Tax Deferral
Postponement of taxes on investment or other earnings until the investor begins to consume them and anticipates being in a lower tax bracket. One example of a tax-deferred investment is an individual retirement account (IRA). Earnings accumulate tax free until the account holder retires after age 59'A. At that time, taxes must be paid on the earnings as money is withdrawn from the account. Other examples of tax deferred investments are insurance products such as annuities and various types of whole life insurance such as variable life and universal life. The tax reform act of 1986 limited the use of IRAs, making insurance products one of the few tax-deferred investments still available.
Popular Insurance Terms
Investment income. Insurance companies invest part of their premiums that are not immediately needed for claims and administrative expenses. These earnings are critical to an insurance ...
Present value of a series of payments such that the first payment is due immediately, the second payment one period from hence, the third payment two periods hence, and so forth. The ...
Coverage for damage due to peril! of war, usually written as part of an ocean marine insurance policy. ...
Risk management practice designed to control losses by physically separating assets or operations (on separating a single exposure unit into various parts) to reduce maximum potential loss. ...
Primarily a British association whose membership includes risk managers and insurance buyers, with the emphasis on risk management. ...
Provision for every citizen of the United States to be guaranteed by law the right to purchase health insurance and is required by law to make such a purchase. ...
Value or cost of the actual net protection, in life insurance, in any year (face amount less reserve) according to the yearly renewal term rate used by an insurance company. ...
Coverage that guarantees that the executor or administrator of an estate will conduct his or her duties according to the provisions of the will and the legal requirements of the ...
System for calculating the relationship between a pension plan's present cost and its present future benefits. This relationship shows the extent to which a pension plan's benefits are ...
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