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people who will receive the account once the owner dies and those who will benefit from assets placed in a trust. Also known as an heir.

Capital gains Gain realized through the sale or exchange of capital assets, such as securities or real estate.

Cash reserve Money that is available to meet expenses that were not planned for in a budget. Commonly, the suggested level of cash reserve equals three to six months of cash expenses, but the size of a cash reserve can vary based on family income, job stability, current debts, amount of insurance deductibles and risk tolerance.

Cash surrender value The amount of money payable to an investor in exchange for a life insurance policy or annuity that has not yet matured.

Coinsurance A part of an insurance policy that designates how much coverage the insurance company will provide and how much out-of-pocket costs the insured will pay for medical costs. For example, an insurance company may stipulate they will pay 80 percent of covered expenses, and the insured will have to pay for the remaining 20 percent. That 20 percent is referred to as the copayment.

Death benefit The amount payable under a life insurance policy upon the death of the insured. The proceeds consist of the face amount of the contract, plus accumulated dividends (if any), plus amounts payable on riders, less any money owed to the life insurance company on the policy in the form of loans and loan interest.

Decreasing term insurance A form of term insurance where the death benefit decreases over the life of the policy.

Defined benefits plan An employer-sponsored pension plan where the formula for calculating benefits is defined in the plan provisions. An employee would then be able to calculate how much retirement income they would receive from this plan.

Defined contribution plan An employer-sponsored pension plan that dictates the contribution amounts that must be made by both the employee and employer, while making no guarantees about the size of the retire- ment benefits.

Disability insurance A form of insurance that replaces a person’s income after he or she has suffered an injury or accident that prevents that person from working and earning a living. Disability insurance comes in both short-term and long-term form.

Discretionary income The difference between income and expenses. It is money that you have to invest to help you reach your financial goals.

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