Term
| Personal Financial Planning |
|
Definition
| the process an individual undertakes of setting financial goals and then designing comprehensive approaches for achieving those goals. The plans must deal with a person's total financial picture and must coordinate the different aspects of a person's financial affairs to seek comprehensive solutions. |
|
|
Term
|
Definition
| a plan for allocation of income among the anticipated expenditures. A budget is helpful for keeping a family's expenditures within its income. |
|
|
Term
|
Definition
| a plan for the incoming and outgoing cash of an individual or family. The statement will reflect the time when money will be received or spent, so inflows can be matched to outflows and nearly as possible. |
|
|
Term
| disability income exposure |
|
Definition
| the risk of loss of income as a result of the disability of the individual who earns the income. The serious risk is of total and permanent disability and is a risk nearly everyone faces. |
|
|
Term
|
Definition
| the losses or damage to the property of an owner |
|
|
Term
| Indirect or consequential losses |
|
Definition
| loss of income or additional expenses that result from a loss or damage to property. For example, a fire at a store is a direct loss to the owner's store, and the loss of income from shutting down the store following the fire is an indirect loss. |
|
|
Term
|
Definition
| the way assets are to be distributed to heirs after a person's death. Estate planning generally encompasses much more than writing a will and includes considerations of income tax, investment, insurance, and retirement planning. |
|
|
Term
|
Definition
| an institution that serves as a conduit for investing money of customers. For example, banks and savings institutions, life insurance companies, and investment companies are intermediaries for individual investors. |
|
|
Term
|
Definition
| investments that will hold their value during periods when general price levels drop. For example, bonds, savings accounts, and CDs are the fixed-dollar investments that will maintain their value in a deflationary period. |
|
|
Term
|
Definition
| the use of various techniques for dealing with risk by individuals. The techniques including insuring risks, avoiding risk, preventing and reducing loss, and loss retention. |
|
|
Term
|
Definition
| a device for transferring and spreading risk of loss. For a payment of premium, an insurance company will undertake the obligation of indemnifying an individual for future losses. |
|
|
Term
|
Definition
one should insure a risk where the loss can be of high severity. If the loss could substantially reduce a person's or family's net worth, it should be insured. For example, a fire could destroy a home that is more than half of the family's net worth, so the family should carry fire insurance on the home. The loss is potentially too great for the family to bear by itself. |
|
|
Term
|
Definition
provide protection for policyholders and claimants in the event of insurer insolvencies. The funds are operated by the states, and the funds collect money and then disburse payments for losses when insurance companies become insolvent. |
|
|
