Financial Glossary


Second Mortgage
This is usually at a higher interest rate and represents the difference between the price of the house and first mortgage plus the down payment. This may be obtained from banks and finance companies or through lawyers or notaries.
Secondary Market
The market where securities are bought and sold subsequent to original issuance.
Securities Act
A provincial act (each province has its own) administered by the securities commission in each province, which sets down the regulations under which securities may be issued to the public.
A general term applied to documents issued to investors by companies and governments etc., that evidences ownership of capital, formal loans, or financial obligations; this general descriptive term covers stock certificates, bonds, debentures, notes, warrants and similar documents, all of which are normally saleable and transferable from one party to another.
Segregated Fund (Seg Funds)
Are the life insurance industry equivalent to a mutual fund with some differences. The term "Mutual Fund" is often used generically, to cover a wide variety of funds where the investment capital from a large number of investors is "pooled" together and invested into specific stocks, bonds, mortgages, etc. Unlike mutual funds, seg funds offer guarantees at maturity or death on the limit of potential losses.
Self-Regulatory Organization (SRO)
An entity, such as the Investment Dealers Association and the Mutual Funds Dealers Association, with a regulatory arm that have the power to monitor and sanction their own members.
Settlement Agent
The custodian that may make/ take delivery against payment of securities to/ from a broker who has executed the trade on behalf of the mutual client.
Settlement Date
The date on which a buyer of securities must pay for a purchase or a seller must deliver the securities sold; for equity securities, settlement must be made on or before the third business day following the transaction date while settlement is same-day for many money market instruments.
Settlement Options
The several ways, other than immediate payment in cash, that the policyholder or beneficiary may choose to have life insurance policy benefits paid.
The completion of a transaction by the delivery and crediting to the appropriate securities ledger and funds accounts of securities and payment respectively.
Short Position
A book-based system term, referring to a negative balance incurred by a customer in their ledger position; usually the result of a rejected deposit or an on-line adjustment.
A process wherein a market participant sells a security it does not own.
Short-Term Disability Income Insurance
The provision to pay benefits to a covered disabled person as long as he/ she remains disabled up to a specified period not exceeding two years.
Sickness Insurance
A form of health insurance providing benefits for loss resulting from illness or disease.
Split Dollar Life Insurance
The split dollar concept is usually associated with cash value life insurance where there is a death benefit and an accumulation of cash value. The basic premise is the sharing of the costs and benefits of a life insurance policy by two or more parties. Usually one party owns and pays for the insurance protection and the other owns and pays for the cash accumulation.
Spousal Registered Retirement Savings Plan
This is an RRSP owned by the spouse of the person contributing to it. The contributor can direct up to 100% of eligible RRSP deposits into a spousal RRSP each and every year. Contributing to a spouses RRSP reduces the amount one can contribute to one's own RRSP, however, if the spouse is a lower income earner, it is an excellent way in which to split income for lower taxation in retirement years.
Spouse's Benefit
Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor's remarriage or death.
Standard Risk
A person who, according to a company's underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
Step-Rate Premium
A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.
Stock Company
A company organized and owned by stockholders, as distinguished from the mutual form of company that is owned by its policyholders.
Stock Dividend
A portion of corporate earnings paid to common and preferred shareholders in the form of stock, rather than cash, increasing the number of shares each holder owns, but not altering a shareholder's proportional ownership of the company.
Stock Exchange
An organized marketplace for securities featured by the centralization of supply and demand for the transaction of orders by member brokers for institutional and individual investors.
Stock Life Insurance Company
A life insurance company owned by stockholders who elect a board to direct the company's management. Stock companies, in general, issue non-participating insurance, but may also issue participating insurance. Stock Redemption Plan an entity purchase form of buy-sell agreement within a corporation that involves the corporation buying back shares from a departing owner.
Stock Market
The market for trading equities.
Stock Split
The division of a company's outstanding common shares into a larger amount of common shares, leaving each stockholder's proportional share the same.
Straight Life Insurance
Whole life insurance on which premiums are payable for life.
Stripped Instrument (SI)
A bond stripped into interest and principal components either electronically or physically.
Strips (Strip Bonds)
The interest coupons that have been separated from the underlying bond residue and sold at significant discounts to their face value; BBS ledger balances in debt securities are used by customers to create ledger positions in the stripped bond components.
Structured Settlement
Personal injury claims used to be settled merely by exchanging a sum of money for a release of the claim. In contrast, a Structured Settlement goes beyond an immediate cash payment and provides future payments "structured" over time to meet a person's ongoing financial needs. A structured settlement may provide payments for a certain period of time or extend throughout the lifetime of the injured person.
Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.
Substandard (Impaired Risk)
A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.
Suicide Clause
Generally, a suicide clause in a regular life insurance policy provides for voiding the contract of insurance if the life insured commits suicide within two years of the date of issue of the coverage.
Supplementary Contract
An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.
Surrender Charge
an amount retained by the issuer of a life insurance policy when a policy is cancelled, typically assessed only during the first five to ten years of a policy.
Surrendered Policy
A policy terminated because of non-payment of premiums, for which there is a cash value or other non-forfeiture value available.
The accurate mathematical measurements of land and the buildings thereon made with the aid of instruments.
Suspense Account
An accounting term for an account used temporarily to carry receipts, disbursements or discrepancies pending their analysis and permanent classification.
Syndicated Underwriting
A group of investment banking firms formed to conduct an underwriting of a new security issue.