Financial Terms Glossary
Common financial terms explained in plain language. Find the definition you need and build your confidence around key concepts.
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- 1035 Exchange
- A method of exchanging insurance-related assets without triggering a taxable event. Cash-value life insurance policies and annuity contracts are two products that may qualify for a 1035 exchange.
- 401(k) Plan
- A qualified retirement plan available to eligible employees of companies. 401(k) plans allow eligible employees to defer taxation on a specific percentage of their income that is to be put toward retirement savings; taxes on this deferred income and on any earnings the account generates are deferred until the funds are withdrawn—normally in retirement.
- 403(b) Plan
- A 403(b) plan is similar to a 401(k). A 403(b) is a qualified retirement plan available to employees of non-profit and government organizations.
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- Adjustable-Rate Mortgage (ARM)
- A mortgage with an interest rate that is adjusted periodically based on an index. Adjustable-rate mortgages generally have lower initial interest rates than fixed-rate mortgages.
- Adjusted Gross Income (AGI)
- One figure used in the calculation of income tax liability. AGI is determined by subtracting allowable adjustments from gross income.
- Annuity
- A contract with an insurance company that guarantees current or future payments in exchange for a premium or series of premiums. The interest earned on an annuity contract is not taxable until the funds are paid out or withdrawn.
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