Flashcards

A fixed annuity contract in which its values are based on a crediting index, such as the Standard & Poor’s 500 Index.

A whole life plan of insurance that provides for the face amount of the policy and, correspondingly, the premium rate, to automatically increase every year based on an increase in the Consumer Price Index (CPI) or another index as defined in the policy.

An indication of interest is an investor’s expression of conditional interest in buying a forthcoming securities issue after the investor has reviewed a preliminary prospectus. An indication of interest is not a commitment to buy.

An indirect loss (or consequential loss) is financial damage that isn’t a direct result of physical damage, but rather a consequence of it, like lost income, extra expenses (temporary rent), or spoilage from a fire or power outage, which insurers cover under specific policies like Business Income Insurance to restore the insured’s operations.

An individual retirement plan (IRA) is available to anyone with earned income. There are two types of IRAs, traditional and Roth. A Roth IRA may only be funded by individuals with earned income, who do not earn too much (phaseout varies each year). Roth IRAs are always funded with after tax dollars. If a distribution is made from a Roth that has been open for a minimum of 5 years and that is paid out on or after age 59 ½, the earnings are tax-free. A traditional IRA may be funded by anyone with earned income. The contributions made into a traditional IRA may or may not be tax-deductible, depending upon the client’s situation and current tax code. Traditional IRAs are subject to the required minimum distribution rules. Earnings in a traditional IRA are taxable as ordinary income upon withdrawal.

An industrial development bond is a type of municipal revenue bond issue, with the municipality using the proceeds to finance the construction of industrial facilities to be leased or purchased by private companies. The bonds are backed by the credit of the private companies and often are not considered an obligation of the issuing municipality.  Interest paid on an industrial development revenue bond may or may not be tax exempt, depending upon if the issue is best for the public or the private company.

Inflation is a general rise in prices. One of the root causes of inflation is too many dollars chasing too few of goods.

Inflation risk is a type of systematic investment risk.  Fixed income investments have inflation risk. Inflationary risk is also called purchasing power risk. Inflationary risk may only be reduced with asset class diversification.

The initial margin requirement is set by Federal Reserve Board Regulation T. Currently, it is 50% of the value being purchased, or $2,000, whichever is greater, not to exceed the market value of the securities being purchased.

In an initial public offering shares of stock are sold for the very first time to the general public. Shares in an IPO are sold at a fixed price in the primary market, one time only. After the shares trade in the primary market, they will trade in the secondary market at a price set by the market.

An injunction is a court order requiring a person to either do or not do a specific act. If a person has been issued an injunction and he or she fails to meet the requirements of the order, they may be held in contempt of court.

Inland marine insurance is a broad category of property insurance generally coverage loss to movable property or unusual risks. In personal lines, inland marine includes coverage for personal effects like jewelry, fine art, sports, or musical equipment. Inland marine coverage in commercial lines can include, but is not limited to, equipment floaters, builders risk, jewelers block, and difference in condition polic

Inside information is material information that is not known by the general public that if known would affect the stock price.

The inside market is the difference between the bid and the ask in the over-the-counter market. The closer the two prices are, the more active the issue.

An insider includes any person who has material nonpublic information about a publicly traded company. According to the l934 Act, directors, officers, and stockholders who own at least 10% of any class of equity security issued by the corporation are all considered insiders.

An institutional account is an account held for the benefit of others. Institutional accounts include banks, pension plans, insurance companies, mutual fund companies, and profit sharing plans.

An institutional communication is a written communication (including electronic) that is distributed or made available to only institutional investors, not to retail investors. The term institutional communication does not include a firm’s internal communications.

Institutional investors include broker-dealers, banks, pension plans, insurance companies, mutual fund companies, profit sharing plans, and any entity with $50 million or more in total assets. Most regulations are written to protect retail investors and not written towards institutional investors, with the belief that institutional clients should know what they are doing.

For persons related by blood, a substantial interest established through love and affection, and for all other persons, a lawful and substantial economic interest in having the life of the insured continue. An insurable interest is required when purchasing life insurance on another person.

Insurance is a legal agreement between two parties – the insurer and the insured, also known as insurance coverage or insurance policy. The insurer provides financial coverage for the losses of the insured that s/he may bear under certain circumstances.

The laws that govern the business of insurance in a state.

The Insurance Services Office, Inc., is an organization that collects statistical data, promulgates rating information, develops standard policy forms, and files information with state regulators on behalf of insurance companies that purchase its services. Most state P&C exams cover ISO policy forms.

The person or organization covered by an insurance policy.

The insurance company.

The insuring agreement or clause outlines the specific perils or risks that the insurer agrees to cover in exchange for the premium paid by the insured.

The insuring clause is found on the first page of the policy, the face of the policy. It is the insurer’s legally enforceable promise to pay. The insuring clause includes the parties to the contract, the policy effective date, and the coverage.

Intangible assets are assets of a business that do not have a physical quality, but they do have value. Intangible assets include goodwill, intellectual property, and patents pending.

Interactive content is a social media format that allows for input from both the creator and the viewer.

Interest is the charge for the borrowing of money, usually expressed as an annual percentage rate.

Interest rate risk is the risk that the cost of borrowing money will change over time. This term is generally associated with bond prices, but it applies to all investments. In the bond market, it is the bond’s market price that has interest risk. If interest rates in the market change, relative to the nominal yield on the bond, the bond’s market price will move in an inverse direction. Interest rate risk is a type of risk that is systematic and cannot be avoided by diversification. Diversification by asset class would help to reduce interest rate risk.

The Investment Company Act of l940 requires that at least 40% of the board of directors remain independent from the operations of the investment company. The law states that no more than 60% of the directors may also hold an affiliated position within the fund (an affiliated position would be a director who is also the fund’s investment adviser, custodian, etc).

The internal rate of return on a bond is the bond’s yield to maturity. The internal rate of return is the discount rate at which the future dollars created when discounted back to their present value minus the initial cost outlay is equal to zero.

An interstate offering is a securities offering that will be sold across state lines. Interstate offerings must be registered, prior to sale, with the SEC, as well in each state in which the security will be sold.

To die intestate is to die without a will. The state will appoint an administrator to oversee the settling of the decedent’s estate. The process will be public, going through the probate court, and opening up the estate to the claims of creditors.

An intrastate offering is a securities offering that takes place in one state only.

A call option has intrinsic value when the market price is above the strike. A put option has intrinsic value when the market price is below the strike price. An option with intrinsic value is said to be in-the-money. An option with intrinsic value may be exercised by the owner of the option.

An inverse ETF is an exchange-traded fund designed to capitalize on intraday bearish movements in the markets. An inverse ETF trades on the stock market and is designed to perform the inverse (opposite) of the index it tracks. When the underlying target index goes down, the value of the inverse ETF is designed to go up. The target index may be broad-based, like the S&P 500, or it could be a basket chosen to follow a specific area of the economy, such as the financial sector.

An inverted yield curve is one where the highest yields are on short-term debt, and the lowest yields are on the long-term debt. An inverted yield curve is also called a negative yield curve. An inverted yield curve is often the precursor to an economic contraction.

An investment adviser is a firm that manages money for the accounts of others. An investment adviser files Form ADV to register as an investment adviser, either with the SEC or at the state level, depending upon current rules. An investment adviser to a mutual fund has the day-to-day responsibility of investing the cash and securities held in a mutual fund’s portfolio. The adviser must adhere to the objective as stated by the client or found in the fund’s prospectus.

Amended by the Dodd-Frank Act in 2010, investment advisers are required to register at the federal level (with the SEC) if they manage a mutual fund or have $100 million or more in assets under management (AUM). Investment advisers with assets under management under $100 million are required to register at the state level. Investment advisors are the firms that either charge a flat fee for investment advice or an asset-based advisory fee.  The investment advisory fee of a mutual fund is the fund’s largest expense.

The investment banker is a broker-dealer that is hired by a corporation or government to raise capital by marketing new issues.  Sometimes called the underwriter, sponsor, or distributor.

An investment company is engaged primarily in the business of investing and trading in securities. There are three types of investment companies under the Investment Company Act of 1940: face-amount certificate companies, unit investment trusts, and management companies. All mutual funds are management companies. Management companies employ investment advisers (investment managers) to manage the assets in the portfolios.

The Investment Company Act of 1940 regulates investment companies.  The act requires any investment company that is engaged in interstate commerce to register with the SEC.

Investment grade securities are debt instruments that are rated BBB/Baa or higher. They are often purchased by fiduciaries.

The investment objective is the goal of the client or the goal of the mutual fund portfolio. There are many different investment objectives including safety/preservation of capital, income, and growth.

A person’s income may affect how much they pay in premiums for Medicare Part B and Part D. This adjustment is commonly referred to as IRMAA – income-related monthly adjustment amounts. IRMAA is calculated based on a person’s MAGI on their tax returns two years prior. For example, in 2025 an individual with MAGI over $106,000 (over $212,000 if MFJ) will pay higher premiums for Medicare Part B and D. The income that is used for the IRMAA calculation is a person’s MAGI from their tax return two years prior, in this case 2023. Most people do not pay any premium for Medicare Part A, but even if they do, there is no income-related surcharge, so Medicare Part A premiums are not affected by income. How much IRMAA affects Part B premiums depends on the household’s income. In 2025, Medicare Part B’s premium is $185.00. IRMAA can add up to $443.90 a month to the Part B premium. In 2025, IRMAA can increase Part D’s premium by as much as $85.80.

A named beneficiary whose rights to life insurance policy proceeds are vested and whose rights cannot be canceled by the policy owner unless the beneficiary consents.

Issued stock is the stock that has been sold to the public. The corporate charter lists authorized stock, which is the maximum number of shares that the issuer may sell.

The issuer is a corporation, municipality, or the U.S. government that offers or proposes to offer its securities for sale.