Glossary of Terms

401(k) Plan: Employer-sponsored, qualified plan that permits employees to make pretax contributions from their salaries to a profit-sharing plan, a target benefit plan or a stock bonus plan. Contributions and earnings grow tax deferred until withdrawn.

403(b) Plan: A retirement plan for employees of non-profit organizations, public schools and churches where employees can contribute a portion of their salary into a mutual fund or annuity. As with a 401(k) plan, contributions and earnings grow tax deferred until withdrawn.

Accelerated death benefit: Allows the policyholder to receive all or part of the policy's proceeds prior to death under certain circumstances, including a life expectancy of 12 months or less.

Accidental death benefit: A provision added to a life insurance policy for payment of an additional benefit if death is caused by an accident. This provision is often called "double indemnity."

Adjustable-rate mortgage: A mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill rate or the prime rate.

Adjusted gross income (AGI): This is the income amount on which a person computes deductions that are based on, or limited by, a percentage of his or her income in order to figure out federal taxable income. AGI is determined by subtracting from gross income any deductible business expenses and other allowable adjustments (some traditional Individual Retirement Account annual contributions, SEP and Keogh annual contributions, and alimony payments).

Administrator: A person appointed by a probate court to handle the estate of a person who died intestate (without a will). They have the same duties as an executor.

Adult day services: A program of adult day health care that is state licensed, operates at least five days a week for a specific minimum length of time and does not provide any overnight care.

After Tax Retirement Income: The amount of spending money needed, net after tax, to provide an investor with his or her desired lifestyle. Can be thought of as their annual budget in retirement or their total planned annual spending in retirement.

Alternate care: Alternate care is licensed personal care and custodial services provided to those who suffer cognitive impairment or require help with activities of daily living.

Alternative minimum tax: An IRS mechanism created to ensure that high-income individuals, corporations, trusts, and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions. It operates by adding certain tax-preference items back into AGI (Adjusted Gross Income).

Amortization: The gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest. .

Annuity: A contract that provides for a series of payments to be made or received at regular intervals. An annuity may be immediate, starting as soon as the premium has been paid, or deferred, starting at a designated later date. Annuities are commonly used to fund retirement. .

Appreciating asset: An asset that is growing in worth.

Asset: Property and tangible resources, such as cash and investments. Examples include stocks, bonds, real estate, bank accounts, and jewelry.

Asset allocation: Investment strategy whose purpose is to enhance total return and/or reduce risk by diversifying assets among different types of stocks, bonds and money market investments.

Asset classes: Types of investments, such as stocks, bonds, real estate, and cash.

Assisted living: As it relates to long-term care insurance, a form of personal care such as help with bathing or dressing, and usually recreation and social services. Licensed by state departments of social services.

Attorney-in-fact: A person who holds power of attorney, and therefore is legally designated to transact business on behalf of another person.

Automatic premium loan: A provision in a life insurance policy that any premium not paid by the end of the grace period will be paid automatically by a policy loan if there is sufficient cash value.

Average annual total return: Represents the average annual change in value of an investment over time, including changes in share price and income (dividends or interest) expressed as a percentage.

Bankruptcy: A legal process available to individuals (and businesses) who are overextended financially and unable to pay their debts. Individuals can file for bankruptcy in order to legally eliminate some or all of their debts. Bankruptcy will not discharge all debts. Consult an attorney.

Basis point: One one-hundredth of one percentage point.

Beneficiary: An individual, institution, trustee, or estate that receives, or may become eligible to receive, benefits under a will, insurance policy, retirement plan, annuity, trust, or other contract.

Business cycle: The predictable long-term pattern of alternating periods of economic growth and decline, characterized by many factors, including changing employment, industrial productivity, and interest rates.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985): Law guaranteeing most Americans continued health care coverage when they leave a job. Premium payments are responsibility of the individual.

Capital appreciation: The increase in value (price) of securities you own.

Capital gain or capital loss: Profit or loss from the sale of a capital asset. A capital gain, under current federal income tax laws, may be either short-term (six months or less) or long-term (more than six months). A short-term capital gain is taxed at the reporting individual's full income tax rate. A long-term capital gain is taxed at the reporting individual's income tax rate with a maximum rate of 15 percent.

Capital stock: All shares representing ownership of a business, including preferred and common.

Capitalized cost: Or cap cost. In the automobile leasing industry, a car's cap cost is what the dealer has determined the car would cost if it were being sold. If you're leasing a car, you will make a monthly lease payment based on its capitalized cost.

Cash value (cash surrender value): The amount available in cash upon surrender of a policy before it becomes payable upon maturity or death.

Catch-up provision: A provision in 401(k), 403(b) and 457 plans and IRAs that allows some participants to make contributions over the usual annual limit if they have not maximized their contributions in earlier years.

Certificates of Deposit (CD): Investment vehicles usually issued by banks and other financial institutions that pay a fixed rate of interest for a specific period of time. FDIC insured up to $100,000 per customer.

Certified Public Accountant (CPA): An individual who has received state certification to practice accounting.

Charitable Remainder Unitrust (CRUT): A trust commonly used to receive property that will return an income stream to you throughout your lifetime or for a specified period of time, and then pay out the property to the designated charity.

Closing costs: Fees and expenses, over and above the price of the property, incurred by the buyer and/or the seller in the property ownership transfer. Examples are title searches, lawyer's fees, survey charges, and deed filing fees.

Collateral: Securities or other property pledged by a borrower to secure repayment of a loan.

Community property: Any property that a married couple has acquired during their marriage. In certain states community property is divided equally in the event of a divorce.

Compound interest: The interest that accrues when earnings for a specified period are added to the principal, so that interest for the following period is computed on the principal plus accumulated interest. Interest is calculated on reinvested interest as well as on the original amount invested.

Consumer price index (CPI): An inflationary indicator that measures the change in the cost of a fixed "basket" of products and services, including housing, electricity, food, and transportation. The CPI is published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor. Also called cost-of-living index.

Convertible term policy: Can be exchanged for cash value insurance without a medical examination but generally with a higher premium.

Corporate bond: An evidence of indebtedness issued by a corporation, rather than by the U.S. government or a municipality.

Corporation: The most common form of business organization, and one that is chartered by a state and given many legal rights as an entity separate from its owners. Characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern.

Cost of insurance: Calculated as unit of insurance times the number of units purchased.

Coverdell Education Savings Account: Formerly called an Education IRA. With the name change in 2002, came an increase in contribution limits ($2,000 a year vs. $500 for the Education IRA). And while you could only save for college expenses prior to 2002, now you can use this account to save for K-12 expenses too. Unlike other IRAs, however, you can only invest cash in the Coverdell Education Savings Account.

Credit risk: The investor's risk of not receiving back the money or interest payments expected.

Current assets: Those assets of a company that are reasonably expected to be realized in cash, or sold or consumed during the normal operating cycle of the business.

Death benefit: The payment made to a beneficiary from an annuity or life insurance policy when the policyholder dies. Also called face amount or face value.

Debit Card: Used much like a credit card, although purchases are deducted directly from your personal checking account.

Deductible: Relating to health insurance, a predetermined amount the insured person pays for medical treatment before the health insurance coverage kicks in.

Defined benefit plan: A company retirement plan, such as a defined benefit pension plan, in which a retired employee receives a specific benefit based on salary history and years of service, and in which the employer bears the investment risk. Contributions may be made by the employee, the employer, or both.

Defined contribution plan: A company retirement plan, such as profit sharing, money purchase pension, 401(k) or 403(b), in which each participant has an individual account within the plan with benefits based solely upon amounts contributed and the past performance of that account. The participant bears the investment risk

Depreciation: A decline in the value of a property due to general wear and tear. A car's value declines quickly. If you're leasing a car, expect to pay for that depreciation over the term of the lease, which is to say the shorter the lease, the higher your payment will be.

Disability income insurance: A kind of insurance that replaces a portion of the income lost in the event of disability. Many different kinds of disabilities qualify.

Dividend: The payment designated by the board of directors to be distributed pro rata among the shares outstanding. Preferred shares generally pay a fixed dividend, while common shares pay a dividend that varies with the earnings of the company and the amount of cash on hand. Dividends may be omitted if business is poor or the directors withhold earnings to invest in plant and equipment. Sometimes a company will pay a dividend out of past earnings even if it is not currently operating at a profit.

Dividend reinvestment plan: A mutual fund share account in which dividends are automatically reinvested in additional shares. With this type of account, capital gains distributions are also automatically reinvested. Dividends (but not capital gains) may be reinvested at offering price (i.e., with a sales charge), but are more commonly reinvested at asset value.

Double taxation: The federal government taxes corporate profits once as corporate income; any part of the remaining profits distributed as dividends to stockholders may be taxed again as income to the recipient.

Durable power of attorney: A legal document allowing individuals to grant others general or specific powers for managing financial or medical decisions in the event that the individual becomes incapacitated and unable to make decisions.

Education IRA: Now called the Coverdell Education Savings Account. A type of tax-deferred financial planning vehicle, which enables a person to save money for future education-related expenses in this tax-advantaged way.

Equity: The ownership interest of common and preferred stockholders in a company. Also refers to excess of value of securities over the debit balance in a margin account. Also, the value of a property that remains after all liens and other charges against the property are paid. A property owner's equity generally consists of his or her monetary interest in property in excess of the mortgage indebtedness. In the case of a long-term mortgage, the owner's equity builds up quite gradually during the first several years because the bulk of each monthly payment is applied, not to the principal amount of the loan, but to the interest.

Estate Taxes: IRS tax rates that apply to the estate after the death of the holder. Currently estates are taxed on any amount in excess of $1 million. Often portfolios are managed to reduce this substantial tax burden.

Executor: An individual or institution nominated in a will and appointed by a court to settle the estate of a deceased. See administrator.

FICA payroll taxes: FICA is an anacronym for Federal Insurance Contributors Act, and is the federal law, which requires employers to withhold a portion of employee wages and pay them to the government trust fund, which provides retirement benefits (more commonly known as Social Security).

Face amount: The amount stated on the face of the policy that will be paid in case of death or at maturity. It does not include dividend additions or additional amounts payable under accidental death or other special provisions.

Federal Deposit Insurance Corporation (FDIC): A federal agency that insures deposits in member banks and thrifts up to $100,000.

Federal Housing Administration (FHA): A government agency whose primary purpose is to insure residential mortgage loans.

Fees: Fees paid to investment advisors or money managers, which reduce the expected total return of the individual's portfolio.

Financial Advisor: An advisor employed to provide advice on subjects related to investing and personal financial decisions.

Financial Plan: A plan with stated goals and objectives pertaining to current and long-term investment needs of the individual.

Financial Planning: Creating a plan with stated goals and objectives pertaining to the current and long-term investment needs of the individual.

Fixed Annuity: Fixed Annuity is generally the term used to distinguish an annuity with a specified rate of return provided by the issuing insurance company. An annuity is an insurance product that provides lifetime retirement income in previously designated monthly installments. (Annuitization periods may not be based on life expectancy.)

Fixed-rate mortgage (FRM): A mortgage in which the interest rate does not change during the entire term of the loan. Also called conventional mortgage. See also adjustable rate mortgage.

Gift Tax: Gifts of cash or securities over $11,000 per year, per recipient are taxed by the IRS at a highly progressive rate.

Gifting Phase: Refers to the period toward the end of the investment cycle, where excess funds are generally used to establish trusts, minimize estate taxes, etc.

Government bonds: Obligations of the U.S. government, regarded as the highest grade issues in existence.

Health insurance: Insurance that provides protection against financial losses resulting from illness, injury and disability. In general, any insurance program covering medical expenses and/or income lost owing to illness or accidental injury.

Heir: Individual who will receive assets upon the death of another.

Home health care: A program of professional, paraprofessional or skilled care provided through a home health care agency to a patient in his or her home. Services not included in home health care are those provided to a patient while confined in a hospital, nursing facility or any other facility that charges for room and board.

Hospice care: A formal program of care for terminally ill patients, on an inpatient basis, as directed by a physician. Treatment must be provided by a state-licensed or Medicare-approved hospice care organization.

Income taxes: Taxes on income, both earned (salaries, wages, tips, commissions) and unearned (interest from savings accounts, dividends if you hold stock). Individuals and businesses are subject to income taxes.

Individual retirement account (IRA): A tax-deferred personal retirement account that allows a person to invest up to $3,000 (or 100% of compensation, whichever is less) each year. Your contribution may be tax deductible depending on your adjusted gross income, whether you're married and whether your employer offers a retirement plan at work. A Rollover IRA accepts eligible employer-sponsored retirement plan assets.

Inflation: Assumptions for adjusting savings or retirement distributions based on estimated salary increases or cost-of-living adjustments.

Insolvent: A business that is unable to meet debt obligations, which may lead to bankruptcy or forfeiture of property.

Insurable interest: The beneficiary who would suffer financial loss if the insured dies; without an insurable interest, an insurance company will not issue a policy.

Interest: Amount charged by a lender to a borrower for the use of money. Interest rates are normally expressed on an annual basis.

Interest rate risk: If you have securities that you bought for the fixed income feature (such as bonds and preferred stock), if the interest rate changes your piece of the pie will move in the opposite direction.

Internal Revenue Service (IRS): The federal agency responsible for administering and enforcing the Treasury Department's revenue laws, through the assessment and collection of taxes, determination of pension plan qualification, and related activities.

Intestate: Legal term for dying without a legal will. Distribution of the property is overseen by a probate court.

Investment: A current commitment of money for a period of time, to obtain future payments or wealth to compensate the investor for the time the funds were committed, for the inflation that may affect them, and for the uncertainty of repayment.

Irrevocable Trust: A trust that cannot be changed or canceled once it is set up without the consent of the beneficiary.

Itemized deduction: A reduction in adjusted gross income for individual taxpayers. Items allowed to be deducted from AGI include medical expenses, interest, casualty losses, contributions, state and local income and real estate taxes and miscellaneous expenses. Some itemized deductions have limitations associated with them.

Junk bonds: A high-risk, non-investment-grade bond with a low credit rating, usually BB or lower; as a consequence, it usually has a high yield.

Keogh Plan: A tax-saving retirement program for self-employed people and their employees.

Lapsed policy: A policy terminated at the end of the grace period because of non-payment of premiums (see non-forfeiture values).

Liabilities: A broadly defined term implying legal or financial responsibilities to others.

Liability insurance: Coverage to protect against the liability the insured becomes legally obligated to pay due to bodily injury, property damage, or professional liability or libel.

Lien: A claim by one person on the property of another as security for money owed.

Life insurance: Insurance coverage against death of a person to be paid to a beneficiary when the insured dies. See term insurance, whole life insurance, universal life insurance, variable life insurance, or survivorship life insurance.

Living will: A document that enables a person to declare his or her wishes in advance concerning the use of life-sustaining procedures in the event of a terminal illness or injury when the person has become incompetent.

Long-term capital gain or loss: A capital gain or loss on an investment, which was held for at least some minimum amount of time (often a year and a day). A long-term gain usually results in a lower tax rate than a short-term gain.

Long-term care: Physical, mental and social assistance provided to people who are unable to provide for themselves as a result of disability or a prolonged illness. Care ranges from providing personal care at home, such as bathing and dressing, to skilled nursing services in a nursing home.

Long-term care insurance: An insurance policy that provides benefits for the chronically ill or disabled over a long period of time.

Look-back period: Relating to long-term care, it's the timeframe during which the government may check whether you gave any cash or property gifts during that window that would affect your eligibility for benefits.

Marriage Penalty: A consequence of the current tax system that results in most married couples collectively paying more in income taxes, whether they file jointly or separately, than they would if they weren't married. You thought this had to do with suffering through another evening at home instead of going out after work with friends?

Medicaid: A program, funded by the federal and state governments, that pays medical costs for the poor. If your financial assets and monthly income are below certain allowed levels, Medicaid will pay nursing home and some home care costs if you are disabled.

Medicare: A federal program that pays for certain health care expenses for people age 65 or older.

Medigap: Medigap or Medicare Supplement policies are private insurance policies that pay for care that is approved but not paid by Medicare. Medigap policies will not pay for services not covered by Medicare.

Money Market: Portfolios of high-quality, short-term securities. Marked by high liquidity, they're an alternative to bank savings accounts. However, they are not guaranteed and could lose value.

Mortgage Insurance Premium (MIP): Paid on government-insured loans (FHA or VA loans) regardless of your loan-to-value. Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. Please note that such insurance is not a form of life insurance that pays off the loan in case of death.

Net asset value (NAV): A term usually used in connection with mutual funds, meaning net asset value per share. It is common practice for mutual funds to compute their net asset value daily by totaling the market value of all securities owned, deducting liabilities, and dividing the balance by the number of shares outstanding. The resulting figure is the net asset value per share.

Net worth: The amount by which a person's total assets exceeds total liabilities.

Non-forfeiture benefits: With long-term care insurance, non-forfeiture benefits provide that at least some benefits (usually minimal) will be paid if the buyer fails to keep up premium payments and the policy is cancelled for non-payment.

Non-forfeiture values: The value of the policy if canceled, either in cash or in another form of insurance. Also available to the policyholder if required premium payments are not paid.

Nursing home care: As it relates to long-term care, 24-hour care provided in state-licensed facilities with medical personnel on staff. Patients require varying degrees of ongoing care for physical or mental impairments.

Partnership: A type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are equally liable for its debts; other individuals called limited partners may invest but not be directly involved in management and are liable only to the extent of their investments. Or more generally, a relationship of two or more entities conducting business for mutual benefit.

Pension Plans: Plans for employees of some corporations or government entities where the employer is obligated to provide either annual contributions or an annual benefit to the participant at retirement.

Planning: The act of contemplating objectives, desires and variables to accomplish an objective. Example would be current investments, rates of returns and retirement income desired for an individual's financial plan.

Points: The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent of the loan amount. For example, two points on a $100,000 mortgage would equal $2,000.

Policy lapse: A period during which an insurance policy is not in effect due to a failure to pay premiums required to keep policy in force.

Policy loan: Under an insurance policy, the amount that can be borrowed at a specified rate of interest from the issuing company by the policyholder, who uses the value of the policy as collateral for the loan. In the event the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the death benefit amount.

Power of attorney: A legal document giving another the power to act as one's attorney or agent in handling all personal affairs. The power may be general or specific and is revoked upon the death of the principal.

Principal: As it relates to power of attorney, a principal is the person who is no longer able to make decisions so the attorney-of-fact is granted the power to make those decisions.

Private Mortgage Insurance (PMI): Paid on loans that are not government-insured and whose loan-to-value is greater than 80 percent. When you have accumulated 20 percent of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance is not a form of life insurance that pays off the loan in case of death.

Probate: A judicial procedure to test the authenticity and validity of an estate, will, guardianship or trust agreement.

Qualified Domestic Relations Order (QDRO): In divorce proceedings, a QDRO is an order from the court to the retirement plan administrator, which allows one spouse to receive benefits from the other spouse's company-sponsored retirement plan.

Reinstatement: A restoration of a lapsed policy. The company requires evidence of insurability and payment of past-due premiums plus interest.

Residual value: A term used to describe the estimated worth of an automobile at the end of a lease term. The residual value is used to calculate what a base monthly lease payment will be.

Retirement Income: The amount of income needed, on an annual basis, to live once the investor has retired. Can be pretax (the amount needed for spending plus the taxes due on that amount) or after tax (the amount needed for spending to meet their lifestyle excluding taxes).

Retirement Plan: A person's unique plan for meeting his or her retirement obligations or an employer-sponsored tax advantaged program to accumulate assets for retirement of the plan's participants.

Return: The dividends or interest paid by a company expressed as a percentage of the current price. A stock with a current market value of $20 a share that has paid $1 in dividends in the preceding 12 months is said to return 5 percent ($1/$20). The current return on a bond is figured the same way. Another term for yield.

Revocable Trust: A trust that may be changed or canceled by its grantor or by another person. Does not avoid estate taxes as an irrevocable trust does.

Rider: It's an amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or excluding certain conditions from coverage.

Roth IRA: A personal retirement savings vehicle created by the Tax Payer Relief Act of 1997 available for certain investors beginning in 1998. A Roth IRA allows certain investors to make non-deductible contributions of up to $3,000 annually, and provided certain requirements are met, offers (after owning the Roth IRA for 5 years) tax-free and penalty-free withdrawals for important specified financial needs as qualified distributions. Distributions after age 59 1/2 are tax-free provided you have had the Roth IRA for five years before you withdraw funds.

SEP (Simplified Employee Pension Plan): A retirement program for self-employed people or owners of small companies allowing them to defer taxes on investments intended for retirement.

Savings account: A bank account established for the purpose of putting aside money for future spending goals. Savings accounts normally earn a competitive rate of interest and are insured by the Federal Deposit Insurance Corporation.

Second mortgage: A mortgage debt with a claim to the first mortgage. May be used to reduce the amount of a cash down payment or in refinancing to raise cash for home improvements or other investments. The interest rate is higher on a second mortgage because of increased risk.

Section 457 Plan: A tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. Similar to a 401(k) plan, except there are never employer matching contributions and the Internal Revenue Service doesn't allow it the tax advantages of a qualified retirement plan.

Settlement option: One of several ways, other than immediate lump-sum payment, the insured or beneficiary can have the policy proceeds paid.

Share: Certificate representing one unit of ownership in a corporation, mutual fund, or limited partnership.

Simple interest: It's the interest charge computed on the original principal. It is compared with compound interest, which is applied to the original principal and accumulated interest.

Social Security: The government-sponsored program that is designed to provide basic pensions and disability income for U.S. citizens.

Sole proprietorship: A business structure in which an individual and his or her company are considered a single entity for tax and liability purposes.

Split: The division of the outstanding shares of a corporation into a larger number of shares. A 3-for-1 split by a company with 1 million shares outstanding results in 3 million shares outstanding. Each holder of 100 shares before the 3-to-1 split would have 300 shares, although the proportionate equity in the company would remain the same; 100 parts of 1 million are the equivalent of 300 parts of 3 million.

Spousal IRA: Spousal Individual Retirement Account. A working spouse may contribute for a non-working spouse up to $3,000 annually. You must file a joint return and have adjusted gross income below $160,000.

Standard deduction: The amount a taxpayer who does not itemize his or her federal tax deductions can deduct in determining taxable income.

Stock: Ownership shares of a corporation that provides the lender with a claim on a company's earnings and assets. Stock may be issued in different forms, including common and preferred. Holders of common stock are the last to be paid any profits from the company but are likely to profit most from the company's growth. Owners of preferred stock are paid a fixed dividend before owners of common stock, but the amount of the dividend doesn't usually grow if the company grows.

Stock certificate: A certificate that provides physical evidence of stock ownership.

Stock dividend: A dividend paid in securities rather than cash. The dividend may be additional shares of the issuing company or shares of another company (usually a subsidiary) held by the issuing company.

Suitability rule: The rule of fair practice that requires reasonable grounds for believing that a recommendation to a customer is suitable on the basis of the customer's financial objectives and abilities.

Surrender: The termination of a life insurance policy by agreement of the insured and the insurance company.

Survivorship life insurance: Also second-to-die. A form of insurance which pays a death benefit only upon the death of the last surviving insured person. Often used by a married couple in estate planning.

TAMRA: Technical and Miscellaneous Revenue Act of 1988. Enacted modified endowment contract rules (Internal Revenue Code Section 7702) that eliminated the tax-free loan provision on single premium variable life insurance products.

Tax deductible: An item or expense subtracted from adjusted gross income to reduce the amount of income subject to tax. Examples include mortgage interest, state and local taxes, un-reimbursed business expenses, and charitable contributions.

Tax lien: A debt attached against property for failure to pay taxes. It can result in the sale of the property in order to settle the debt, but the lien will be removed if the taxes are paid.

Tax-deferral: Paying taxes in the future for income earned in the current year, such as through an IRA, 401(k), SEP IRA or Keogh Plan.

Tax-deferred retirement plans: A retirement plan in which you get to postpone current income taxes on pre-tax money invested or any earnings in an account until you withdraw it from the plan. Such a plan may allow you to set aside part of your pay for retirement. Tax-deferred accounts include traditional and rollover IRAs and 401(k)s.

Tenants in common: A form of registration of property, frequently used with securities. An undivided estate in property where, upon the death of the owner, the undivided estate becomes the property of heirs or devisees and not of the surviving co-owner.

Term insurance: Life insurance under which the benefit is payable only if the insured dies during a specified period of time, usually a 10- , 15- or 20-year period.

Title insurance: Protection for lenders or homeowners against financial loss resulting from legal defects in the title.

Trusts: A legal arrangement in which an individual (the trustor) gives fiduciary control of property to a person or institution (the trustee) for the benefit of beneficiaries.

Uniform Gifts to Minors Act: Laws adopted by most states allowing an adult to contribute to a custodial account in a minor's name without having to establish a trust or name a legal guardian. A custodian acts on behalf of the minor, making all related investment decisions.

Uniform Transfer to Minors Account: A law that extends the Uniform Gift to Minors Act's definition of a gift to include real estate, fine art, patents and royalties.

Universal life insurance: A variation of whole life insurance that combines variable investment options with term life insurance. It provides both the pure death protection and cash value buildup of whole life insurance with variability in the face amount, death benefit, and other features.

Variable assumptions: The personal inputs into the financial planning tools including retirement age, planned annual savings, etc.

Vested: The rights of an individual to receive benefits from employment, such as pension, sick leave and vacation. Pension benefits are vested when the employee has worked a specified number of years. The person may then leave the employer for another job and still collect the accumulated amount at retirement.

Waiver of premium: A provision that sets certain conditions under which an insurance policy would be kept in full force by the company without the payment of premiums. It is used most frequently for those policyholders who become totally and permanently disabled, but may be available in certain other cases.

Whole life insurance: Life insurance under which coverage remains in force during the insured person's entire lifetime, provided you've kept up your premium payments as specified in the policy.

Will: A written document specifying that a person, called a testator, is disposing of his or her property, upon death, to the parties named. To be enforceable, the will must be signed and witnessed.

Yield: Also known as return. The dividends or interest paid by a security expressed as a percentage of the current price. A stock with a current market value of $20 a share that is currently paying dividends at the rate of $1 a year is said to return 5 percent ($1/$20). The current return on a bond is figured the same way.