Rate of return
The reward for investing. The increase in value of an investment, usually expressed as a percentage.
Realized gains (distributions)
A realized gain results when a security is sold after having appreciated in price. An open-end mutual fund must distribute all realized gains to shareholders at year-end. Unrealized gains (price increase in a security not realized by selling the security) are reflected in an increase in the fund’s share price and are not distributed until the year in which the underlying security is sold.
Reduced paid-up insurance (RPU)
This non-forfeiture option uses the cash surrender value to purchase paid-up insurance. The amount of insurance purchased is based upon the insured's current age and the amount of cash surrender value that was in the certificate at the time premiums were discontinued.
A contract that allows for payment to the beneficiary of the difference between the original cost of the annuity and total benefit payments already paid if the annuitant dies before the full cost has been paid out in cash.
A brokerage firm employee who acts as an account executive for clients. In a full-service brokerage house, a registered representative solicits clients’ business and provides advice on when to buy and sell securities. For this advice, the registered representative may receive a percentage of the commission that is charged to the client for making such transactions.
Putting a lapsed certificate back in force. Generally, reinstatement requires evidence of insurability and payment of back premiums (plus interest).
A form of term insurance whereby the certificate owner has the option to renew the certificate for additional terms without evidence of insurability, subject to payment of the renewal premiums.
Retained earnings statement
A financial summary that shows changes in a company’s retained earnings for a particular period of time.
The possibility that the value of an investment may decline or lose money. There is also the possibility that it won’t keep ahead of inflation.
A tax-free transfer of funds from one qualified plan to another. To avoid withholding and income tax liability, such a transfer should be made via a "trustee to trustee" transfer.
A type of Individual Retirement Annuity in which contributions are made with after-tax (nondeductible) dollars. If certain requirements are met, earnings accumulate tax-free, and no federal income tax is levied when qualifying distributions are taken from the plan.