C


Capital Gains Tax
A tax assessed on profits realized from the sale of a capital asset, such as stock.  


Cash Investments
  
Investments in which you lend money for short periods to banks, the U.S. government or insurance companies.  Examples: bank deposits, CDs, money market instruments and U.S. Treasury bills.


Cash surrender value
  
The amount payable to the owner upon voluntary termination of the certificate.  


Certificate
  
As it pertains to fraternal life insurance, it is the written document given to the insured, which expresses the insurance contract between the insured and the society. It also represents membership in the fraternal organization. Similar to a "policy" issued by a nonfraternal life insurance company.  


Certificate anniversary
  
Anniversary of the register date of the certificate.  


Closed-end Fund
  
This is established by selling a fixed number of shares to investors. These funds are then traded on the stock exchanges.  The money is invested and managed by a professional portfolio manager.  The net asset value reflects the value of the securities it holds.  The fund’s share price can deviate from the net asset value depending upon investor demand for the fund itself.  These funds seldom take in new money but at times may elect to have another offering of shares to increase the fund’s size.  


Collateral assignment
  
A transfer of certain ownership rights of an insurance or annuity certificate to the applicant’s creditor as security for payment of a debt. A collateral assignment gives the assignee a right to such amount payable under the certificate (either as cash value, death or endowment proceeds) as is necessary to repay indebtedness.


Common Stock
  
Common stock represents equity (ownership) in a corporation.  Stockholders are normally the only group to participate in the increased earnings a company may experience, via increasing dividends paid to stockholders. Upon liquidation, stockholders own any residual after creditors (including bondholders) are paid.


Compound Interest
  
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.  


Consumer Price Index (CPI)
  
A measure of price changes in consumer goods – also known as the “cost of living index.”  The index is calculated monthly by the U.S. Bureau of Labor Statistics.  Some CPI components are food, housing costs and transportation.  


Contestable period
  
The period of time after a certificate is issued during which a company can contest the certificate and deny a claim. This period is usually two years but is limited to one year in several states.  


Contingent Deferred Sales Charge (CDSC)
  
This is a declining back-end sales charge imposed upon shares redeemed within a specified period of time.  For Example: Shares redeemed within six years are subject to such a charge (5 percent during year one, then 4 percent, 4 percent, 3 percent, 2 percent, 1 percent, for the next five years respectively).  Shares redeemed after being held longer than six years are not subject to the CDSC. Dividend or capital gain distributions, whether paid out or reinvested, are not subject to the CDSC.  Shares redeemed under the Systematic Withdrawal Plan (SWP) are not subject to the CDSC (SWP procedures are explained in the prospectus).  


Conversion provision
  
A provision in most term certificates or riders allowing the owner to convert to a permanent certificate without providing evidence of insurability.  


Convertible Bond
  
These debt instruments may be exchanged by the holder for common stock or another security - usually of the same company – in accordance with the terms and exchange ratios identified in the original issue.  

Convertible term  
A type of term insurance that includes a conversion provision, i.e., is eligible for conversion to a permanent certificate.  


Corporate Bonds
  
This is a debt instrument or an evidence of an obligation entered into by a company, as opposed to stock that represents ownership.  Bondholders must be paid interest on their principal before dividends may be paid to stockholders.  Also, in the case of business failure, bondholders must be repaid before equity holders.


Cost basis
  
The total adjusted cost of purchasing a life or annuity certificate. The cost basis is compared to the value of the certificate at termination to determine if there is a taxable gain.  


Coupon rate
  
The stated, fixed rate of interest paid by a fixed-income security, expressed as a percentage of the par value of the security.  A bond with a par value of $1,000 that pays $70 a year has a coupon rate of 7 percent.  Also called the nominal yield.  


Coverdell Education Savings Account
  
An education savings account that allows parents, grandparents and others to contribute cumulatively up to $2,000 a year, starting in 2002, for the education expenses of a child.  Contributions are not tax-deductible, but withdrawals are tax-free if used for qualified expenses such as tuition and room and board.  


Credit rating
  
Assessment of an individual’s or corporation’s credit history and ability to pay its obligations.  There are several firms that investigate, analyze, and maintain records on the credit status of individuals and business – for example, Equifax for individuals, and Dun & Bradstreet for commercial firms.  In rating bonds, credit worthiness is an important factor.  


Credit Risk
  
The risk that the issuer of a bond may become insolvent and default on the bonds.  Rating agencies attempt to measure this risk when determining the rating they apply to a bond both at the time of issue and during the life of the bond.  


Current interest rate
  
See Interest Rate


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