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Dollar-cost averaging Investing a fixed dollar amount at regular inter- vals. When prices are low, your investment purchases more shares. When prices rise, you purchase fewer shares. Over time, the average cost of your shares will usually be lower than the average price of those shares. Such a plan doesn’t assure a profit and does not protect against losses in a declining market. However, over longer periods of time it can be an effective means of accumulating shares.

Elimination period The amount of time an insured person must wait before their insurance benefits begin. During this time, the insured must pay for his or her own care in the case of long-term care or medical bills. In relation to disability insurance, the insured would receive no income from the policy during the elimination period. Also referred to as a wait- ing period.

Equity Value of a person’s ownership in real property or securities. For instance, current market value of a home, less the principal remaining on its mortgage, is the equity of that property.

Expenditures Money spent on living expenses and to purchase assets, pay taxes, and pay off debt; bills.

Face amount The amount of the death benefit for insurance policies. This is also called the face value of the policy.

Government obligations Instruments of the U.S. government’s public debt. Examples are Treasury bills, notes, bonds, savings bonds, and retire- ment plan bonds. These are fully backed by the U.S. government.

Grantor A person who transfers his or her own property to trust ownership.

Gross estate All assets, including personal, business, and investment assets, retirement benefits, and life insurance policies that are owned by a person at the time of death, before being reduced by payment of estate settlement expenses.

Individual retirement arrangement (IRA) A type of retirement account which grows on a tax-deferred basis. The owner may take a tax deduction for any contributions he or she makes to the account. When distributions begin, that person is then taxed at his or her ordinary income rate on the whole amount withdrawn. IRAs can be any type of investment vehicle, including annuities.

Inflation risk The risk created by the reduced purchasing power of the dollar; your dollar will purchase fewer goods in the future than it will today.

Insolvency The financial state in which net worth is less than zero.

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