Flashcards

A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.

Freeriding is the buying and selling of securities, without fully paying for them. Freeriding is prohibited under Federal Reserve Board Regulation T.

A front-end load is a sales charge that is charged when mutual fund shares are purchased. Class A shares have a front-end load. The front-end load is included in the public offering price (ask).

Front running occurs when a broker-dealer or investment adviser places a trade for their own account ahead of a trade for a customer. Front running is a prohibited practice.

A frozen account occurs when an investor engages in freeriding. When an account is frozen under Regulation T subsequent transactions must be paid in cash in advance for the following 90 days.

A general obligation muni bond is backed by taxes. GO bonds are sometimes referred to as full faith and credit bonds.

A full power of attorney is a written authorization for someone other than the account owner to make deposits and withdrawals and to execute trades in the account. Also referred to as full trading authorization.

Fundamental analysis involves the study of an issuer’s financial statements, the overall economy, and the management of the company in an attempt to determine the value of the stock.

Funding is a requirement found under ERISA regulations requiring the employer to keep retirement plan assets segregated from the other assets that are owned by the business.

Specific life insurance policies or annuities having a low initial face amount (often $20,000 or less) that are designated by the purchaser for the payment of funeral and burial expenses.

Futures are contracts between two parties for the sale or purchase of a commodity. Futures are standardized and traded on an exchange.

Generally Accepted Accounting Principles (GAAP) are the accounting standards that public accountants must use in the United States.

The general account of the insurance company is conservatively invested and promises the investor a minimum guaranteed rate of return. Fixed annuities and traditional whole life utilize the insurer’s general account. The insurer has the risk in the general account.

A general obligation bond is a municipal bond backed by the general taxing power of the issuer. Payment of the obligation may be backed by a specific tax or just the issuer’s general tax fund. General obligation bonds are sometimes referred to as full faith and credit bonds.

In a partnership, there must be one or more general partners. The general partners have unlimited liability and are responsible for the management of the partnership. General partners are active and must maintain a minimum of 1% ownership in the partnership.

In a general partnership there are two or more general partners who have joint and several liability, fully responsible for the actions of the other general partner(s). General partnerships are flow-through tax entities with the partners receiving form K-1 annually with their percentage of the profits or losses.

Geopolitical risk is the risk associated with tensions or actions between actors (state and non-state) that affect the normal and peaceful course of international relations. Geopolitical risk tends to rise when the geographic and political factors underpinning country relations shift.

Good delivery is when the securities are delivered in such a form that the ownership is clearly assigned from the seller to the buyer and can be easily transferred. Good delivery includes proper assignment, good condition of the securities, the proper number of units, at the proper time, not in the name of a deceased person, and with a permanent certificate, if available.

When an order is GTC it is left on the order book until it is either executed or canceled.

Goodwill is an accounting entry made to intangible assets representing the reputation of the business.

Ginnie Mae is a wholly-owned government corporation. Its mission is to expand funding for mortgages that are insured or guaranteed by other federal agencies. Ginni Mae bundles these mortgages into securities, providing a full-faith guarantee. Ginnie Mae bonds are fully guaranteed by the United States government. Ginnie Mae instruments represent an undivided interest in a pool of FHA, VA, or FMHA mortgages that are fully taxable at all levels of government.

The time during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the grace period or the insured dies.

The Gramm-Leach-Bliley Act seeks to protect consumer financial privacy. Its provisions limit when a financial institution may disclose a consumer’s nonpublic personal information to nonaffiliated third parties.

GANs are issued in anticipation of receiving a grant from the federal government or one of its agencies. The municipal will use the grant funds when received to pay off the GANs.

The grantor is the person who establishes a trust. The grantor is also called the donor or settlor.

Gross domestic product is the value of goods and services produced within a country’s border during a given period of time (typically a year). GDP includes consumption, government purchases, investments, and the balance of trade (exports minus imports).

Gross income is income from all sources. For a business, gross income may be referred to as gross sales or gross revenue.

Gross margin is a business’s income (sales/revenue) minus the cost of goods sold. Gross margin is also called gross profit. To get gross margin as a percentage take gross margin divided by gross revenue.

Gross revenue is the total revenue of a business, it does not include investment income.

A health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Life insurance provided for employees of a common employer or members of an association provided it is not formed for the purposes of buying insurance. The cost is usually lower than for individual policies, but choices among plans and benefit amounts may be limited. Under a group plan, the insurer issues a single master policy to the employer or association and certificates of insurance are issued to the individual insureds. Most group programs provide coverage on a term basis, but the group plan can be used for most types of life insurance and annuity products.

A growth fund is a type of diversified common stock fund that has capital appreciation as its primary goal. It invests in companies that reinvest most of their earnings for expansion, research, or development. The term also refers to growth income funds that invest in common stocks for both current income and long-term growth of capital and income.  Growth funds usually have very low yields.

GIR stands for guaranteed insurability rider. This rider allows the insured to purchase additional amounts of insurance regardless of health, at specific dates. If an option date is missed it is lost and cannot be made up. Additional dates may be added for marriage and/or the birth of a child. When buying additional coverage under the guaranteed insurability rider the premium is based upon the insured’s attained (current) age, not the original age when they purchased the policy.

A health insurance policy that must be issued no matter the applicant’s health.

A policy that must be renewed, up to a certain age or date, so long as the premium is paid. Rates may only be changed by class.

Established at the state level to support insurers and protect consumers in the event of insurer insolvency. Guaranty Associations are funded through assessments charged to admitted insurers.

A guardian is a fiduciary who manages the assets of a minor or an incompetent person. The guardian must be of legal age and sound mind.

A hazard is something that increases the risk. Hazards may be physical, moral, or morale hazards.

A policy that will pay for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage. The term health insurance also includes all senior health products.

Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the arrangement. Health Reimbursement Arrangements are sometimes called Health Reimbursement Accounts.

A health savings account is a tax-advantaged account that an individual may fund to provide monies for future health expenses. To fund a health savings account (HSA) the person must have a high deductible health insurance plan on the first day of the last month of that tax year, December 1st. Contributions made into an HSA are tax deductible on a person’s federal return, even if the person does not itemize. The balance rolls from year to year, and the earnings are free from income taxes when used for qualified medical expenses. A person enrolled in Medicare is not eligible for an HSA.

A type of savings account that lets a person set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, a person may be able to lower their out-of-pocket health care costs. HSA funds generally may not be used to pay premiums. A person may contribute to an HSA only if they have an HSA-eligible plan (sometimes called a High Deductible Health Plan (HDHP)) — generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible. An HSA may earn interest or other earnings, which are not taxable. Banks, credit unions, and other financial institutions offer HSAs.

A hedge fund is a type of pooled investment that engages in aggressive investment strategies, such as shorting stock. Hedge funds are suitable for aggressive investors that meet financial requirements.

Hedging is a strategy used to offset investment risk. Options can be used to hedge both long and short stock positions. Limits and stops can also be used to hedge investment risk.

A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but the insured will pay more health care costs themself before the insurance company starts to pay its share (also called the deductible). A high deductible plan can be combined with a health savings account (HSA), for a person to pay for certain medical expenses with money set aside tax-free in an HAS. HDHPs are commonly called an HSA-eligible plan.

The Health Insurance Portability and Accountability Act (HIPAA) lays out three rules for protecting patient health information, namely: the privacy rule, the security rule, and the breach notification rule.

An individual’s status once they have had 18 months of continuous creditable health coverage. To be HIPAA (Health Insurance Portability and Accountability Act) eligible, at least the last day of the creditable coverage must have been under a group health plan; the individual also must have used up any COBRA or state continuation coverage; they must not be eligible for Medicare or Medicaid; they must not have other health insurance; and they must apply for individual health insurance within 63 days of losing the prior creditable coverage. When an individual is buying individual health insurance, HIPAA eligibility gives a person greater protections than they would otherwise have under state law.

The holding period is the time period that an investment is owned.

Skilled or unskilled care provided in an individual’s home, typically on a part-time basis.

The home state of a broker-dealer or investment adviser is the state in which they maintain their principal place of business. The strictest rules that may be imposed on an investment adviser that is registered in more than one state are the rules of the firm’s home state.