Glossary: C

Capital – Generally, the money or property used in a business. The term is also used to apply to cash in reserve, savings, or other property of value.

Capital cost allowance – A taxation term, equivalent to depreciation, that makes allowance for the wearing away of a fixed asset.

Capital loss – The loss that results when a capital asset is sold for less than its purchase price.

Capital stock – All ownership shares of a company, both common and preferred.

Capitalization – The total amount of all securities, including long-term debt, common and preferred stock, issued by a company.

Carrier – insurance company.

Cash equivalent – Assets that can be quickly converted to cash. These include receivables, Treasury bills, short-term commercial paper and short-term municipal and corporate bonds and notes.

Cash (Surrender) Value – The amount that is available in cash for loans and that may be available for withdrawals. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse.

Certificate – A document providing evidence of ownership of a security such as a stock or bond.

Certificate Booklet – the plan agreement. A printed description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured group or individual. May also be referred to as a policy booklet.

Claim – a formal request made by an insured person for the benefits provided by a policy.

Closed-end fund – A fund company that issues a fixed number of shares. Its shares are not redeemable, but are bought and sold on stock exchanges or the over-the-counter market.

Co-insurance – the percentage of covered expenses an insured individual shares with the carrier. (i.e., for an 80/20 plan, the health plan member’s co-insurance is 20%.) If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan’s stop loss amount. (see “stop loss.”)

Compounding – The process by which income is earned on income that has previously been earned. The end value of the investment includes both the original amount invested and the reinvested income.

Consumer price index – A statistical device that measures the change in the cost of living for consumers. It is used to illustrate the extent that prices have risen or the amount of inflation that has taken place.

Contractual plan – An arrangement whereby an investor contracts to purchase a given amount of a security by a certain date and agrees to make partial payments at specified intervals.

Convertible – A security that can be exchanged for another. Bonds or preferred shares are often convertible into common shares of the same company.

Convertible Term Insurance – Term insurance which can be exchanged (converted), at the option of the policyowner and without evidence of insurability, for a permanent insurance policy.

Co-pay/co-payment – the amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $10 co-pay for each doctor’s office visit.

Corporation – A legal business entity created under federal or provincial statutes. Because the corporation is a separate entity from its owners, shareholders have no legal liability for its debts.

Credit for prior coverage – any pre-existing condition waiting period met under an employer’s prior (qualifying) coverage will be credited to the current plan, if any interruption of coverage between the new and prior plans meets state guidelines.

Current asset – An asset that could be converted into cash within 12 months.

Current liability – A liability that has to be paid within 12 months.

Current yield – The annual rate of return that an investor purchasing a security at its market price would realize. This is the annual income from a security divided by the current price of the security. It is also known as the return on investment.