 Accident Benefit |
An add-on with a life policy. It compensates a policyholder in the event of death or injury by accident |
| Annuity |
An investment option that makes a series of regular payments to an individual in exchange for a premium or a series of premia. |
| Appreciate |
To grow in value |
| Asset |
Everything owned or due to a person |
| Asset allocation |
How your investments are spread across various asset classes |
| Bond |
It is like an IOU. By buying a bond you loan money to a company, a municipality, state or the Central Government |
| Bonus |
The amount paid as return in a ‘with-profit’ policy. The bonus, expressed as a percentage of the sum assured, is generally declared every year. The amount is linked to the profits earned by the insurer. Depending on the time of withdrawal, there are two kinds of bonuses – reversionary and cash. A reversionary bonus can be encashed only on maturity of the policy; a cash bonus can be withdrawn when declared |
| Budget |
It is a tool used to monitor and control expenditures and purchases. |
| Capital gains |
Profit earned from the sale of stocks, mutual fund units and real estate. Long-term capital gains arise from assets owned for more than a year while short-term capital gains are made from assets owned for less than a year. |
| Compound Interest |
Interest computed on principal plus interest accrued during the previous periods of the investment |
| Corpus |
The amount of money available with a scheme for investing. If already invested, the corpus is the current value of the scheme’s portfolio. |
| Cost averaging |
A strategy that involves investing a fixed amount of money in an asset class like equity, so that the average cost of acquiring the asset in the long-term is much lower than that in the short-term. |
| Cover |
Another word for insurance; it also refers to the amount of insurance. |
| Critical illness rider |
A rider that provides a policyholder financial protection in the event of a critical illness |
| Death benefit |
The amount payable to the nominee on death of the policyholder. The amount paid is the sum assured plus benefits applicable (if any) less outstanding loans. |
| Declining term cover |
A type of pure life protection insurance policy where the premia remain the same while the life coverage keeps declining. They are typically used to cover the life of a person with a pending loan repayment, like home loan. |
| Deferred annuity |
An annuity plan where the first annuity payment becomes payable after a chosen period that exceeds one year. |
| Disability / dismemberment benefit rider |
A rider that provides for additional cover in the event of disability, or dismemberment, of the policy holder due to an accident |
| Discretionary expenses |
These are expenses like entertainment, dining out and non-compulsory travel that you can reduce at will. |
| Dividend yield |
The percentage of dividend paid on a share to the value of the share. |
| Dividends |
Payments made by companies and mutual funds to shareholders and unit-holders, respectively, from the income generated by it. |
| Down payment |
The money that a home buyer has to contribute, often at least 15 per cent of the value of the house, when he is taking a home loan. |