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tax free until the account holder retires after age 59'A. At that time, taxes must be paid on the earnings as money is withdrawn from the account.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
Use of a life insurance policy dividend by the owner of a participating policy. Here the policy dividend is left with the insurance company to accumulate at a guaranteed minimum interest ...
Same as term Application: written statements on a form by a prospective insured about himself, including assets and other personal information. These statements and additional information, ...
Legislation mandating that factors taken into account in the calculation of premium rates for automobile insurance include the insured's driving record, annual miles driven, and years of ...
Maximum that an insurance company can underwrite. The limits of coverage that a property and casualty company can underwrite are determined by its retained earnings and invested capital. ...
Coverage that exceeds the normal insurance capacity of an insurer or reinsurer. ...
Endorsement to an existing policy or a separate policy covering loss of rental income to the property owner, caused by the damage or destruction of a building, rendering it unrentable. The ...
One of two bureaus that writes forms and files standard rates for inland marine insurance. The other is the inland marine insurance bureau. ...
Trust in which rights to make any changes therein are retained by the grantor. At the grantor's death all rights become irrevocable. This type of trust has several advantages: it can avoid ...
Kindling intentionally set in a fireplace, stove, furnace, or other containment that has not spread beyond it. Property insurance does not protect against damage from a friendly fire. For ...
Have a question or comment?
We're here to help.