Security: Evidence of direct ownership (stock), creditorship (bond) or indirect ownership (rights, warrants, and options).

Separate Account: An account that houses all the variable options in a variable annuity (sub-account). The Separate Account is segregated from the general funds of the insurance company, and is maintained for the purpose of making investments for the contract holder.

Separate Account Charges: Charges set by the fund company that compensate the company for assuring certain risks such as guaranteeing payments during the payout period; paying interest-guaranteed death benefits; and issuing, administrating and marketing the product.

Simplified Employee Pension (SEP): Pension plan in which the employer contributes to an Individual Retirement Account for each of its employees. The employee is vested immediately and pays no taxes on the employer's contributions. The contributions and all earnings on funds in the plan are tax-deferred until withdrawn.

Single-Premium Deferred Annuity (SPDA): Tax-deferred annuity that is created to accept one lump-sum premium. The value of the sum appreciates during the years prior to distribution. Taxes are deferred on the interest and earnings until withdrawal or when annuity payouts begin, usually at retirement.

Small capitalization: In general, a public company with a total stock value (that is, market capitalization) of less than $1 billion. Small companies may have higher earnings growth rates than large companies because they may operate in new markets.

Speculative risk: Exposure that offers extreme opportunity for both gain and loss.

Speculative stock: Common or preferred stock that offers extreme degrees of unrealized appreciated valuation and depreciated valuation. Typically, speculative stocks are issued by start-up, emergent-technology firms, or firms experiencing a decline in their financial condition.

Split Life Insurance: A combination of installment annuity and term insurance under which the amount of annuity consideration (premium) paid determines the amount of one-year renewable term insurance an annuitant can purchase and place on the life of anyone designated.

Standard deviation: A measure of the range of variation from an average of a group of measurements. Sixty-eight percent of all measurements fall within one standard deviation of the average. Ninety-five percent of all measurements fall within two standard deviations of the average.

Stock: Ownership shares of a corporation.

Stock call and put options: Contracts to buy or sell securities within a specific period of time. A call option is an option to purchase a specified number of shares of stock at or before some future date for a stated "striking" price. A put option is an option to sell a specified number of shares of stock at or before a specified future date for a stated striking price.

Stock dividend: A dividend paid in securities rather than cash: either additional shares of the issuing company or shares of another company (usually a subsidiary) held by the issuing company. These shares are not taxable until they are sold.

Strategic asset allocation: Historical data is used in an attempt to determine how an asset class has performed and is likely to perform during long time periods. The goal is not to "beat" the market, but to establish a long-term investment strategy using a core mix of asset classes.

Striking price: The amount at which a call or put option can be exercised, normally a price set close to the market price of the stock at the time the option is issued.

Surrender Charge: A fee imposed for terminating an annuity contract prior to its maturity.

Survivor: The beneficiary of an annuity contract, i.e., the annuitant's survivor.

Systematic risk: Also called market risk, or non-diversifiable risk. It is risk attributable to factors affecting all investments.

Tactical asset allocation: Uses periodic assumptions about asset classes and the economy in general. The fund manager tries to improve portfolio performance by making "mid-course" changes in the long-term strategy based on near-term expectations.

Target rate of return: This return is the starting point for the optimization program to search for more efficient portfolios and may be based on the client's required return to meet an investment goal.

Tax-deferred: Description of an investment whose earnings are not taxed until they are distributed to an investor. For example, funds placed in an individual retirement account (IRA) or employer-sponsored plan are not taxed until withdrawal or when annuity payments begin.

Tax-Deferred Annuity (TDA): A tax-favored plan that permits an employee of a qualifying organization to enter into an agreement with his or her employer to have a portion of his or her earnings set aside for retirement. If pre-tax contributions, income tax is deferred on the contributions, provided the amounts are used to purchase an annuity contract or regulated investment company's shares, as well as the interest and earnings. Contribution amounts are limited by tax law and taxes are due on all contributions and interest and earnings upon withdrawal or when annuity payments begin, usually at retirement. 

Tax-exempt securities: Bonds offering income payments that are not subject to taxation. These securities are issued by various state and local governments and are often called "municipals" or "munis."

Tax-Qualified Retirement Plan: A retirement plan that is afforded special tax treatment by the IRS. Contributions are generally made on a pretax basis and earnings can accumulate tax deferred.

Tax-Sheltered Annuity (TSA): See Tax Deferred Annuity.

Taxable estate: Gross estate reduced by allowable deductions; the amount subject to the estate tax.

Tax Deferral: A description of an investment whose earnings are not taxed until they are distributed to an investor. For example, funds placed in an IRA or employer-sponsored plan are not taxed until withdrawal or when annuity payments begin.

Tenancy by the entirety: A form of property ownership similar to joint tenancy, but which carries no rights of survivorship, no exclusions from the probate process, and no protection from lawsuits and creditors.

Term life insurance: Insurance that covers the insured for a specified period such as one, five or 10 years, often with an option to renew. Premiums are paid throughout this time, but generally become higher during the course of the term, as the policyholder grows older.

Testamentary trust: A type of trust created in the decedent's will. It technically comes into existence at the time of death.

Thrift plan: A defined contribution plan that requires employee contributions. These contributions are generally matched by employer contributions. Earnings on contributions accumulate on a tax-deferred basis until withdrawal or when annuity payments begin, usually at retirement.

Time horizon: The amount of time remaining until the investor will need the money.

Ticker symbols: A system of letters used to uniquely identify a stock or mutual fund. Symbols with up to three letters are used for stocks that are listed and traded on an exchange. Symbols with four letters are used for NASDAQ stocks. Symbols with five letters are used for NASDAQ stocks other than single issues of common stock. Symbols with five letters ending in X are used for mutual funds.

Total return: The rate of return on an investment, including all dividends and interest, plus or minus any change in the value of the asset. Also, an investment strategy that seeks a combination of growth and income.

Trading: See Ticker Symbol.

Trading symbol: See Ticker Symbol.

Transfer: A nontaxable movement of funds between like plans that does not result in any reporting for federal income tax purposes.

Transfer of Value (TOV): A movement of money between investment options within a retirement plan. A TOV only affects money already in the account. It does not affect future payroll deductions. 

Treasuries: General term for all negotiable securities of the U.S. government. Treasury bills (T-bills) are short-term obligations (three-month and six-month maturities) that do not pay interest, but are sold at a discount from their face value. Treasury bonds are issued in $1,000 units with maturities of 10 years or longer and are traded on the market like other bonds. Treasury notes are medium-term obligations (one to 10 years) sold by subscription.

Trust: A right of property, real or personal, held by one person for the benefit of another.

Umbrella policy: An insurance policy that provides excess liability coverage for both homeowners and automobile insurance, as well as coverage in some areas not provided for in either of these policies.

Underlying Investments: The stocks, bonds, cash equivalents or other investments purchased with the money invested in an annuity. 

Unit investment trust: Investment vehicle that purchases a fixed portfolio of income-producing securities, such as corporate, municipal or government bonds, mortgage-backed securities, or preferred stock. Unit holders receive an undivided interest in both the principal and the income portion of the portfolio in proportion to the amount of capital they invest. The portfolio of securities remains fixed until all the securities mature and unit holders have recovered their principal.

Universal life insurance: A hybrid insurance product that combines the protection of a conventional term insurance policy with cash values and investment yields. Unlike traditional whole life policies, universal life divides death protection and cash value accumulations into separate components.

Unsystematic risk: Also called non-market or diversifiable risk. It is risk attributable to factors unique to the security.

U.S. government securities: Securities issued by the U.S. government (i.e., Treasury bills, notes and bonds).