What is Federal Insurance Contributions Act – FICA?
A U.S. law requiring a deduction from paychecks and income that goes toward the Social Security program and Medicare. Both employees and employers are responsible for sharing the FICA payments. Read more for examples and further explanation including related video clips and also comments
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Tag: insurance
Qualified Mortgage Insurance Premium definition explanation
What is Qualified Mortgage Insurance Premium?
Premium paid by homeowners on mortgage insurance for FHA loans that can be deducted in the same manner as home mortgage interest. Qualified mortgage-insurance premiums can be deducted in addition to allowable mortgage interest for up to three years. In order to qualify, the mortgage must have been originated after 2006. Read more for examples and further explanation including related video clips and also comments
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No-Fee Mortgage definition explanation
What is No-Fee Mortgage?
A mortgage in which a mortgagee does not charge the mortgagor any fees for the applications, appraisals, underwriting, processing, private mortgage insurance and other third-party closing costs typically associated with mortgages. The total cost savings associated with the lack of fees is typically 3-5% Read more for examples and further explanation including related video clips and also comments
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Credit Life Insurance definition explanation
What is Credit Life Insurance?
A life insurance policy designed to pay off a borrower’s debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value. Read more for examples and further explanation including related video clips and also comments
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Three-Year Rule definition explanation
What is Three-Year Rule?
Section 2035 of the tax code, which stipulates that assets that have been gifted through an ownership transfer, or assets for which the original owner has relinquished power, are to be included in the gross value of the original owner’s estate if the transfer took place within three years of his or her death. If gifted assets do not meet the necessary requirements, the value of the assets is added to the value of the estate at the time of the original owner’s death, increasing its value and the estate taxes imposed on it. Read more for examples and further explanation including related video clips and also comments
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Waterfall Concept definition explanation
What is Waterfall Concept?
A life insurance plan that provides a tax benefit in regards to intergenerational transfers of wealth. The concept occurs when a tax-exempt insurance policy is rolled over to a child or a grandchild. The origin of this term is derived from the fact that this insurance plan is similar to waterfalls in that it only flows downwards. Read more for examples and further explanation including related video clips and also comments
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State Guaranty Fund definition explanation
What is State Guaranty Fund?
A fund administered by a U.S. state to protect policy holders in the event that an insurance company defaults on benefit payments or becomes insolvent. The fund only protects beneficiaries of insurance companies that are licensed to sell insurance products in that state. Read more for examples and further explanation including related video clips and also comments
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Non-Contestability Clause definition explanation
What is Non-Contestability Clause?
1. A provision in a person’s will designed to stop beneficiaries from contesting the will. The provision states that if beneficiaries try to contest the will, their potential inheritances will be effectively redistributed to other beneficiaries.
2. A provision in a life insurance policy designed to stop life insurance companies from refusing to pay out a claim to individuals because of fraud or error. Read more for examples and further explanation including related video clips and also comments
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Level-Premium Insurance definition explanation
What is Level-Premium Insurance?
A type of term life insurance for which the premiums remain the same throughout the duration of the contract. The premium paid on this type of policy will be higher at the beginning of its life but lower towards the end of its life as compared to term policies that have rising premium rates. Read more for examples and further explanation including related video clips and also comments
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Hidden Load definition explanation
What is Hidden Load?
An undisclosed fee or sales charge, which is often hidden in the fine print of a fund’s prospectus or in an insurance contract. In some cases, investors and clients do not realize they are paying the hidden load, as explicit attention is never drawn to the issue. Read more for examples and further explanation including related video clips and also comments
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