Financial Glossary


Paid up Policy
A policy that remains active without any further requirement of premium payments.
Paid-up insurance
Life insurance on which all the required premiums have been paid.
Par Value
The stated face value of a bond or stock expressed as a dollar amount per share.
Paramedical Examination
Physical examination of an applicant by a trained person other than a physician.
Partial Disability
A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/ or is prevented from performing one or more important daily duties pertaining to his occupation.
Participating Policy
One under which the policy owner is entitled to receive shares of the divisible surplus of the insurer. Such shares are commonly called dividends.
A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.
Pension Maximization
Most couples are concerned that their retirement income will be insufficient. With the Pension Maximization insurance solution, your survivor pension income will be maximized. Neither you nor your partner will have financial concerns if the other dies.
Pension Plan
A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement.
Permanent Insurance
A form of life insurance that provides lifetime coverage to the policy owner. This type of policy also provides a savings element that builds a cash value in the policy.
The degree to which policies stay in force through the continued payment of renewal premiums.
P.I. (Principal & Interest)
Principal and interest due on a mortgage.
P.l.T. (Principal, Interest, & Taxes)
Principal, interest and taxes due on a mortgage.
Plan Administrator
The person or persons controlling the money or property contributed to the plan, usually designated in the plan agreement.
The depository service allowing customers to use ledger balances as collateral for call loans with lending institutions that accept book entry pledges.
Policy Fee
This is an administrative fee that is part of most life insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy.
Policy Loan
A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
Policy owner
The person who owns an insurance policy.
Policy Reserves
The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
A contract of insurance.
The person who owns an insurance policy. Also called the "insured". In life insurance, the policyholder is usually the "life insured" but not always.
The transfer of pension rights and credits when a worker changes jobs.
Pre-Existing Condition Provision
A provision in the insurance policy that stipulates that benefits will not be paid for any injury or sickness that occurred prior to issuance of the policy, until the insured person has been covered under the policy for a specified period of time.
Pre-Existing Condition
A physical and/ or mental condition of an insured which first manifested itself prior to the issuance of his/ her policy or which existed prior to issuance and for which treatment was received.
Preferred Rates
As non-smoking rates caused a major reduction in the cost of life insurance in the early 1980's, the emergence of preferred non-smoker rates in 1998 has caused another noteworthy reduction in rates. A growing number of insurance companies are offering better rates that go beyond simply looking at gender or smoking habits. Other health related factors such as physical build, lifestyle, avocation and personal and family health history indicating longer life expectancy can add up to significant cost savings to new life insurance applicants. Make certain to ask about these new preferred rates.
Premium Loan
A policy loan made for the purpose of paying premiums.
Premium Offset
This term relates to participating whole life insurance and the use of the dividend to reduce or completely eliminate the need for future premiums. In the 1980's life insurance company's profits from investment were exceedingly high compared to historical experience. It became common for a salesperson to show new prospective clients how quickly his or her insurance company's dividends would cover the future cost of future premiums. In some cases more emphasis was put on the value of future dividends than on the fact that future dividends were not guaranteed and could only be projected based on current earnings. Many life insurance buyers have since learned that the dividends they expected in the 80's no longer exist in the 90's and they are continuing to dig into their pockets to pay insurance premiums.
Premium Tax
A tax, imposed by each state, on the premium income of insurers doing business in the state.
Payments made by the policy owner to the insurer for the insurance policy.
Prepayment Option
The right to prepay specified amounts of the principal balance. Penalty interest may be incurred on prepayment options.
The amount you still owe the lender at any time.
Principal Sum
The amount payable in one sum in the event of accidental death and in, some cases, accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.
Private Placements
The sale of a bond or other security directly to a limited number of investors, for example, sale of stocks, bonds, or other investments directly to an institutional investor like an insurance company, avoiding the need for SEC registration if the securities are purchased for investment as opposed to resale.
Probate estate
That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
Letters probate represent judicial certification of the validity of a Will and judicial confirmation of the authority of the personal representative who is to administer the Will. Essentially, probate fees are a tax on a person's estate and except for the provinces of Québec and Alberta; there is no limit to this tax.
Probationary Period
A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.
Proof of Loss
Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured and the insured's attending physician. For medical expense insurance itemized bills must also be included.
Property Insurance
Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.
A legal document describing securities for sale, including information relative to the issuer's operations, management, etc.
A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.
Proxy Statement
Information given to stockholders in conjunction with the solicitation of proxies.
Proxy Voting
Authorization whether written or electronic, that shareholders votes may be cast by others; shareholders can and often do give management their proxies, delegating the right and responsibility to vote their shares as specified.
Written authorization given by a shareholder to someone else to represent and vote on their behalf at a shareholder meeting.
Punitive Damages
a court-awarded amount that exceeds the economic losses and general damages of a plaintiff and is intended solely to punish the defendant.