Course Glossary - National Guard Family Program

Term	Definition
401(k)	A qualified, tax-deferred retirement plan offered by employers which allows employees to save a percentage of their current salary for retirement.
Add-on interest	Interest that is computed at the beginning of the loan, and then added to the principal, so that all must be repaid even if the loan is paid off early.
Additional principal payment	Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid.
Adjustable Rate Bond (or Preferred Stock)	A security with an interest rate (or dividend rate) that is adjusted each payment period according to a recognized market rate (such as the "prime" interest rate that banks charge, the rate on Treasury bills, etc.).
Adjusted Gross Income	The amount used in the calculation of an individual’s income tax liability. It is equal to one’s income after certain adjustments are made, but before standardized and itemized deductions and personal exemptions are made. Includes all of the income you received over the course of the year such as wages, interest, dividends and capital gains minus things such as business expenses, contributions to a qualified IRA, moving expenses, alimony and capital losses.
Advisory Service	A service that offers investment information (usually buy and sell advice) for a fee.
American Depository Receipts (ADRs)	Negotiable certificates, issued by U.S. depository banks, which represent the actual shares of a foreign company’s stock that an overseas branch of the depository bank or a custodian is holding.
American Stock Exchange (AMEX)	The second largest national stock exchange in the U.S., where primarily securities of small to mid-size companies are bought and sold. Options on many NYSE stocks are also traded on the AMEX.
Amortization	An accounting term that refers to the reduction in the value of an intangible item, such as a patent or trademark, through periodic reductions in income.
Anniversary Date	The annual recurrence of the policy’s effective date. The anniversary date is often the time the owner of a universal life policy is permitted to make changes to the policy, such as increasing the death benefit.
Annual fee	A bank charge for use of a credit card levied each year, which can range from $15 to $300, billed directly to the customer’s monthly statement. Many credit cards come without an annual fee.
Annual percentage rate (APR)	A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
Annual Report	The formal financial statement that a corporation issues annually to its shareholders.
Annual Return	The percentage increase in the value of an investment over a 12-month period or a series of 12-month periods, taking into account compounding of investment dividends or capital gains.
Annuitant	The individual who is entitled to receive the benefits of an annuity.
Annuity	Regular payments to an individual according to a contract, for a specified or an indefinite time period.
Asset	Any item of economic value owned by an individual or corporation. Usually refers to items that can be sold and converted to cash. Examples are cash, securities, financial accounts, a house, a car, jewelry and other property.
Asset Allocation	The process of dividing investor funds among several classes of assets to limit risk and increase opportunities for gains.
Asset-Backed Securities	A bond backed by loans or account receivables originated by banks, credit card companies or other credit providers.
Assumed Investment Return (AIR)	The guaranteed rate of return used in variable annuities to set the initial annuity payment.
Average daily balance	This is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day’s balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card’s monthly periodic rate, which is calculated by dividing the annual percentage rate by 12. A card with an annual rate of 18 percent would have a monthly periodic rate of 1.5 percent. If that card had a $500 average daily balance it would yield a monthly finance charge of $7.50.
Average Tax Rate	An individual’s average tax rate is the result of total income taxes paid divided by taxable income. For example, if an individual has taxable income for the year of $50,000 and paid income taxes of $10,000, the average tax rate would be 20%. ($10,000 ÷ $50,000 = .20).
Balance Transfer	The process of moving an unpaid credit card debt from one issuer to another. Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance transfer fees to discourage them from going out.
Balance Transfer Fee	Fee charged customers for transferring an outstanding balance from one card to another.
Bankruptcy Code	The informal name for Title 11 of the United States Code (11 U.S.C. § 101 – 1330), the federal bankruptcy law.
Chapter 7	The chapter of the Bankruptcy Code providing for "liquidation," i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.
Chapter 9	Chapter of the Bankruptcy Code addressing the adjustments of debts of a municipality.
Chapter 11	A reorganization bankruptcy, usually involving a corporation or partnership. (A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in Chapter 11.)
Chapter 12	Chapter of the Bankruptcy Code designed to give special relief to a family farmer with regular income.
Chapter 13	The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)
Bankruptcy Trustee	A private individual or corporation appointed in all Chapter 7, Chapter 12, and Chapter 13 cases to represent the interests of the bankruptcy estate and the debtor’s creditors.
Beneficiary	The party who will receive the death benefit of the contract upon the insured’s death.
Bereavement period	A period of time during which the survivors adjust emotionally and financially to the loss of a loved one.
Billing Cycle	The number of days between the last statement date and the current statement date.
Billing Statement	The monthly bill sent by a credit card issuer to the customer. It gives a summary of activity on an account, including balance, purchases, payments, credits and finance charges. Important changes to a credit card account are often included in small-print fliers that are sent with the statement.
Blue Chips	The high-quality stocks of major corporations with long records of uninterrupted earnings and dividends, capable management, and good growth prospects.
Bonds	The debt instrument of an issuer (essentially an I.O.U. for money you lend to the issuer) that promises to pay the holder a specified amount of interest, for a specified time period, with principal to be repaid on the maturity date.
Bond Mutual Fund	An investment company that invests primarily in bonds and debt securities. The objective of most bond funds is to provide current income while protecting the principal from decreasing in value. Both the net asset value and the monthly income can fluctuate with changes in interest rates.
Broker	An agent who executes buy and sell orders for securities or commodities for a fee.
Capital Gain (Loss)	Profit (loss) from the sale of securities or other capital assets.
Cash Surrender Value	The value a policyowner receives upon termination of a permanent life insurance policy for any reason other than death of the insured. The cash surrender value of a life insurance contract is equal to the cash value less any surrender charge imposed by the insurance company. Cash surrender values are typically not available during the first year or two of the policy’s life. Usually, the policyowner is allowed to take the cash surrender value in the form of cash, a reduced amount of paid-up life insurance, or extended term life protection.
Cash Value	The "savings" element of all permanent forms of life insurance. The cash value is the amount of money a policy owner can get for surrendering the policy. The cash value of whole life is pre-determined and fixed when the policy is issued. The cash value of a universal life policy depends on the amount and timing of premium payments, the expense and risk charges the insurance company charges for providing benefits and the interest rate the company credits. The cash value of a variable life or variable universal life policy will vary depending upon the performance of the investment accounts selected by the contract owner. Increases in cash values are not taxable until withdrawn. Some policies may allow the owner to borrow against the cash value.
Cash Value of Life Insurance	The amount of money accumulated in a whole life, universal life or a variable life insurance policy. The cash value is accumulated based on the return of the underlying investments in the policy.
Certificates of Deposit (CDs)	An FDIC-insured account offered by banks and savings and loans. As with a bond, they are usually opened with a single deposit, earn a fixed return and have a set maturity date. Their maturities normally range from three months to five years.
Commission	A fee an investor pays a broker for buying or selling securities.
Common Stock	Securities that represent an ownership interest (with voting rights) in the issuing corporation. See preferred stock.
Consumer Credit Counseling Service	A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time.
Consumer Price Index	A measure of the change in prices of a fixed basket of goods and services, including food, clothing, medical care, transportation, housing and electricity.
Controllable Expense	An expense over which an individual has control as to how much is spent. Examples of controllable expenses include entertainment, clothing, food, investments and savings.
Conversion Period	The period of time during which the owner of a term policy may convert it to a permanent policy without evidence of insurability.
Convertible	A provision in a term life insurance contract that allows the contract owner to convert the term policy to a permanent life policy without evidence of insurability.
Corporate Bonds	A bond issued by a corporation, which creates an obligation by the corporation to pay interest for a specified period and to repay the principal amount at the bond’s maturity date.
Co-signer	A person who signs a promissory note that is also signed by one or more other parties. All parties take responsibility for the debt if any of the others renege.
Death Benefit	The amount of money paid to the beneficiary when the insured dies. The death benefit is generally equal to the policy’s face value, although the death benefit can be reduced dollar-for-dollar by the amount of any outstanding policy loan.
Debit card	A payment card that is linked directly to a customer’s bank account. Some cards require a personal identification number. Others require a customer’s signature. A PIN-based or direct debit card removes a purchase price from a customer’s checking account almost immediately. A signature-based or deferred debit card has a Visa or MasterCard logo and removes the purchase price from a customer’s bank account in two or three days. Obligations in the form of bonds, loans, notes or mortgages, owed to another person or institution and required to be paid by a specified date.
Debt Consolidation	The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It’s also called a consolidation loan.
Debt-to-income ratio	The percentage of before-tax earnings that are spent to pay off loans for obligations such as auto loans, student loans and credit card balances. Lenders look at two ratios. The front-end ratio is the percentage of monthly before-tax earnings that are spent on house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower’s other debts are factored in.
Debtor	Technically, a person who has filed a petition for relief under the bankruptcy laws. More generally, anyone who owes.
Default	The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.
Depreciation	An accounting term that refers to the reduction in the value of physical assets, such as manufacturing plants and equipment, through periodic reductions in income.
Disability Insurance	An insurance policy designed to pay a specified monthly income to the policyholder in the event that he/she becomes either temporarily or permanently incapable of working.
Discount Broker	A broker who charges a lower commission for buy and sell orders than a full-commission broker. Typically, a discount broker does not give investment advice.
Discretionary Income	The amount of an individual’s income available for spending after all fixed and necessary expenses (such as food, clothing and shelter) have been paid.
Diversification	Investing in several different companies in various industries or in several different types of investments in order to spread risk.
Dow Jones Industrial Average	An average of thirty blue chip stocks commonly used as an indicator of whether the stock market is moving "up" or "down."
Down payment	An initial, partial payment on a purchase.
Economic Value	The value of the tasks a family member provides to the rest of the family. The economic value for a non-working spouse would be equal to the cost the family would incur to hire someone to complete the tasks in the absence of the non-working spouse less the cost of that spouse’s personal maintenance. These costs usually include childcare and housekeeping but may also include transportation, the cost of eating out more often, tutoring and the like.
Emergency Fund	An emergency fund is money set aside to allow you to weather any unexpected events or expenses in your life. Emergency funds are often used to pay for expenses not incorporated into the budget such as property losses or medical expenses not covered by insurance, or living expenses during a period of unemployment. It is generally recommended that your emergency fund equal three to six months of your living expenses.
Estate Planning	The process of planning for the efficient transfer of assets at one’s death. Estate planning begins with preparing a will and may also include naming a power of attorney, establishing trusts and making pre-death gifts.
Estate Tax	Tax imposed by a state or the federal government on the transfer of property from a deceased to his/her heirs.
Evidence of Insurability	Proving that you are a good risk for the insurance company by answering health and lifestyle related questions and possibly submitting to a medical exam.
Executor	An individual or institution that is tasked with the settling of an estate for the deceased. Activities may include gathering the assets, paying the taxes and distributing the estate in accordance with the Will.
Expense	An individual’s cost or obligation to meet a need or pay a debt.
Face Amount	The named dollar amount of coverage provided by a life insurance policy. Generally, for a whole life or term policy, the face amount is the same as the death benefit – the amount paid to the named beneficiary upon the insured’s death.
Final Expenses	Expenses that occur at the death of an individual that must be paid before concluding the probate process. Examples include estate taxes, medical bills, funeral expenses, legal fees, probate costs, outstanding debts, appraisal fees and the like.
Fixed Annuities	An investment contract offered by an insurance company that pays a fixed return principal (which may be periodically adjusted by the insurance company) that is guaranteed by the insurance company to be repaid at a specified date. Any earnings on the account remain tax-deferred until the interest is withdrawn from the contract. The contract can be converted to a guaranteed stream of fixed payments to the owner, either for life or for a specified period.
Fixed Expenses	Expenses that are set and difficult to change or minimize. Examples include mortgage payments, car payments, utility bills, and income and social security taxes.
Fixed-Income Securities	Investments, primarily bonds and bond funds that generate a predictable flow of income over a specified period.
Fixed Investment	A security or investment account that pays a fixed rate of return.
Front-End Load (Sales Charge)	A front-end load (or front-end sales charge) is usually associated with Class A shares of a mutual fund. It is a sales commission, over and above the net asset value of the shares purchased, which is charged at the time you purchase shares. It’s computed as a percentage of the dollar amount you’re investing. For example, if you pay a front load of 3% on a $10,000 transaction, $300 of your $10,000 is paid to the mutual fund distributor, and the remaining $9,700 is used to purchase shares. The fund distributor keeps a small portion of the sales charge for its services, and the bulk of the sales charge is paid to the selling broker/dealer firm or financial institution. The agent selling the funds to you receives a portion of the sales charge from his/her firm. You can find a listing of the sales charges you will pay in the front of your fund’s prospectus, or you can ask your broker.
Fund Objective	A fund’s primary goal — for example, current income, capital appreciation or preservation of principal.
Gross Income	Total personal income before taxes or other deductions.
Growth Stock	The stock of a corporation whose sales and earnings are expanding faster than the general economy.
Guaranteed Renewable	A provision in term insurance contracts that allows the owner to renew the policy at the end of its term without evidence of insurability.
Health Insurance	Insurance that covers medical expenses or health care services.
High-grade Bonds	Debt securities or bonds with an AAA or AA rating from an independent rating organization.
Homeowners Insurance	Insurance that combines liability insurance and hazard insurance and protects homeowners against property and casualty damage.
Income Stock	Common stock that pays out a relatively large portion of earnings as dividends, resulting in a high yield for investors.
Individual Retirement Account (IRA)	A tax-favored retirement account that allows all earners to make contributions (in many cases, tax deductible contributions) of up to $2,000 a year and defer income tax on the IRA earnings until distributions are made from the IRA.
Inflation	The general increase in the cost of goods and services. Inflation is often measured by the Consumer Price Index, which represents a fixed basket of goods such as food, utilities, transportation, and medical care.
Insurable	An individual is insurable if he or she is able to obtain life insurance under the insurance company’s underwriting criteria. Insurability is usually based upon the individual’s age, health, occupation and lifestyle.
Insurer Risk	The risk that an insurance company will be unable to meet its obligations to policyholders.
Interest Rate Risk	The risk that a rise in interest rates will cause the price of bonds to fall. In general, there is an inverse relationship between interest rates and bond prices so that when interest rates rise, bond prices fall and vice versa.
Investment Vehicle	An investment product that usually provides the investor with a diversified portfolio of securities. Examples are mutual funds, unit investment trusts and variable annuities.
IRC	The Internal Revenue Code, which is the federal tax law in the United States.
Junk Bonds	Below investment-grade bonds that provide high yields with high risk.
Large Cap Funds	Mutual funds that primarily invest in stocks of large corporations such as those found in the S&P 500 like General Electric, Wal-Mart or Microsoft. Large-Cap funds typically invest in companies with a market capitalization greater than $5 billion.
Leading Economic Indicators	A group of economic activity reports that tend to foretell an upswing in general economic activity.
Liabilities	A financial obligation, debt, or claim against a person or institution. Simply put, liabilities are the debts you owe. You subtract your liabilities from the total value of the assets you own to determine your net worth. Liabilities include your mortgage, credit card debt, installment and auto loans, loans against a life insurance policy, students loans and loans against your investments (such as margin loans with a brokerage firm). Other liabilities include any taxes you owe — even taxes you would owe if you sold all of your investments today.
Life Insurance	An insurance policy that pays a death benefit to the beneficiaries when the insured dies.
Living Trust	A trust established during the lifetime of the person creating the trust, rather than under the person’s will.
Liquidity	The ability of an asset to be converted into cash quickly and without significant loss of value.
Load	A sales charge on the purchase of certain mutual funds.
Long-Term Care Insurance	An insurance policy that provides medical and nursing home benefits for the chronically ill or disabled.
Long-Term Growth of Principal	Increase in the value of an investment over a sustained period-typically 12 months or longer.
Money Market	The market for borrowing and lending large amounts of short-term funds. Money-market instruments include notes, negotiable certificates of deposit, Treasury bills, and the like.
Money Market Accounts	Federally insured accounts (with banks and other financial institutions) that pay rates established by the bank based upon money-market yields. Money Market Mutual Funds, however, are similar to Money Market accounts but are not federally insured.
Money Market Deposit Accounts	A highly liquid account offered by banks that typically provides a higher interest rate than that of a savings account. The account is FDIC insured and its rate of interest is usually sensitive to changes in market rates.
Money Market Funds	Mutual funds that invest in money-market instruments.
Money Market Mutual Fund	An open-end mutual fund that invests only in cash or cash equivalents. The fund’s net asset value remains a constant $1 per share, although not guaranteed, and the interest rate fluctuates with the market.
Morningstar	A mutual fund and variable annuity research and reporting company.
Mortality Cost	The amount of money the insurance company charges (usually monthly) for providing the death benefit in a universal life policy or a variable universal life policy.
Municipal Bonds	A bond issued by a state, a municipality, or a state agency or authority for the purpose of funding some governmental function, which pays interest that is exempt from federal income tax.
Municipal Bond Fund	A mutual fund that invests primarily in bonds and debt securities issued by states or municipalities. The objective of most municipal bond funds is to provide current income that is exempt from federal income taxes while protecting the principal from decreasing in value. Both the net asset value and the monthly income can fluctuate with changes in interest rates.
Mutual Fund	An investment company that enables its shareholders to pool their funds for professional management as a single investment account.
NASDAQ	The National Association of Securities Dealers Automated Quotations system is a computerized system where prices are quoted for many small over the counter (OTC) securities along with many NYSE listed securities.
Net Income	For an individual, gross income minus expenses.
Net Worth	Total assets minus total liabilities of an individual or company.
NYSE	The New York Stock Exchange is the largest national stock exchange in the U.S. where the securities of large American companies are bought and sold. The NYSE also maintains regulatory authority over firms that are members of the exchange.
Ordinary Life	A whole life policy where the premiums are paid throughout the life of the insured. Also known as "straight life".
Over-the-Counter Market	A market for trading stocks not listed on an exchange.
Pension Plan	A qualified retirement plan established by a corporation or organization to provide income for its employees when they retire.
Policy Holder	The individual or entity that owns the life insurance policy. The Policyholder may be different from the insured. For example, a grandparent (the Policyholder) may own a life policy on a grandchild (the insured).
Policy Value	A Universal Life policy’s equivalent of a cash value. The policy value is built by the accumulation of premiums plus interest less charges for expenses and mortality costs and other risk charges. In Variable policies, this accumulation depends on the performance of the underlying assets and not on an interest rate set by the insurance company.
Political and Legislative Risk	The risk that governments of many foreign nations are not as stable as the U.S. and any change in power could affect the value or ownership rights of that nation’s securities. It also includes the risk that new laws may adversely affect the companies you invest in, including companies in the U.S.
Portfolio	An individual’s or institution’s total investment holdings.
Preferred Stock	A class of stock that has preference for dividend payments over the common stock and, in many cases, also for the liquidation of the company’s assets. See common stock.
Premium	The money the owner pays to the insurance company in order to obtain life insurance protection.
Prime Rate	The base interest rate that commercial banks charge on loans.
Prospectus	A printed offering to sell a security that fully discloses relevant information on that security.
Recession	A period of general and sustained economic decline.
Renewal Rate	The fixed rate the insurance company will pay after the initial rate period expires. Usually set annually at the end of each policy year.
Return on Investments	The money you earn or lose on your investment, expressed as a percentage of your original investment.
Revocable Trust	A living trust that the creator of the trust may amend or end (revoke). See living trust and trust.
RISK	The measurable possibility of economic loss. There is risk involved if the outcome of an investment is uncertain at the time the investment is made. Although the outcome is uncertain, it is measurable.
Risk Tolerance	An investor’s ability to withstand declines in the value of his/her portfolio, financially and emotionally.
"Rollover" IRA	An IRA (individual retirement account) started to receive all or part of the taxable portion of an eligible distribution from a tax-qualified retirement plan. The eligible distribution amount transferred to the IRA (together with any earnings on that amount while in the IRA) escape taxation until distributions are made from the IRA.
S&P 500	The Standard & Poor’s 500 is an index made up of 500 blue chip stocks. The index is commonly used to measure stock market performance.
Sales Commission	A fee an investor pays a broker for buying or selling securities.
Securities	An instrument issued by a corporation or government that denotes a debt or ownership interest. Stocks and bonds are referred to as securities.
Shares Outstanding	The shares of a corporation’s stock that have been issued to the public and are in the hands of investors.
Single-Pay Life	A whole life policy purchased with one premium payment.
Small Cap Funds	Mutual funds that primarily invest in small, start-up or very specialized companies. Small cap funds typically invest in companies with a market capitalization greater than $300 million but less than $1 billion.
Stock	Stock represents ownership in a company. The stock holder’s percentage of ownership in the company can be calculated by dividing the number of shares he or she owns by the total number of shares outstanding. The value of a stock will fluctuate with the company’s performance and the stock market in general.
Stock Dividend	A dividend paid in stock (or other securities) rather than in cash.
Stock Fund	A mutual fund that invests in many stocks, offering investors diversification and professional management.
Stock Mutual Fund	An investment company that invests primarily in stocks. The investment objective of most stock funds is growth, although some funds also have a secondary objective of income.
Stock Split	An allocation of newly issued stock to shareholders according to their current holdings so that there is no change in the shareholders’ relative ownership positions. A company generally uses a stock split to reduce its stock’s price to what the company believes will be a more marketable trading level.
Surrender Charge	The fee an insurance company would assess against the cash value of a life insurance policy if the owner were to surrender the policy. The amount of the surrender charge will usually be highest in the first year of a policy and decreases over time until eventually it is zero.
Surrender Charge Period	The number of years during which the insurance company would charge the owner a fee if the owner chooses to surrender the contract.
Surrender Charge Schedule	A schedule illustrating the fee the insurance company charges for making early withdraws from the annuity contract. The surrender charge is generally on a sliding scale that decreases the longer you have owned the annuity.
Survivors	Individuals, usually family members, who face emotional and sometimes financial setbacks because of your death.
Tax-Deferred Investment	An investment whose income and/or capital gains are not taxed until they are removed from the investment. Examples of tax-deferred investments include annuities and the cash value of life insurance. Tax-deferral can also be accomplished through the use of IRAs and corporate retirement plans such as 401(k)s.
Tax Shelter	In general, any means used to provide favorable tax treatment for all or part of an individual’s or corporation’s income. More usually, "tax shelter" is an investment device that generates tax deductions larger than the income from the investment.
Taxable Income	The amount used in the calculation of an individual’s income tax liability. It is equal to one’s income after certain adjustments have been made and standardized or itemized deductions and personal exemptions have been deducted.
30-Day Treasury Bill	A U.S. government security that matures 30 days after it is issued. They are sold at weekly auctions at a discount and are redeemed at face value.
Treasury Bills	U.S. government securities that mature (are redeemed) sooner than one year after issue. They are sold at weekly auctions at a discount and are redeemed at face value.
Treasury Bonds	U.S. government securities with a maturity longer than seven years.
Treasury Notes	U.S. government securities that mature between one and seven years after issue.
Trust	A legal arrangement that one party (the grantor) uses to transfer assets to a second party (the trustee). The assets are held and invested for the benefit of one or more third parties (the beneficiaries). See living trust and revocable trust.
Trustee	The institution or individual that is named to hold, manage, and distribute a trust’s assets.
Underwriter	Makes the determination of who can be insured and at what rate.
Uninsurable	An individual who is unable to obtain life insurance coverage due to the high risk he or she represents to the insurance company. For example, most insurance companies would consider an individual with a serious life threatening disease to be uninsurable.
U.S. Treasury Bills	U.S. government securities that mature (are redeemed) sooner than one year after issue. They are sold at weekly auctions at a discount and are redeemed at face value.
Value Stocks	Overlooked or under performing companies that have a low price to earning ratio (P/E), and are trading at relatively low prices compared to their earnings.
Variable Annuity	An annuity contract whose growth and subsequent income payout are based on the performance of the securities held in the underlying sub-accounts selected by the contract owner. All income and capital gains produced by the sub-accounts are tax-deferred.
Volatility	A measure of price stability. An investment is volatile if its price is subject to wide swings.
Waiting Period	The length of time a disability policy holder must wait after submitting a claim before disability income benefits begin.
Will	A legally enforceable document allowing an individual to direct the distribution of his/her property after death.
Yield	The interest or dividend payable on a security, expressed as a percentage of the price of the security. Some investment advisors also include capital gain as part of the yield.
Zero Coupon Bond	A bond that pays no periodic interest, but is sold at a deep discount from the face value payable at maturity. See bond and municipal bond.