Money words, in plain English

24 terms

BeneficiaryInsurance

The person or entity you name to receive an insurance payout. A named beneficiary receives money directly, bypassing the estate and probate.

Capital Dividend Account (CDA)Corporate

A notional account inside a corporation that tracks amounts — such as the tax-free portion of a life insurance payout — that can be paid to shareholders tax-free.

Compound GrowthInvesting

Growth earned on both your original money and on the growth it has already produced. Time matters more than rate of return.

Critical Illness InsuranceInsurance

Coverage that pays a tax-free lump sum after diagnosis of a listed condition and a survival period, regardless of whether you can still work.

Disability Tax Credit (DTC)Government

A federal non-refundable tax credit for people with a severe and prolonged impairment. Approval is the gateway to the RDSP.

Elimination PeriodInsurance

The waiting time between a disability starting and the first benefit payment. Longer waits mean lower premiums.

Emergency FundFoundations

Cash set aside for interruptions — job loss, repairs, health. Usually three to six months of fixed costs.

FHSAAccounts

First Home Savings Account. Contributions are deductible like an RRSP and qualifying withdrawals are tax-free like a TFSA.

Fixed CostsFoundations

Expenses that continue whether or not you are earning: housing, insurance, utilities, minimum debt payments.

Group BenefitsInsurance

Coverage provided through an employer. Usually cheaper but not portable, and disability benefits are often taxable.

Key Person InsuranceBusiness

A corporate-owned policy that pays the business if an owner or essential employee dies or becomes disabled.

Marginal Tax RateTax

The rate applied to your next dollar of income — the number that matters when deciding between accounts.

Own OccupationInsurance

A disability definition that pays if you cannot perform your specific job, even if you could work elsewhere. The stronger definition.

Passive IncomeCorporate

Investment income earned inside a corporation. Above $50,000 a year it begins reducing the small business deduction.

ProbateEstate

The court process that validates a will. It costs time and fees, which named beneficiaries and joint ownership can reduce.

RDSPGovernment

Registered Disability Savings Plan. Attracts matching grants of up to 300% and bonds for lower-income families.

RESPAccounts

Registered Education Savings Plan. The federal grant matches 20% of contributions, up to $500 a year per child.

Retained EarningsCorporate

After-tax profit kept in the company rather than paid out. Useful, but it eventually has to come out and be taxed.

RRSPAccounts

Registered Retirement Savings Plan. Contributions are deductible now; withdrawals are fully taxable later.

Structural Wealth Score™SmartHub

SmartHub Academy's 12-question snapshot across five pillars: Foundation, Protection, Growth, Structure and Transfer.

Term InsuranceInsurance

Life coverage for a set period — often 10, 20 or 30 years. Lowest cost per dollar of coverage.

TFSAAccounts

Tax-Free Savings Account. No deduction going in, no tax coming out, and withdrawn room comes back the following year.

UnderwritingInsurance

The insurer's review of your health, history and finances to decide whether and at what price to offer coverage.

WillEstate

The legal document that directs how your estate is distributed and who is responsible for carrying it out.