Terms & Definitions - C
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Callable: Preferred shares or bonds that give the issuing corporation an option to repurchase, or "call" those securities at a stated price. These are also known as redeemable securities.
Canada Savings Bonds (CSBs): Savings certificates issued by the Government of Canada for purchase by individual Canadian citizens. The interest rate is set each November.
Canadian Council of Insurance Regulators (CCIR) www.ccir-ccrra.org/CCIR/ : The collective body formed by the provincial Superintendents of Insurance. It is an inter-jurisdictional association of regulators of insurance. Its mandate is to facilitate and promote an effective regulatory system in Canada to serve the public interest. CCIR works cooperatively with other financial services regulators to enhance consumer protection and to develop and harmonize insurance policy and regulation across jurisdictions.
Canadian Institute for Health Information (CIHI): www.cihi.ca The CIHI was specifically created by the federal/provincial/territorial governments to be a central repository for administrative health data. CIHI is a good source for statistical information about the Canadian health system and the delivery of health care.
Canadian Life and Health Insurance Association (CLHIA): www.clhia.com CLHIA was established in 1894. It’s a voluntary, non-profit industry association of life and health insurance companies operating in Canada. The association’s overall mission is to serve its members in areas of common interest, need and concerns. The CLHIA publishes guidelines concerning various aspects of insurance matters known as CLHIA Guidelines. It also represents the industry at various levels of the government.
CLHIA Guidelines: The CLHIA Guidelines replace the former Guidelines of the Superintendents of Insurance. They maintain the spirit of consumer protection and fair practices inherent in the former Superintendents’ Guidelines. It is a series of guidelines developed by the CLHIA regarding various insurance matters and it provides a minimum standard for group insurance practices. All insurers are expected to abide by these guidelines as a condition of their membership to the association. These guidelines apply to life insurance, accidental death and dismemberment insurance, disability insurance, accident and sickness insurance, health and dental insurance. They do not apply to annuities, blanket insurance, creditor group insurance, family insurance and personal accident and sickness insurance issued to the client base of a credit card issuer.
Canadian Life and Health Insurance Compensation Corporation (CompCorp): On December 1, 2005 the name was changed from CompCorp to Assuris. See Assuris.
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 gains: Profit realized on the sale of capital assets, such as stocks or property. Only 75 percent is included in your income for tax purposes. The other 25 percent is, in effect, tax free.
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.
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 of cash a person may obtain by voluntarily surrendering a life insurance policy.
Cashable annuity: Most annuity decisions are irrevocable, but the law has allowed cashable annuities since 1986. Not many companies offer this option, but most will at least consider paying an annuitant the "commuted value" of a term-certain annuity because it can be easily calculated at any time.
CDIC: The Canada Deposit Insurance Corporation, a Crown Agency that provides insurance to banks and to most trust companies to protect individual depositors against losses of up to $60,000 on specific deposit investments.
Certificate: A document providing evidence of ownership of a security such as a stock or bond.
Certificate of Insurance: This is a document the insurer must provide to each employee covered under a group insurance plan. It includes the plan description and outlines the principal benefits and conditions under the master group insurance contract.
Claims: Paid - The amount of actual cheques issued during a specific period of time. Incurred - The sum of paid claims plus the change in the Incurred But Not Reported (IBNR) claims reserve.
Claims Fluctuation Reserve (CFR): This is a reserve established by the insurer when a group is underwritten on a retention accounting basis. The reserve is funded through emerging surplus until the ultimate level is reached. The ultimate level is dependent upon the size of the group and plan design and usually ranges between 10% and 20% of the annual premium. The purpose of the reserve is to absorb any potential significant increase in paid claims over a period of time. If a deficit is generated in any given year the loss is first recovered through the CFR. Any remaining deficit would be carried-forward and recovered through future year’s surplus. Also referred to as a Rate Stabilization Fund.
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 arrangement by which both the insurer and the insured share, in a specific ratio, the covered expenses under a policy. For example, the insurer may reimburse the insured for 80 percent of covered expenses with the insured paying the remaining 20 percent. Also referred to as Co-pay.
Commercial paper: A negotiable corporate promissory note with a term of a few days to a year. It is generally not secured by company assets.
Common shares: Also known as common stocks or equities, they represent a portion of ownership in a corporation. If the corporation is public, the shares can be bought or sold on a stock exchange.
Commutation payment: A fixed or single lump-sum payment from an annuity equal to the current value (the "commuted value") of all or part of your future annuity payments.
Commuted value: The current value, typically of a worker’s pension. It is normally calculated in order to provide employees with a one-time payout if they are leaving a plan before retirement age. It is the estimated amount of money that would have to be invested today to provide a future benefit equal to the pension a worker has earned to date.
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.
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.
Cost-of-Living Adjustment (COLA): The provision usually applies to Long Term Disability (LTD) benefits whereby the monthly benefit is increased annually (January 1st) by the lesser of CPI or the maximum percentage increase indicated in the contract.
Cost-Plus: A special arrangement whereby the policyholder pays to the insurer enough funds to reimburse an employee for certain medical or dental costs plus a margin to cover the insurer’s administrative costs. The cost-plus arrangement is usually used for expenses which are either not covered under the insured plan or are in excess of the amount allowable under the insured plan.
Consumer Price Index (CPI): www.statcan.ca/ - CPI is the measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. Changes in the CPI are used to assess price changes associated with the cost of living.
Coupon rate: The annual interest rate of a bond.
Credibility: The size of the group and/or the length of time it has been insured with the carrier will determine the degree of weighting which is given to the group’s own claims experience. This is referred to as the degree of credibility. The theory stems from the fact that the more people insured, and the longer they are insured the more predicable, or credible, their claims experience becomes. The higher the degree of credibility, the greater reliance the carrier places on the group’s own claims experience to establish rates. The lower the degree of credibility, the more reliance the carrier will have on their manual rates. The degree of credibility is usually expressed as a percentage.
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.
Custodian: A financial institution, usually a bank or trust company, that holds a mutual fund's securities and cash in safekeeping.
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