Financial Glossary

Q

Qualification Period
The period during which the insured must be totally disabled before becoming eligible for residual disability benefits.

R

Rate (interest)
The return the lender receives for loaning you the money for the mortgage.
Rated policy
Sometimes called an extra-risk policy, this is an insurance policy issued at a higher than standard premium rate.
Re-Organization
An event where the equity, debt, or capital structure of a company is changed.
Real-Time Settlement
The settlement that is done during the day on a “first-in, first-out” basis; the settlement process is continuous and transactions are settled in chronological order.
Rebating
Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Law prohibits rebating.
Recurring Claim Provision
A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.
Registered Education Savings Plan
A Registered Education Savings Plan is a special savings plan that can help you, your family, or your friends save for education after high school. RESPs are registered by the Government of Canada to allow savings for education to grow tax-free until the person named in the RESP enrolls in education after high school.
Registered Retirement Savings Plan
Commonly referred to as an RRSP, this is available to individuals to defer tax on a specified amount of money to be used for retirement. The holder invests money in one or more of a variety of investment vehicles which are held in trust under the plan. Income tax on contributions and earnings within the plan is deferred until the money is withdrawn at retirement.
Registrar
An organization, usually a trust company, maintaining the official listing of ownership of securities for an issue.
Rehabilitation
  1. Restoration of a totally disabled person to a meaningful occupation
  2. a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment
Reimbursement
The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.
Reinstatement
This is the restoration of a lapsed life insurance policy. The life insurance company will require evidence of continuing good health and the payment of all past due premiums plus interest.
Reinsurance
The purchase of insurance by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured.
Reinsure
To transfer the risk of potential loss from one insurer to another insurer.
Renewable Term Insurance
Term insurance that can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.
Renewal
Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.
Replacement Ratio
The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.
Replacement
The substitution of health insurance coverage from one policy contract to another.
Replacement
Sometimes existing life insurance policies are unnecessarily replaced with new coverage resulting in a loss of valuable benefits. If someone suggests replacing your existing coverage, insist on having a comparison disclosure statement completed. The most important policies to examine in detail are those that were issued in Canada prior to December 2, 1982. If you have a policy of this vintage with a significant cash surrender value, you may want to consider keeping it. It has special tax advantages over policies issued after December 2, 1982. Basically, the difference is this. The cash surrender value of a pre December 1982 policy can be converted to an annuity in accordance with the settlement options in the policy and as a result, the tax on any policy gain can be spread over the duration of the annuity. Since only the interest element of the annuity payment will be taxed, there will be less of a tax impact on the annuitant. Policies issued after December 2, 1982 that have their cash surrender value annuitized trigger a disposition and the annuitant must pay tax on the total policy gain immediately. If you still decide to replace existing coverage, don't cancel what you have until the new coverage has been issued.
Rescission
Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defences but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.
Reserve
  1. An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding
  2. An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund
Residual Disability
A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.
RESP
See Registered Education Savings Plan.
Retractable (RET)
A feature that can be included in a new debt or preferred issue allowing the security holder to redeem the security issue on a date earlier than the originally specified maturity date.
Revocable Trust
A trust that can be terminated or revoked by its creator.
Rider
A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable.
Right of Survivorship
At the death of one co-owner of property, that person's interest in the property automatically passes to the surviving joint tenant or tenants.
Right
A temporary privilege granted to a firm's common shareholders to buy additional securities from the firm.
Risk
Any chance of loss.
Rollover Mortgage
A mortgage loan where the interest rate is established for a specific term. At the end of this term the mortgage is said to “roll over” and the borrower and lender may agree to extend to loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.
Rule of 72
This is a very important rule to know. The rule is that the number 72 divided by the rate of return of your investment equals the number of years it takes for your investment to double.