• A

  • Absolute Assignment

    A life insurance policy assignment under which the assignee (the person to whom a policy is assigned) receives full control over the policy and full rights to its benefits. Generally, when a life insurance policy is assigned to secure a debt, the insured retains all rights in the policy in excess of such debt, even though the assignment is absolute in form. (See also Assignment and Collateral assignment.)

  • Accident

    An unforeseen happening not voluntarily undertaken. 

  • Accident insurance

    Life insurance providing benefits (monthly and/or lump sum) in the event the person insured is accidentally injured or killed. 

  • Accidental bodily injury

    Injury to the body of the person insured as a result of an accident. This may include infections arising from an accidental injury to the exterior of the body. 

  • Accidental death and dismemberment benefit

    A form of accident and sickness insurance rider that is added to a life insurance policy that provides payment in the event of death or loss of one or more bodily members (such as hands or feet), or the sight of one or both eyes, as the result of an accident. 

  • Accidental death benefit (ADB)

    An optional life insurance provision  that doubles ( or sometimes triples) the face amount of a life insurance policy ( subject to specified conditions and exclusions) if the life insured dies as the result of an accident. In general, death must occur prior to a specified age and result from bodily injury effected solely through external, violent, and accidental means independently and exclusively of all other causes, and within 365 days after such injury. Also called double (triple) indemnity. 

  • Accidental dismemberment

    Often defined as “the severance of limbs at or above the wrists or ankle joint or the entire irrevocable loss of sight” as a result of an accident. In the past, loss of use, in itself, was not usually considered to be dismemberment. However, loss of use is now covered by many companies life insurance policies.  

  • Accident and sickness insurance

    Life insurance rider providing for the payment of benefits as the result of sickness or injury. Includes various types of insurance such as: accident insurance, disability income replacement insurance, medical expense insurance, accidental death and dismemberment insurance. 

  • Accidental means

    An unforeseen, unexpected, unintended cause of an accident. Both the cause and the result of what happened must be accidental.  

  • Account value

    In a universal life insurance contract, the accumulating (reserve) fund that is invested on behalf of the policy owner. The account value represents the gross policy reserve, before allowing for back-end surrender charges ( where applicable). ( See also Cash surrender value and Surrender charge.) 

  • Accrual rules

    Tax rules applying to non-exempt life insurance policies last acquired after December 1st, 1982, requiring any unrealized (i.e., not actually triggered) gain to be reported as income. ( See also Non-exempt life insurance policy)

  • Actual authority

    Authority (either express or implied) that is specifically vested in an agent by a principal. ( See also Apparent authority, Express authority and Implied authority)

  • Actuary

    A technical expert in life insurance, particularly in mathematics. A person in this job applies the theory of probability to the business of insurance and is responsible for the calculations of premiums, policy reserves and other values. 

  • Adjustable premium whole life (APWL)

    A life insurance policy having a level sum insured ( face amount ) with premiums guaranteed for only a limited period, such as three or five years. After that time, premiums and recalculated based on actual and projected mortality experience, operating expenses and investment performance. Changes in premiums influence the level of cash value ( and reserve ), which is adjusted to maintain the sum insured. 

  • Additional provisions

    Provisions in addition to the insuring and benefit provisions, and to the uniform provisions, which define and limit the coverage. Also called “general provisions.” 

  • Adjusted cost base (ACB)

    For depreciable property, the ABC is the capital cost of the property when it is acquired or purchased. For non-depreciable capital property, the original cost is subject to frequent adjustment reflecting transactions and other changes between the dates of acquisition and disposition.  

  • Adjusted cost basis (ACB)

    The base value from which accrued income and policy gains for life insurance and annuity contracts are measured. The ACB changes with each transaction with respect to the policy; some transactions increase it and others decrease it. 

  • Adjustment income

    One of the basic uses for life insurance.  Also called readjustment income. An added “step down” income, over and beyond that required to cover the family’s minimum needs, to help adjust to the shock of lower incoming following the life insured’s death.

  • Administrative services only (ASO)

    A self-insurance arrangement in which an organization ( usually an employer ) hires an outside firm to administer the employer’s health insurance program, but the employer retains responsibilities for providing funds to pay claims. 

  • Adverse selection

    Selection “against the company.”  The tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others. Also, the tendency of policyowners to take advantage of favorable options in the life insurance contract. ( See also Anti-selection)

  • Age admitted

    Noted on a life insurance policy where the applicant has provided proof of age ( e.g., a birth certificate) during the application process. Having ” age admitted” will speed up the claims process in the event of the death of the life insured. 

  • Age adjustment

    Increase or decrease of the face amount payable under a life insurance contract, to compensate for a misstatement of age of the life insured at the time of policy application. The face amount is adjusted to the amount of coverage that the premium paid would have purchased had the life insured’s correct age been used.  ( See also Misstatement of age)

  • Age at issue

    The age of an life insurance applicant or an insured as used for insurance purposes. In some companies, the issue age is the age at last birthday; in others, it is the age at the nearest birthday. 

  • Age limits

    Minimum and maximum age limits for the insuring of new applicants or for the renewal of policies.

  • Agent ( life Insurance)

    A Person, other than a duly licensed broker, licensed broker, licensed to solicit life insurance or to aid in placing risks, delivering policies or collecting premiums on behalf of an life insurance company (insurer). The acts of an agent are binding upon the company only to the extent specified in the agent’s contract or otherwise authorized. The agent cannot bind the life insurance company by any statement contrary to provisions of the application or policy nor delegate his or her rights or powers unless expressly authorized. Often called a life underwriter.

  • Aggregate limit clause

    Refers to the maximum amount of benefits payable under an “overhead expense” reimbursement contract. Where benefits are expressed as a monthly maximum for a benefit period of stated number of months and a provision is made for continued access to benefits when all available dollars have not been paid during the specified benefit period. 

  • Allocated benefits

    Payments ( in some policies) for specified services which are limited to maximum specified amounts. 

  • Amount of risk

    The difference between the sum insured and the reserve or policy value at a given date. In other words, the amount over and above what the policy owner has contributed in the way of policy value toward the payment of a claim against the policy. Because the policy value increases each year, the net amount of risk normally decreases and finally reaches zero when the policy value reserve becomes equal to the sum insured. 

  • Annuitant

    A person during whose life an annuity income is payable, usually the person receiving the income. 

  • Annuitization

    The conversion of the accumulating fund under a life insurance policy or deferred annuity contract into a series of periodic income payments, either for a fixed term of years or for the life of the annuitant. 

  • Annuity

    A contract that provides income payments at regular ( typically monthly ) intervals, usually for a specified period or the lifetime of the annuitant. 

  • Anti-selection

    The tendency for the poorest health risks to be those individuals who are most likely to want to acquire, maintain or convert a life insurance policy. 

  • Apparent authority

    Authority that, to the public at large, appears to have been vested in an agent but that, in fact, has never actually been given to that life insurance agent by his or her principal. ( See also Actual authority, Express authority and implied authority)

  • Arm’s lenght

    Generally, parties are dealing at arm’s length ( objectively ) in a transaction if they are not related to each other by blood ( e.g., brother and sister, father and daughter) or marriage (e.g, husband and wife ).


  • Application

    A statement of information made by a person applying for life insurance. The application identifies the plan and the amount applied for, the life insured and the beneficiary, and provides other data useful in evaluating the risk. 

  • Assignee

    A person ( including a corporation, partnership or other organization ) to whom a right or rights under a life insurance policy are transferred by means of an assignment. 

  • Assignment

    The signed transfer by a policy owner of the benefits of a policy to another party. If the insurer is giver due notice of the assignment, the policy benefits will accrue to the person named as assignee. The insurer does not guarantee the validity of an assignment. ( See also Absolute assignment and Collateral assignment).  

  • Assignor

    A person ( including corporation, partnership or other organization) who transfers rights under an life insurance policy to another by means of an assignment. 

  • Association group insurance

    Life insurance issued under a group plan to members of a professional to trade association formed for purposes other than securing insurance.

  • Assurance / Insurance

    These terms are synonymous. Assurance is more commonly used in Britain and some other Commonwealth countries than in Canada. ( See Life insurance )

  • Attained age

    With reference to an insured, usually the age at which a life insurance policy is issued plus the number of years completed since issue. 

  • Attribution rules

    Under the Income Tax Act, income ( interest or dividends ) or capital gain from property earned subsequent to transfer of the property by a taxpayer to his or her spouse or minor children may be deemed to be income or gain of the taxpayer and taxable in his or her hands.

  • Authority

    ( See Actual authority, Express authority, Implied authority and Apparent authority )

  • Authorized stock

    Shares of capital stock of a corporation that are authorized to be issued, whether or not the shares have actually been issued to a shareholder. 

  • Automatic premium loan (APL)

    An option that will automatically pay any premium in default at the end of the grave period and charge the amount so paid against the life insurance policy as a policy loan, provided such premium is not in excess of the policy’s cash surrender value on the due date of the premium ( the SCV having been computed on the assumption that such premium had been paid).  

  • Average tax rate

    Calculated by dividing the amount of tax payable by taxpayer in a given tax year, by the taxpayer’s total income for that year. ( See also Marginal tax rate)

  • B

  • Baby boom

    A period of significant increase in the number of births per annum in Canada, between 1945 and 1959.

  • Back-end Charges

    Expense charges associated with life insurance policies, deferred annuities and pooled funds, which are charged only in the event that the contract is actually surrendered ( in whole or in part).

  • Balanced Financial Planning

    A review of a client’s financial program in four key areas; cash on hand, protection dollars, guaranteed investment and equity investments. 

  • Bearer bonds

    Corporate or government debt securities that are not registered in the name of an individual investor, but are in street form – payable to whoever might present them for payment. 

  • Beneficiary

    A person or organization ( e.g, a corporation ) to whom or for whose benefit life insurance proceeds are made payable in a contract or by declaration. ( Under a pension plan, any person who may become eligible to receive, or who is receiving, benefits under the plan other than as a participant.) ( See also Irrevocable beneficiary and Revocable Beneficiary) 

  • Benefit

    The amount payable by the life insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss covered by the policy. 

  • Benefit period

    The length of time benefits will be paid under a disability income policy. common benefit periods are: one year, two years, five years, to age 65 and for life. 

  • Blue Cross

    An independent membership association providing protection for medical costs not covered by government hospital and medical plans. Benefits available vary among the various provincial blue cross associations. 

  • Bond

    Evidence of a debt on which the issuer promises to pay the holder a specified amount of interest for a specified period, and to repay the loan on maturity or expiration date. Strictly speaking, assets must be pledged as as security for a bond. However, the term is often used loosely to describe any debt security. 

  • Broad form

    Policies that offer broad protection with few limitations ( as compared with limited form plans.)

  • Bundled

    An life insurance policy where the various components of face amount, premium and guaranteed cash surrender value are interdependent in fixed amounts, established at the time of issue of the policy.

  • Business insurance

    Life insurance coverage concerned primarily with the protection of an insured’s business or vocation. Business life insurance protects a business against the loss of its valuable lives of key personnel; stabilizes the business through the establishment of better credit relations; and provides a practical plan for the retirement of business interests in the event of the death of one of the owners. 

  • Business buy-out

    Disability insurance policies designed to provide the funds for partners or shareholders to buy the interest of other partner(s) or shareholder(s) in the event of a prolonged disability. Such plans will have an elimination period of one or two years with benefits payable in a lump sum or monthly over two to five years or a combination of the two. 

  • Buy-Sell agreement

    A contract between two or more persons, generally with a business relationship, setting out the conditions under which one may buy out the other’s interest. It is 

  • C

  • Callable bond

    A bond that can be called ( redeemed ) by the issuing corporation or government at the issuer’s direction, usually after ( or within ) a specific time period. 

  • Canada Pension Plan ( CPP )

    An earnings-related pension plan, administered by the Government of Canada, that provides a retirement pension up to the level of 25 per cent of the current average industrial wage. Financed principally by compulsory contributions from income-earners on their annual “pensionable earnings,” as determined each year, and from employers. Several supplementary pensions and benefits are available to family members. The province of Quebec administer its own plan: the Quebec Pension Plan 

  • CPP/QPP sharing

    The sharing ( in equal portions ) of retirement benefits received by a married couple, under either the Canada Pension Plan or the Quebec Pension Plan.

  • Canada Savings Bonds

    Highly secure and liquid debt securities, issued annually by the Government of Canada. 

  • Canadian Council of Insurance Regulators, The

    A council of provincial superintendents of insurance active in the discussion of insurance regulatory problems and in the formation and recommendation of model legislation and regulations. 

  • Canadian Institute of Chartered Life Underwriters and Chartered Financial Consultants (The)

    An organization of life insurance representatives awarded the Chartered Life Underwriter (CLU) designation. Members may also qualify for the Chartered Financial Consultant (CH.F.C) designation. Its objective is to promote the highest possible standard of service to the public. 

  • Canadian Life and Health Insurance Association Inc. (CLHIA)

    The oldest organization of its kind in North America (1894). Membership includes Canadian, American, British and European companies representing about 90 per cent of the health and life  insurance in force in Canada. Among its roles, CLHIA seeks to promote a legislative and regulatory environment in Canada favorable to its members and to provide information and educational resources to the public. Its information center provides information and responds to consumer concerns. 

  • Canadian Deposit Insurance Corporation (CDIC)

    Backed by the federal government, the CDIC guarantees the principal investment of Canadians in deposit investments with banks and trust companies, in the event of the insolvency of the issuing company. 

  • Capital cost allowance (CCA)

    The degree of depreciation that may be claimed under the Income Tax Act. An owner of depreciable property may claim, as a CCA deduction, a percentage of the property’s original or previously undepreciated cost. Basically, a tax deduction based on the assumed decline in value ( due to use ) of  business assets.

  • Capital gain or loss

    Profit or loss resulting from the sale of a capital asset. A percentage ( currently 50 per cent ) of the taxable portion of the gain or the allowable portion of the loss is reportable for tax purposes. 

  • Capital property

    Investment property identified under the Income Tax Act as having been acquired for its capital growth potential (e.g., shares, mutual funds, real estate).

  • Capitalized value

    The amount of capital, invested at a specified interest rate that would be required to replace the earning or income power of an investment or individual. 

  • “Career average earnings” registered pension plan

    A pension plan that pays out a benefit to plan members based on a percentage of their average salary over the course of their tenure with the employer. 

  • Cash refund annuity

    An annuity that pays out the difference ( if any ) between its purchase price and the total of annuity payments made to date, upon the death of the annuitant. 

  • Cash surrender value ( CSV )

    The amount available in cash upon surrender of a life insurance policy ( other than term insurance policy ) before it matures. During the early policy years, the CSV is the reserve less a “surrender charge”; in the later policy years, the CSV usually equals or closely approximates the reserve value at the time of surrender. A schedule of the CSV per $1,000 (or units) at the end of various representative policy years generally in included in the policy. 

  • Catastrophic loss

    A loss that is so significant that it cannot be compensated for out of the income or assets of the insured. An all-encompassing fire destroying a house or the death of an income earner are examples of catastrophic loss. 

  • Certificate of insurance

    A document delivered to an individual summarizing the benefits and principal provisions of the group contract under which the individual is insured. Also, a written contract between a fraternal benefit society and the member purchasing the life insurance, stating the terms and full details of the agreement. 

  • Chartered Financial Consultant (CH.F.C.)

    In Canada, a designation conferred jointly by The American College and The Canadian Institute of Chartered Life Underwriters and Chartered Financial Consultants in recognition of the attainment of certain standards and proficiency in the practice of financial planning. The right to the designation is open to all Chartered Life Underwriters who meet the preliminary requirements and pass the requisite examinations. In the U.S.A., the short form is ChCF. 

  • Chartered Life Underwriter (CLU)

    A designation conferred by The Canadian Institute of Chartered Life Underwriters and Chartered Financial Consultants in recognition of the attainment of certain standards of education and proficiency in life underwriting. The right to the designation is open to agents and certain other members of a life insurance company or fraternal organization who meet the preliminary requirements and pass the requisite examinations.  

  • Churning

    Said to occur when an agent directly, or indirectly, replaces an in-force policy with an existing life insurance company with a new policy from the same life insurance company, primarily for the purpose of generating new commissions. 

  • Claim

    A demand by a person for payment or fulfillment of benefits provided by a policy. 

  • Claimant

    A person entitled to claim under the policy – which includes a beneficiary or trustee. 

  • Classification

    The occupational category of a risk. 

  • Clean-up Fund

    One of the basic uses for life insurance. A reserve to cover costs of last illness, burial, legal and administrative expenses, miscellaneous outstanding bills, ect. Also called final expense fund. 

  • Closed-end fund

    A pooled investment fund that issues a finite number of shares to the public. Investment in the fund (after issue) is affected by the purchase of shares from an existing shareholder rather than from the fund itself. (See also Investment company, fund or trust)

  • Collateral assignment (insurance)

    The assignment of a life insurance policy to a creditor as security for debt. The creditor is entitled to reimbursement from policy proceeds for any amount owed to the creditor at the life insured’s death; the beneficiary is entitled to any excess of policy proceeds over the amount due to the creditor. (See Absolute assignment and Assignment.)

  • Coinsurance

    In respect to benefits of a group health insurance plan, the portion of the expenses claimed that must be borne by the plan member ( e.g., 20%)

  • Commercial policies

    Contracts of accident and sickness insurance that may be terminated by the insured or insurer at any time. The fact that the contract is cancellable must be stated in the contract and usually provides that the insurer must give the insured 10 days notice by registered mail and the insured give the insurer notice by registered mail.  

  • Common disaster clause

    An optional policy clause designed to provide an alternative beneficiary in the event that the life insured and the beneficiary die as the result of a common accident (or each dies in a different location and the order of the deaths cannot be determined). Unless the clause provides otherwise, if the life insured and the beneficiary die at the same time or in circumstances making it uncertain which of them survived the other, the beneficiary is presumed to have predeceased the life insured. Also sometimes called simultaneous death clause. 

  • Common Stock (Shares)

    Securities that represent ownership in a corporation and carry voting privileges.

  • Commuted Value

    The single sum that represents the present worth, or equivalent value, or a stipulated number of annuity installments payable at fixed future dates. Also called discounted value.

  • CompCorp

    A Canadian health and life insurance industry-sponsored consumer protection plan that insures specified investment amounts or policy benefits in the event of the insolvency of the issuing life insurance company. 

  • Concealment

    Failure of the insured to disclose the the life insurance company a fact material to the acceptance of the risk at the time application is made.

  • Conditional insurance agreement

    Document given by a life insurance agent to a person who, at the time of making application for life insurance, pays the required amount of premium. Consists of two parts: receipt for the premium payment and a certificate evidencing an agreement that provides interim, or “conditional,” life insurance while the application is being processed by the life insurance company. 

  • Consideration

    Under contract law, an asset of discernable value (e.g, cash, cheque, negotiable securities, ect.) that must pass from one party to another in return for goods or services provided. Absent the payment of consideration, a contract is not enforceable in law. 

  • Consideration clause

    The part of an insurance contract that sets forth the amount of initial and renewal premiums and the frequency of future payments.

  • Consumer Price Index (CPI)

    An index compiled and published by Statistics Canada of the costs of a selected cross-section of goods and services, which are allocated a value of 100 in the “base (initial) year.” Costs of the selected goods and services in all other years are proportionate to the base year. 

  • Contingent beneficiary

    A person designated to receive policy proceeds if the primary beneficiary of a life insurance policy is deceased at the time the proceeds become payable. Policy owners are generally advised to appoint a contingent beneficiary; other wise, the life insurance policy proceeds would become payable to the estate of the insured.  

  • Contingent owner

    An individual designated to become the successor owner of a life insurance or annuity contract, in the event of the death of the current owner.

  • Continuous disability

    Some contracts require that the insured’s disability be continuous. However, a trial effort to return to work, or work done as medical therapy, is usually construed as breaking the continuity of the disability of the life insurance contract. 

  • Contract

    The application, the policy, any documents attached to the life insurance policy when issued, and any amendment to the contract agreed upon in writing after the policy is issued, constitute the entire contract, and no agent has authority to change the contract. 

  • Contract of life insurance

    In legal terms, includes not only the group policy but the certificate of group insurance, interim receipt renewal receipt, or writing evidencing the contract and binding oral agreement. 

  • Contributions

    Under a universal life insurance policy, amounts deposited to the policy in excess of premium deposits designated for payment of life insurance and related expenses under the life insurance contract. 

  • Contributory group plan

    A group pension, RRSP of health insurance policy under which the employee plan members are required to pay a portion of the annual premiums or contributions. 

  • Convertible bond

    A debt security issued by a corporation, under which the holder of the investment has the option to convert the security into a prescribed number of shares of stock of this issuer. 

  • Convertible preferred shares

    Shares of a given preferred class of a corporation, under which the shareholder has the option to convert the investment into a prescribed number of common shares of the issuer. 

  • Convertible term insurance

    Term life insurance that may be exchanged, in part or in whole, at the option of the insured ( without evidence of insurability), for permanent life insurance (e.g., whole life insurance) within the period specified in the policy.  

  • Conversion privilege

    The contractual right of the owner of one type of life insurance policy to convert the contract ( usually term), without evidence of insurability, to another type of contract ( usually permanent life insurance) with the same life insurance company.  

  • Conversion ratio (rate)

    Generally, the number of common shares that can be obtained in exchange for one convertible preferred share of this same corporation, under a conversion right. 

  • Corporate bond

    Debt security,usually long term, issued by a corporation in order to raise capital. 

  • Corporate dividends

    Amounts paid to preferred and common shareholders, out of net profits, in cash or stock at the discretion of the corporation’s board of directors. 

  • Cost of living rider

    An addition to a disability income policy that will increase the benefit payable, by fixed amount or based on the consumer price index, annually or semi-annually while on claim. Rider may or may not have annual and/or overall maximum increases. 

  • Coupon bond

    A debt security ( issued by a corporation or a government) that pays periodic interest to investors by way of a coupon physically attached to the bond certificate. Bondholders collect the interest due on the bond by detaching the coupon and cashing it at a financial institution. 

  • Creditor protection

    The issue of weather or not an investor’s assets are exempt from claims of their creditors in the event that the investors become bankrupt. 

  • Creditor’s group insurance

    A class of group insurance (usually decreasing term life insurance ) effected by a creditor insuring the lives  and/or well-being of a number of his or her debtors. If a debtor dies or becomes disabled, the balance of the loan outstanding is paid from the life insurance money. 

  • Creditors

    Third parties to whom the insured is indebted.

  • Crystallization

    With respect to the capital gains exemption, action taken to trigger a disposition of qualifying assets, so as to trigger the realization of capital gains qualifying for the exemption. Crystallization ensures that the exemption will be used to the benefit of the taxpayer.

  • Cumulative preferred shares

    Participating preferred stock of a corporation for which unpaid dividends accrue. Such accrued, unpaid dividends must be paid out to the preferred shareholder in the future, before any dividends can be paid to the corporation’s common shareholders. 

  • Cut-off provision

    Regulates the period during which benefits are payable under major medical and comprehensive medical expense insurance. 

  • D

  • Days of grace

    The number of days ( usually 30 or 31 ) that a life insurance policy will remain in force after a scheduled premium has not been paid. 

  • Death benefit

    The amount payable from a life insurance or annuity contract, to a named beneficiary, as the result of the death of the life insured or annuitant. 

  • Debenture

    A bond secured by the general credit of the issuer rather than by specific assets.

  • Declaration

    An instrument signed by the insured with respect to which an endorsement is made on the policy, or which identifies the policy or which describes the life insurance, and in which the insured designates, alters or revokes the designation of the insured’s personal representative or beneficiary. 

  • Decreasing term insurance

    A term life insurance policy with a level premium for the life of the contract, but under which the death benefit payable decreases annually. Usually used as protection against declining liabilities, like mortgages.  

  • Deductible

    A fixed dollar amount ( either annually or by life insurance clam ) that an insured must assume before group benefits are payable under a group health insurance policy. 

  • Deemed disposition

    A change in regard to capital property that, under the Income Tax act, causes the property to be deemed to have been disposed of, just as though the property had actually been sold. The ruling may apply to life insurance policies under such typical situations as an absolute assignment of a life insurance policy or succession to a contingent owner. 

  • Deferred annuity

    An annuity providing for a periodic payments to begin at some future date, such as after a specified number of years or at a specified age. May be purchased either on a single premium or a regular premium basis. 

  • Defined benefit pension plan

    One of two types of registered pension plans (RPPs), under which benefits are determined by a benefit formula. The required contributions depend on the benefits to be provided and the number of years in the accumulation period.  ( The opposite to the defined contribution pension plan.)

  • Defined contribution pension plan

    One of two types of registered pension plans ( RPPs), under which annual contributions are determined by contribution formulas set forth in the plan. The benefits paid to a participant vary with size of the contributions on his or her behalf and length of service under the plan.  Also know as a money purchase plan. 

  • Dental benefits

    Reimbursement for all or part of the cost of specified dental services. 

  • Dependency period income

    One of the basic uses for life insurance, to generate income for the family until the youngest child attains maturity. 

  • Deposit administration contracts

    A method of pension funding in which contributions ( as necessary ) are deposited with a life insurance company and used to purchase annuities when employees retire. ( In contrast to conventional group annuities, under which the funds are immediately used to purchase units of deferred annuities for all participants.) The life insurance company acts as the trustee until the annuities are actually purchased. 

  • Disability

    A physical or mental inability to work. 

  • Disability (Income) insurance

    A form of accident and sickness life insurance that provides periodic payments when the insured is unable to work as result of illness or injury. Also called: income protection; income replacement; long term disability insurance; weekly indemnity; loss of income insurance. 

  • Disclosure

    The concept of full and adequate revelation to a prospect of all pertinent information regarding a contract (especially a variable contract) as a prerequisite to its sale. 

  • Dismemberment clause

    A clause in the life insurance policy referring to the accidental loss of limbs or sight. 

  • Disposition

    The act of divesting oneself of an interest in a life insurance policy by way of surrender, absolute assignment or maturation. 

  • Dividend additions

    An amount of life insurance added to participating policies. Provided that the life insurance policy permits that dividends may be used as a single premiums at the insured’s attained age to purchase paid-up insurance as a additions to the sun insured. 

  • Dividend gross-up

    Increase in the amount of actual dividends received from Canadian corporations ( by 25 per cent), to compute the taxable amount of dividends. 

  • Dividend options

    A variety of choices offered to owners of participating life insurance policies, for the  pay-out, investment or reinvestment of dividends payable on their policies. Standard dividend options include dividends paid out in cash, used to reduce premiums, invested at interest with the insurer and used to purchase paid-up additional life insurance. 

  • Dividend tax credit

    An amount equal to 16.67 per cent of the actual cash amount of taxable dividends from a Canadian corporations. The dividend tax credit offsets federal income tax payable on the dividends and/or other income. 

  • Dollar cost averaging

    The periodical investment of a fixed amount in specific shares at regular set intervals, regardless of the price of the stock purchased, usually resulting in the average cost of the shares being lower than the average of their prices. 

  • Double indemnity clause

    A clause in or added to some life insurance contracts that will double the death benefit if death is due to an accident. Now more commonly known as accidental death benefit. See Accidental death benefit. 

  • Duplicate coverage

    A term used where an insured is covered by several policies with one or more companies providing the same type of benefits, often resulting in over-insurance. 

  • E

  • Earned income

    For RRSP contribution purposes, those amounts of income that qualify to be taken into consideration for calculating the allowable amount of deductible RRSP contributions. “Earned income” includes such items as salaries, commissions, royalties, net income from self-employment and net rental income. A percentage (currently 18 per cent) of earned income is used to compute a portion of the RRSP contribution room formula. 

  • Effective date

    The date upon which a life insurance contract is deemed to go into force. 

  • Eligible expenses

    Expenses that are insured under the broad terms of major medical or comprehensive medical expense insurance. 

  • Elimination period

    A specified period of time, beginning at the onset of a disability that must pass before any policy benefit will be paid.

  • Emergency fund

    One of the basic uses for life insurance. A reserve death benefit fund provided by policy owners to protect their families against unexpected large, non-budgetable expenses. The increasing loan values of life insurance policies also constitute (and often are referred to as) emergency funds for policy owners while living. 

  • Employee booklet

    A publication given to members of a group plan of life insurance or health insurance, explaining the benefits and terms and conditions of the group plan.

  • Endorsement

    An alteration, addition, limitation or extra provision attached to a life insurance policy or sometimes on the printed policy page. An endorsement may also be in the form of a rider. No endorsement is valid unless signed by an executive officer of the life insurance company. 




  • Endow

    A provision that allows that the cash surrender value of a life insurance policy shall equal the sum insured at a specified future date.  (the endowment date).


  • Endowment insurance

    Life insurance payable to the policy owner, if living at the end of a specified period, called the maturity date, or to a beneficiary if the life insured dies prior to that date. 

  • Equities

    Investment in non-guaranteed assets involving varying degrees of risk, ranging from such relatively conservative assets as real estate, variable contracts, blue chip stocks and other securities, to high risk shares in a junior mining or oil or gas company. 

  • Estate planning

    The total process of planning an estate, including: creating and conserving an estate; minimizing estate shrinkage at death; creating adequate liquidity for settling the estate; and a proper plan for distributing the estate to the owners heirs. 

  • Evidence of insurability

    A statement, declaration of proof of a person’s health, occupation, income, etc. affecting the acceptance of life insurance. 

  • Exceptions exclusions

    Specified risks for which a policy will not provide benefit payments in a life insurance contract. 

  • Excess interest

    The difference between the rate of interest the insurer guarantees to pay on proceeds left under settlement options and the interest the insurer actually allows. 

  • Excess RRSP contributions

    Amounts contributed to an RRSP plan in excess of the deductible amounts as calculated under the annual contribution formula. Lifetime, a taxpayer may carry forward up to $2,000 of excess RRSP contributions without being subject to penalty. 

  • Executor

    A person or a corporation (eg. Trust Company) nominated in a will to effect the settlement of the testator’s estate in accordance with the terms of the will. 

  • Exempt policy

    A life insurance policy that meets the requirements under the exemption test policy and is therefore exempt from current taxation on the buildup of investment income within the life insurance policy. 

  • Exemption test policy

    A theoretical life insurance policy based on a 20-pay, endow at age 85 contract that is used as a benchmark to determine whether or not a given life insurance policy is exempt from current taxation. 

  • Expense loading

    Agents commissions, medical costs and other expenses taken into consideration in determining the amount of front-end charges to be applied to a given class of life insurance contracts.  Also used in the computation of premiums to be charged on the contract. 

  • Experience rating

    A factor taken into consideration at the time of renewal of premium for a group life insurance contract (usually annually), allowing for the past claims experience of the group. 

  • Expiry date

    A predetermined date upon which the benefits of a given contract of life insurance or disability insurance will terminate. 

  • Expressed authority

    Authority vested in a life insurance agent, by principal, through specific written or oral instruction. 

  • Extended health care insurance

    A form of health insurance (usually group) that provides reimbursement for certain expenses not covered by provincial medical insurance plans and (usually) some other health care expenses. Examples include prescribed drugs, ambulance services, private duty nursing, medical appliances, ect. The policy may contain a deductible amount per annum and/or a co-insurance feature under which claims are shared by the claimant and the insurer on a formula basis, e.g 20/80 per cent. Also called Supplementary major medical expense. 

  • Extended term insurance

    The non-forfeiture option that provides that the cash surrender value of a life insurance policy, less indebtedness, may be used as a net single premium at the life insureds attained age to purchase term insurance for the sum insured of the life insurance policy for as long a period as possible, but not longer than the term of the original policy. 

  • Extra premium

    The amount charged in addition to the regular life insurance premium rate to cover an extra hazard, special risk or substandard risk.

  • F

  • Fact finding

    The process of collecting information from a prospect, for the express purpose of determining the individuals need for life insurance and the quantity and type of life insurance most suitable for that prospect. 

  • Fair market value (FMV)

    The highest price available in an open and unrestricted market between a willing buyer and a willing seller dealing at ” arm’s length” both of whom are fully informed as to the qualities of the property concerned and neither of whom in under any compulsion or haste to transact business. 

  • Family deductible

    A major medical policy that covers all the members of a family can include a family deductible in addition to an individual deductible. 

  • Fiduciary

    One who holds property or an interest in trust for the benefit of a third party. 

  • Financial Planning

    The process of collecting and analyzing information concerning a persons or families personal and financial situation in order to identify needs and problems. Establishing specific financial objectives and formulating, implementing and continuously monitoring a financial plan to achieve those objectives. 

  • First mortgage bond

    A debt security issued by a corporation, that is secured by a lien against specific corporate assets.

  • Fixed annuity

    An annuity that guarantees the periodic payment of a specified (fixed) amount of income per installment for life or other periods. 

  • Flat deductible

    Amount of covered expenses payable by the insured before major medical benefits are payable. 

  • Flexible premium contract

    A life insurance policy or an annuity under which its owner may vary the amounts and/or timing of premium deposits. 

  • Fraternal Insurance

    Insurance provided by fraternal benefit societies, organized without capital stock and not for profit and maintaining a lodge system. Almost all fraternal societies operate on a level rate and reserve basis in accordance with special fraternal regulations and under the supervision of provincial authorities. 

  • Fraternal Insurance Counselor (FIC)

    A designation awarded to fraternal life underwriters who complete the prescribed courses of study, pass the examinations and meet the other requirements. 

  • Fraternal Society

    A social organization that provides life insurance for its members. 

  • Free look

    A provision in law allowing the purchaser of a life insurance contract a period of 10 days after a policy delivery to decide whether to keep the contract or return it to the issuing life insurance company. If the policy is returned, the former policy owner is entitled to a full refund of all premiums paid until that time. 

  • Front-end load

    An expense load in a life insurance or annuity contract that is levied against funds as they are deposited to the contract. 

  • Fundamental group principles

    A series of five basic principles required for the underwriting and administration of group life insurance and health insurance plans, to ensure the integrity, stability and profitability of the plans. 

  • Future insurance option

    A rider added to disability income policies that allows the insured to purchase additional coverage at standard life insurance rates, for his or her current occupational classification, at stated future times, regardless of health or occupation at that time. It is not guaranteed insurability as, usually, the applicant is subject to financial underwriting , i.e must have the income to justify the increased coverage. 

  • G

  • Government of Canada Bond

    A bond issued by the government of Canada, which has a value that can fluctuate in the open marketplace. 

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It was a very proud day for me when my granddaughter was born.  It was also an eye opener.  I wondered if my life insurance was comprehensive enough to ensure a decent life for her.  Through word of mouth, I heard about Bravia Life.  After talking with their advisors I felt confident that it was the right decision to convert my term insurance policies over to whole life. I sleep well at night knowing my granddaughter will be looked after.  I would strongly recommend their services to my friends and family.

- Mary Nash, London ON
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