Financial Glossary

I

IDA
See Investment Dealers Association of Canada.
IFIC
See Investment Funds Institute of Canada.
Immediate Annuity
An annuity providing for payment to begin immediately.
Income Splitting
This is a tax minimization strategy of arranging for income to be transferred to family members who are in lower tax brackets than the one earning the income, thus reducing taxes. Even though attribution rules limit income splitting, there are still a number of legitimate ways to do so, such as through the use of spousal RRSPs.
Incontestability
Life policies provide that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured.
Incontestable Clause
This clause in regular life insurance policy provides for voiding the contract of insurance for up to two years from the date of issue of the coverage if the life insured has failed to disclose important information or if there has been a misrepresentation of a material fact which would have prevented the coverage from being issued in the first place. After the end of two years from issue, a misrepresentation of smoking habits or age can still void or change the policy.
Incurred Claims
Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.
Incurred-but-not-reported (IBNR) Reserves
liability account on an insurer's balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer
Indemnification
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. Independent Adjustor Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.
Independent Agent
an independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.
Independent Broker
This is a provincial government licensed independent business person who usually represents five or more life insurance companies in a sales and service capacity and who is paid a commission by those life insurance companies for sales and service of life insurance products. We for example, have been in business for 12 years and regularly place new business with over twenty different life insurance companies.
Indexing
Adjusting of values over time to reflect the impact of inflation.
Individual Deductible
Amount that an insured and each person of his or her family covered by the policy must pay before the group or individual medical insurance policy begins to pay for medical expenses.
Individual Insurance
Insurance purchased on an individual basis, covering only one person or, in some cases, members of his or her family as well.
Initial Public Offering (IPO)
A company's first sale of stock to the public; companies making an IPO are seeking outside equity capital and a public market for their stock.
Insolvent
Having insufficient financial resources (assets) to meet financial obligations (liabilities).
Institutional Investor
The class of professional investor who is an indirect market participant; includes banks, mutual funds, pension funds and other entities that participate in the market only on behalf of the members/ participants.
Insurable Interest
A condition in which the person applying for an insurance policy and the person who is to receive the policy benefit will suffer an emotional or financial loss if the event insured against occurs. Without the presence of the insurable interest, an insurance contract is not formed for a lawful purpose and, thus, is void from the start.
Insurable Risk
The conditions that make a risk insurable are:
  • The peril insured against must produce a definite loss not under the control of the insured
  • There must be a large number of homogeneous exposures subject to the same perils
  • The loss must be calculable and the cost of insuring it must be economically feasible
  • The peril must be unlikely to affect all insureds simultaneously
  • The loss produced by a risk must be definite and have a potential to be financially serious
Insurance Company
Any corporation primarily engaged in the business of furnishing insurance protection to the public.
Insurance
A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions.
Insured Mortgage
An insured mortgage protects only the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC [Canada Mortgage and Housing Corporation] and is required if a person has a high-ratio mortgage. (a mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.)
Insured or Insured Life
The person on whose life the policy is issued.
Insured Retirement Plan
The concept of using Universal Life Insurance to tax shelter earnings that can be used to generate tax-free income in retirement.
Integration
Coordination of the disability income insurance benefit with other disability income benefits, such as Canada and Québec Pension Plans.
Interest
The periodic payments borrowers (issuers) make to lenders for the use of their money prior to maturity and principal repayment.
Interest Adjustment Date
A date usually one month prior to the first regularly scheduled mortgage payment date from which interest is calculated for monies advanced previous to that date.
Interest Option
Life insurance settlement option in which the principal is retained by the insurer and interest is paid periodically.
Intestate
This means dying without a will, in which case the provincial laws of the province in which the death occurred apply to the manner in which assets will be distributed. In other words, if you don't write your own will, the government will do it for you after your death and it may not be as you would have wished.
Investment Advisor (IA)
A professional who is licensed to sell securities by one of the provincial securities, provided he or she passed the Canadian Securities Course.
Investment Dealer
A securities firm or individual (sales person) associated with one.
Investment Dealers Association of Canada (IDA)
The national, self-regulatory organization of the Canadian securities industry, whose role is to establish and enforce high standards of business conduct, thereby encouraging the raising and effective allocation of capital.
Investment Funds Institute of Canada (IFIC)
The mutual fund industry trade association set up to serve its members, co-operate with regulatory bodies and protect the interests of the investing public that use mutual funds as a medium for their investments.
Investment Income
The income generated by a company's portfolio of investments (such as in bonds, stocks, or other financial ventures).
Investment Manager/Asset Manager/Money Manager
The person responsible for the securities portfolio of an individual or institutional investor; may manage mutual funds, pension funds, investment funds, etc; a fiduciary responsibility to manage the assets prudently and choose the appropriate investments for the type of fund being managed.
Irrevocable Beneficiary
Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the beneficiary's consent.
Irrevocable Trust
A trust in which the creator does not reserve the right to reacquire the trust property.
Issue
A stock, bond or other security sold by a corporation or a government.
Issuer
A company, government or other body that raises money through "issuing" a debt, equity or other security.