On a participating traditional certificate, additional death benefit that is purchased and fully paid for through the use of dividends. Paid-up additions are simply small, single premium, paid-up coverage.
Insurance on which all required premiums have been paid.
The face value or principal value of a bond, usually $1,000 per bond. A bond trading at par is trading at its face value; A preferred stock’s face value, usually $100 per share. The stock’s book value, liquidating value and dividend payments are based on the par value; A common stock’s stated value. It is primarily used for bookkeeping purposes and has no relationship to its market value.
A means to take cash out of a universal life insurance or annuity certificate without forfeiting the certificate. The universal life death benefit may be reduced by the amount of the cash withdrawn.
A life insurance certificate that is eligible to receive dividends.
Permanent life insurance
Any life insurance certificate that develops cash values.
The holdings of more than one stock, bond, cash equivalent or other asset by an individual. A portfolio may be designed to achieve the investors goals – such as obtaining maximum returns or reducing risk through diversification.
A preferred stock is a type of capital stock that pays dividends at a set rate (at the time of issuance). Dividend payments to preferred holders must be made before common stock dividends can be paid. Preferred stocks usually do not have voting rights.
Premature annuity distribution
Under current tax law, any cash withdrawal from an annuity prior to age 59 ½ is subject to a 10 percent penalty, in addition to any income taxes and surrender charges.
See automatic premium loan.
A printed document that summarizes a corporation’s registration statement for a new issue of nonexempt securities that was filed with the SEC. It details material information about the corporation and the security being issued. A prospectus must be given to all buyers and potential buyers of the new issue.
Purchasing power risk (inflation risk)
The risk that inflation will erode the future purchasing power of dollars invested.