Glossary: V - W - X - Y - Z

Go to: V | W | X | Y | Z
Return to Glossary Index
Glossary content provided by Financial Visions.

V v

variable investment
A variable investment is any investment whose value, and therefore returns, fluctuates with market conditions such as a common stock, a plot of raw land, and a hard asset.

variable universal life insurance
A Variable Life insurance policy provides both a death benefit and an investment component called a cash value. The owner of the policy invests the cash value in subaccounts selected by the insurer. The policyholder may accumulate significant cash value over the years and "borrow" the appreciated funds without paying taxes on the borrowed gains (taxes may be required if policy is surrendered). As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account.

variable rate mortgage (VRM)
A Variable Rate Mortgage offers an initial interest rate that is usually lower than a fixed rate, but that adjusts periodically according to market conditions and financial indices. The rate may go up and/or down, depending on economic conditions. To limit the borrower's risk, the VRM will almost always have a maximum interest rate allowed, called a "rate cap."

venture capital
A common term for funds that are invested by a third party in a business either as equity or as a form of secondary debt. In the event of failure or business wind-up, these funds rank behind all other secured creditors.

vesting
The law requires that a qualified plan have a schedule under which a participant earns an ownership interest in employer provided contributions based on his or her years of service with the employer. Amounts contributed by the participant are always 100% vested.

viatical settlement
Occurs when a person with terminal or chronic illness sells his/her life insurance policy to a third party for an amount that is less than the full amount of the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums, and collects the entire death benefit when the insured dies. Some states regulate the purchase as a security while others may regulate it as insurance.

[ Top of Page ]

W w

waiver of premium
A waiver of premium rider on an insurance policy sets for conditions under which premium payments are not required to be made for a time. The most popular waiver of premium rider is the disability waiver under which the owner of the policy (also called the policyholder) is not required to make premium payments during a period of total disability.

whole life insurance
A traditional Whole Life insurance policy provides both a death benefit and a cash value component. The policy is designed to remain in force for a lifetime. Premiums stay level and the death benefit is guaranteed. Over time, the cash value of the policy grows and helps keep the premium level. Although the premiums start out significantly higher than that of a comparable term life policy, over time the level premium eventually is overtaken by the ever-increasing premium of a term policy.

will
The most basic and necessary of estate planning tools, a will is a legal document declaring a person's wishes regarding the disposition of their estate. A will ensures that the right people receive the right assets at the right time. If an individual dies without a will they are said to have died intestate.

wrap account
An account offered by investment dealers whereby investors are charged an annual management fee based on the value of invested assets.

write-off
Any loan not expected to be recovered and is recorded as a loan loss.

[ Top of Page ]

X x

[ Top of Page ]

Y y

yield
The yield on an investment is the total proceeds paid from the investment and is calculated as a percentage of the amount invested.

[ Top of Page ]

Z z

zero-coupon bond
A zero-coupon bond is a bond sold without interest-paying coupons. Instead of paying periodic interest, the bond is sold at a discount and pays its entire face amount upon maturity, which is usually a one year period or longer.

[ Top of Page ]

Glossary content provided by Financial Visions.