Insured The person who is covered by an insurance policy. The insured doesn’t necessarily have to be the owner of the policy, but he or she can be. For estate planning purposes, the insured shouldn’t be the policy owner.
Itemized deductions Personal expenditures that can be deducted from adjusted gross income to determine taxable income.
Joint tenancy A form of co-ownership that provides that each joint tenant has undivided interest in the whole property. When one joint tenant dies, this interest passes to the surviving joint tenant or tenants. The last surviv- ing joint tenant obtains title to the entire property.
Keogh plan A retirement account to which self-employed people may make pretax contributions of either $40,000 or 20 percent of annual earned income, whichever is less. The principal grows on a tax-deferred basis.
Level term insurance A form of term insurance in which the amount of coverage remains the same throughout the entire life of the policy.
Liabilities Debts or anything owed to another person or party. Liabilities include credit card balances, mortgages, auto loans, etc.
Long-term care insurance A form of insurance that pays for the costs associated with nursing homes, in-home care and other types of long-term care.
Margin A partial payment on investment units, the remainder of which is loaned by the brokerage firm. When investors buy on margin, they hope prices will go up fast enough to cover the loan, thereby increasing buying power. If prices drop, however, losses increase.
Medicaid A state-run public assistance program for those people unable to provide for their own medical bills.
Medicare A federally sponsored health plan to help offset medical costs for people over the age of 65, disabled people, and those who suffer from permanent kidney failure.
Mutual fund A mutual fund pools the dollars of many people, and undertakes to invest those dollars more productively than individuals could for themselves.
Net worth The difference between the total value of all assets and the total value of all liabilities.
Nonqualified This term describes certain types of investment accounts in which the principal is invested after tax and the gains are currently tax- able to the account holder.
Personal financial advisor One who helps individuals in an ongoing process to arrange and coordinate their personal and financial affairs to enable the individuals to achieve their objectives.