with.

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

 

A

Accidental Death Benefit:  This is a life insurance policy benefit which pays upon the accidental death of an insured and does not include death from sickness or old age for example.

Accountant:  Usually one who tracks financial transactions and reports their findings.  They may also make recommendations based on their particular area of expertise and services offered.

Agreement:  A consensus between parties about their obligations.

Arbitration:  A binding process that resolves legal issues outside of the court system.  One who signs an arbitration agreement may be obligated to forgo some of their legal rights should the arbitration become necessary.

 

B

Bad Debt:  Also known in finance as profit and loss statements and refers to amounts a lender must write off from their books due to debtor default.

Bankruptcy:  This means legally absolving ones self from qualifying overextended credit obligations or extending the terms of payment, often as a last resort.  A repayment schedule is established for the debtor through a court appointed trustee.

Beneficiary:  The pre-specified recipient of net benefits in a given plan after the demise of the insured.

Blackout Period:  The range of time an insured is not covered for example under certain Social Security benefits.

Business Transfer:  This is the effective or ineffective transfer of business ownership often at the sale of a business to another buyer.

 

C

Career change:  This often refers to moving from one career to another and can have many consequences.  Much investigation into the pros and cons should take place before a final move occurs.

Cash reserves:  These are usually monetary liquid funds in a savings or other account to have on hand in case of emergency or unplanned major expenses, such as medical costs, repairs, replacement of an asset, bailing someone out of a jam, etc.

COLA:  Cost-of-Living Allowance.

Collegiate Advisor:  This is a financial professional specializing in providing college funding services and products.

Consultant:  An individual who holds themselves out as one may look to for assistance in a specific area.  Some consulting involves general responsibility and does not necessarily mean they have the desired expertise or qualifications.  There are several factors that can assist one in determining the proper fit including trust, respect, education and/or experience.

Contract:  Usually a binding agreement for signing or related parties to meet certain terms which are spelled out in written form and can also be in verbal form.  They are of enormous variety.

Cost Basis:  The amount contributed so far, less any earnings.

Creditor:  Those who a debt must be repaid to or who extended credit.

Crime or Disasters setbacks:  Affected by any crime against you or natural disaster.

 

D

DB(k) A Defined Benefit and 401(k) hybrid retirement plan.

Debt:  This is the amount owed a creditor or creditors.

Debt Consolidation:  This is the process or performance of refinancing debts owed into fewer loans usually to simplify payment management and reduce loan payment expenses.

Debt Elimination:  This is a financial plan to pay off certain debts a given consumer owes.  There are many reliable and creative ways to accomplish this.

Debt Management:  This is a financial method of using debt and may include advanced leveraging principles of finance in favor of the debtor.

Debtor:  Those who owe the debt.

Debt Settlement:  This is a financial service which has gained popularity in some circles during recent years wherein amounts owed are negotiated for a lesser final payment.  There are varied methods in which this is employed.

Defined Benefit Plan:  This is a retirement or pension plan that provides actuary-calculated stream of income distributions to retirees.

Defined Contribution Plan:  This is a retirement plan providing lump sum or income stream distributions from defined contribution installments to the accounts in the plan.

Dependency Period:  This often refers to the range of time that the heads of a household still have dependents at home which can be factored into the social benefits they will receive during that time.

Directional Gaps:  We refer to this as compounding differences between objectives and destinations, which can be progressive or digressive.

Disability Buy-Out:  This is often a financial plan to help disabled business owners obtain a pre-specified value for a pre-specified share of their business interest and can be funded through insurance premium pooling.

Disability Income Benefit:  This is an income stream usually paid by an insurer for qualified disability plan insured’s.

Disability Insurance:  A financial product that provides monetary funds upon predefined disability terms among those pooling premium dollars.

Discovery:  This is the equivalent of obtaining the facts about a given client usually for various evaluation purposes.

Double Indemnity:  This means that the basic face amount of the benefit will be twice that amount.

 

E

Education, Career and/or Business Problems setbacks:  Inadequate knowledge of education and/or career opportunities; difficulty finding or deciding upon the right career or education; unemployment; forced into or out of business or self-employment; lack of quality people or key people becoming disinterested; inadequate business transfer or payroll plans for retirement, disability, and/or death; spending too much time on (you name it).

Employer Benefits or Employee Benefits:  This refers to the usually monetary perks offered to retain employee loyalty and often includes medical, disability, life, long-term care insurances, retirement plans, sick, vacation and holiday pay, etc.

Estate Plan:  This plan sets the parameters for the disposition of an estate usually referring to the post-death of its owners.

Estate Preservation:  This generally refers to planning with the focus of optimizing the preservation of estate assets for as long as possible.

 

F

Family or Health Problems setbacks:  Imbalanced self-esteem, physical, social, emotional, mental, spiritual disability from things such as accident, sickness, victim of abuse, substance or process addictions/compulsions, adoption and/or orphaned; death of a close loved one and/or Widow/er; difficult single life, marriage, separation and/or divorce; relearning finances, dysfunctional upbringing, single parent, divorced partner, difficult step-parent, remarriage, family merge and/or joining finances in a new marriage; outgo exceeds income, financial emergency, medical bills and/or bankruptcy; bailing out, extended or difficult support of a child, parent, friend and/or relative.

Financial plan:  An outline of financial position in relation to goals and the strategies to bridge any gaps.

Financial planner or representative:  One who plans the improvement of client financial affairs in representation to a financial institution.  Planning strategies used vary enormously.

Financial professional:  One who advises or provides value regarding financial matters, services and products.  The seriousness of errors in this field are the resultant holding of financial professionals to a higher standard by law.

FIFO:  First In – First Out.  This often refers to the way in which proceeds such as cost basis and interest earnings from a plan will be withdrawn for tax payment and tax savings purposes.  The first to go in will be the first to be paid out.

Financial Directions:  Our planning services.

Forced retirement:  This refers to circumstances with an employer causing the employee to retire often sooner than normal retirement.  Sometimes an incentive is provided to encourage the employee to take their retirement.  Sometimes employers will do this because they want new blood and pay restructuring in their organization to survive.  Employees should weigh seriously the consequences of such a move.  If they are not ready to retire, they may wish to seek employment elsewhere.

Funding:  This is the actual asset that is being used in a given plan, like the money or real estate in a given retirement plan.

 

G

Gap:  See Directional Gaps

 

H

Health Insurance:  Insurance that covers insured’s for specified health related costs.  There are different types of health insurance, such as major medical, disability income, cancer policies, and so on.

Healthy:  The conclusion of one’s health in financial services is dependent on factors in relation to the institution’s obligations and not necessarily on one’s own or even other professional opinions such as medical advice from a health care professional.

HELOC:  Home Equity Line of Credit.  This is usually a second mortgage extended credit limit secured by the equity position of the property that functions much like a revolving credit card.

 

I

Immediate Annuity:  This is the conversion of a lump sum into an income stream option of a specified amount or duration.

Inadequate Financial Advice and/or Product Loss setbacks:  No advice, no service and/or poor follow-up; uncoordinated sales or product driven advice with a formal analysis; conceptual advice with no formal analysis or single-need analysis only; poor company product and/or performance; misrepresentation of company, service and/or product; uncoordinated collaboration between you, the planner, any networks and/or software; poorly timed buy or sell of volatile-designed property.

Insurance:  A pool of funds managed by an insurer with specified benefits to the contributors or insured’s under pre-agreed upon circumstances.

Insurance Agent:  One empowered by an insurance company or carrier to act on behalf of the company and perform transactions defined in their agent agreement.  Agents must be licensed in the jurisdictions in which they wish to perform such services and be appointed with the companies they write business through.

Investment:  In some circles, this is an exclusive type of asset saved and improved by its monetary growth properties usually toward a desired goal.  Generally it can be anything that improves a desired result, such as a good education, living a good life, etc. versus something that worsens the odds of a desired result, such as ignorance, living recklessly, etc.

IRA: Individual Retirement Account or Individual Retirement Annuity.

 

J

Joint and survivor:  This refers to an immediate annuity periodic payout option where the retiree receives guaranteed funds until his or her demise, upon which the beneficiary receives funds for a specified time also and can last till their demise as well.  The amounts received by both parties depend on which option is selected.

 

K

Keogh:  A retirement plan employers can install for themselves and their employees.

 

L

Labor:  This often refers to a work force or field of work or the process of work related tasks.  Manual labor is usually more physically demanding.

Lay off:  Losing a job due to circumstances not directly related to employee performance, such as seasonal or temporary employment as the cause of layoffs.

License:  An official authorization to perform actions of a discriminating nature which obligates the licensee to the standards and practices of that license often under penalty of law for a breach against the license authority.

Life Insurance:  A financial product providing death benefits from a pool of funds provided by policy owner premiums.

Life Only Option:  This is any distribution from a sum that behaves like an immediate annuity income stream, which is guaranteed for the life of only one specified recipient.

LIFO:  Last In – First Out.  This often refers to the way in which proceeds such as cost basis and interest earnings from a plan will be withdrawn for tax payment and tax savings purposes.  The last to go in will be the first to be paid out.

Liquidity:  This refers to any asset which can be easily converted to cash.  Usually a savings account is liquid.  Usually raw land is not as liquid because it takes time to sell the property to obtain its cash value.

Long term care:  This is a service that assists those who are unable to take care of themselves and can be for a short duration or go on for many years.  Long term care insurance helps pay for such care and is very specific about what conditions qualify and what services the carrier is obligated to pay.

Loss:  This refers to something that is no longer available or will not become available and can occur in many ways, such as setbacks.

Lump Sum Distribution:  An election to withdraw or transfer a chosen lump sum amount versus taking smaller amounts periodically.  Some retirement plans have lump sum distribution tax benefits.

 

 

M

Medicare:  This is a government-managed program for hospital expenses, skilled nursing facilities, hospice care for the terminally ill and home health care benefits.

Minimum Distribution:  The mandatory minimum distribution requirements from qualified plans.  Required amounts NOT distributed carry heavy penalties.

MMA :  Money Merge Account.  This is a debt management tool associated with mortgage debt.

Monetacaduceus:  This is our logo that adapts ancient ideas encouraging those recovering from setbacks to experience monetary healing.  The wings represent “swift recovery”, the ball represents “heaven helping”, and the serpent and staff represent “transforms adversity”.

Money:  A medium of exchange.

Money-purchase plan:  A Defined-Contribution Plan in which the company contributes funds as a percentage of participant compensation.

Monte Carlo Analysis: 

Mortgage:  A loan usually secured against real estate holdings.

Mortgage lending:  This is extending loans using real estate property as collateral.

Mortgage Protection:  This refers to ensuring that upon certain areas of risk, the debtor has funding to payoff all or a portion of the mortgage obligation.

 

N

Non-Qualified Plan:  This is a plan that has less ruling for usage than a Qualified Plan.

 

O

Overhead Expense:  This is a financial plan that pays employer overhead costs during the disability of a key owner or person in the company and can be funded through premium pooled dollars.

Over-Involvement:  In work, career, community, religious, volunteer activity; avid hobbyist.   

Own:  The possession of something with full rights of use.  To own free and clear is to have these rights of possession for something without obligations or encumberances against it. 

 

P

Pen Max:  Pension Maximization.  This refers to optimizing a given pension distribution and/or estate value compared to the available options.

Pension plan:  A retirement income plan that typically utilizes defined benefit or immediate annuity payouts.

Preferred Plans:  We refer to this as our range of plans that give consumers the ability to select the options they prefer in the planning process.

Pre-retiree:  This refers to individuals who have not yet begun withdrawing their retirement funds to pay expenses or those who are withdrawing funds, but are still actively employed.

Provigap:  Our signature financial directions service for inverting directional gap losses into provident gap gains.

 

Q

Qualified Plan:  This is a plan that must meet stringent IRS rules for qualification of specified tax benefits in the law.

 

R

RA:  Reversionary Annuity.  This is a fixed product that optimizes distribution optimization plans, such as pension maximization.

Residual income:  This represents monies derived from repeat or ongoing business transactions or occurrences.  The benefits of this secondary income are longevity as an incentive to provide continued service.

Retire:  To live off of passive income.  Some replace their career with another, get involved in hobbies, or other activities that are important to them.  Beginning retirement is often around age 65, but can be any time one is financially able to do so.

Retirement Package:  This refers to a set of retirement programs offered to employees often as an incentive to accept a position and to engender loyalty to the employer.

Retirement Plan:  A program used to devise the successful financial support of retirees so they have a standard of living when they are less able to support themselves due to reductions of health, and/or to pursue other interests.  It may also include a financial retirement vehicle, such as IRA, 401(k), pension, SEP, defined benefit plan, etc.

Reverse Mortgage:  This is a financial product that allows a homeowner to use their property as collateral for an income stream until their demise after which the paying institution intends to sell the home at a profit.

Rollover:  A method of transferring between funds frequently accomplished through trustee-to-trustee transfer.

Roth-IRA:  The tax code defining its retirement plan properties.

 

S

Self-directed:  A plan structure allowing participants a range of choices to contribute and invest their funds.

SEP-IRA:  A Simplified Employee Pension IRA in the Internal Revenue Code through which small businesses can provide retirement savings and benefits.

Set back:  We refer to this as a temporary loss in time, focus and/or assets that can cause compounding losses. For more setback examples, see Family or Health Problems; Education, Career and/or Business Problems; Over-involvement; Inadequate Financial Advice and/or Product Loss; Crime or Disaster.

Social Security:  This is a government sponsored program funded from taxpayer, which includes supplementary life, health, disability and retirement benefits.

Suitability:  Some professionals are required to perform tests to ensure that the type financial product being recommended properly fits the client.  This precaution can increase client satisfaction and protect both client and advisor from the repercussions of an unsuitable product or service.

 

T

TDA:  Tax-Deferred Annuity

Time Horizon:  This critical planning component is the period of time a client expects to leave their funds in a given financial product, typically based on the period in which they will need their funds for a goal.

Time Value of Money:  This means taking a look at the investment value of an asset by adding interest over time of ownership to its current value.

Trustee-to-Trustee Transfer:  Forms that cause one company plan to be rolled into another company plan by wire or direct check.  It implies that the funds are sent direct and do not pass through the participant’s hands.

Turn-key:  A self-evident marketing plan that has all of the elements to perpetuate a successful campaign in a given area.

 

U

Unemployed:  The status of being without gainful work.  Some people rely on social services such as Unemployment to provide their income until they can obtain other employment.

Unprepared:  The state of being without adequate implementation at a given point to bring about a desirable result.

 

V

Vesting:  This is a schedule of employer requirements for employee ownership of benefits.

 

W

Waiver of Premium:  This typically refers to a life insurance policy benefit that pays the policy premiums for the insured in the event of their disability for a certain length of time.

Wealth Management:  In recent years many financial professionals hold themselves out as assisting clients to manage and maximize their wealth through a myriad of differing strategies, products and services.

Wealth Transfer:  The process of passing an estate or business on to benefit the current or future beneficiaries or owners.

 

X

 

Y

 

Z

 

#

1035 Exchange:  This refers to the IRS code allowing the transfer of funds from certain qualifying accounts to different or similar accounts without incurring a taxable event on such amounts.

401(k): The tax code outlining specific criteria for 401(k) Defined Contribution employer-sponsored retirement plans.

403(b):  The tax code pertaining to 403(b) employer-sponsored retirement plans for non-profit organizations.

529 College Savings Plan: Section 529 of the Internal Revenue Code defining law regarding such plans and allows for favorable college funding distributions with regard to withdrawal taxation and penalties.


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