Chapter 4 Terms Flashcards
(13 cards)
What is earned income?
Salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income.
What does FIFO stand for?
First In, First Out — principle under which it is assumed that the funds paid into the policy first will be paid out first.
What is gross income?
A person’s income before taxes or other deductions.
What does LIFO stand for?
Last In, First Out — principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be paid out first.
What is a nonprofit organization?
An organization that uses its surplus to fulfill its purpose instead of distributing the surplus to its owners or members.
What is policy endowment?
Maturity date.
What is a pretax contribution?
Contribution made before federal and/or state taxes are deducted from earnings.
What is a rollover?
Withdrawal of the money from one qualified plan and placing it into another plan.
What does surrender mean in insurance?
Early termination of a policy by the policyowner.
What is vesting?
The right of a participant in a retirement plan to retain part or all of the benefits.
What does tax deductible mean?
A reduction of taxable income, resulting in lower tax liability.
What does taxable mean?
Subject to taxation, payable to state and federal government.
What does tax deferred mean?
Taxes on investments or gains (such as interest or dividends) are paid at a future date instead of in the period in which they are incurred.
