Employee Stock Ownership Plan (esop) Trust
Type of benefit in which an employee obtains shares of stock in the company, the amount normally determined by the employee's level of compensation. ESOP acts as a leverage tool through which the business is able to obtain a source of capital. The procedure is for a lender (usually a bank) to lend money to the ESOP. The ESOP then takes the borrowed money to buy stock from the company's treasury. In the meantime, the ESOP has signed a note with the lender for the borrowed funds with the stock pledged as collateral for the loan, and the business has guaranteed repayment if the ESOP fails to do so. The stock held in the ESOP is allocated to each employee as the business pays its contributions into the ESOP. The ESOP uses the company's contributions to repay the loan and the interest thereon. The contributions per employee that the company makes into the ESOP are tax deductible, and they are not taxable to the employee until the benefits are received.
Popular Insurance Terms
Same as term Graduated Life Table: mortality table that reflects irregularities from age to age due to chance fluctuations in the sequence of the rates of mortality. The rates of death as ...
Forgery insurance covering securities issues such as stocks and bonds. They protect the issuer of securities against forgery of the securities. ...
Coverage that goes into effect when an individual's claim reaches a specific threshold selected by the employer who has self-insurance. After this threshold is reached, the policy pays ...
Policy provision designed to restore an insured to his or her original financial position after a loss. The insured should neither profit nor be put at a monetary disadvantage by incurring ...
Maximum sum of money that the insurance company will pay, during the time interval that the product liability insurance coverage is in effect, for all product liability-related claims ...
Mechanism for providing coverage when the insured's underinsured motorist coverage limit is more than the tort feasor's limit of liability that has been previously reduced by claim payments ...
Addition to reserves of a life insurance company required by various states because the valuation premium is greater than the GROSS PREMIUM. Without a deficiency reserve, the normal reserve ...
Person for whom the trust was created and who receives the benefits thereof. In many instances a trust is established to prevent the careless exhaustion of an estate. For example, the ...
Coverage in the event of threats to injure an insured or damage or destroy his property. ...
Have a question or comment?
We're here to help.