Term life that includes a conversion rider that guarantees the right to convert a term policy to a permanent whole life plan without proving insurability.
Refers to the maximum amount insurer will pay for an accident. Typically shown as maximum payment for injuries per person; maximum payment for all injuries per accident; maximum payment for property damage per accident.
Liability insurance that covers any expenses beyond coverage limits of existing insurance.
Provides coverage for policyholder if an uninsured driver is at fault for an accident.
Lasts for policyholder’s lifetime and pays out to beneficiaries upon the death of the policyholder (assuming premiums were up to date). Includes a cash savings component funded from premiums collected in excess of cost of insurance coverage. Cash savings portion will not be paid out to beneficiaries.
Guarantees a payment of death benefit for a specified period. No value other than guaranteed death benefit and does not include a savings component. Once the term lapses, policyholders must determine whether they would like to renew. Renewal triggers recalculation of the premiums.
Lasts for the policyholder’s lifetime and pays out to beneficiaries upon death of policyholder. Includes a savings component that policyholder must intentionally fund by paying more than the premium.
Projection of future cash value and death benefit for whole and universal life policies. Also measures the performance of policy against what was initially illustrated upon purchase. Allows policyholders to make adjustments as needed to ensure cash value and death benefit lasts for an appropriate time frame.
Insurance coverage that provides a set dollar amount for nursing home care, home health care, or adult day care for adults who are chronically disabled or who are 65 and older.
LTC rider that allows one spouse to begin using benefit dollars from the other spouse’s pool. The first benefit pool must be exhausted before the spouse is able to draw from the second benefit pool.
Policy feature that increases benefits periodically by a specific percentage in order to keep up with inflation.

Pensions and Annuities

Annuity payments continue to spouse after policyholder passes away. Monthly payments tend to be less than single-life annuity payments.
Annuity payments stop with policyholder’s death. Monthly payments tend to be higher than joint and survivor payments.
Annuity option that guarantees income for a specified period that can also be passed on to beneficiaries. Payments are typically higher than that of a single-life annuity.
Increase made to Social Security payments (and sometimes pensions) to keep up with the effects of inflation.
Comparison used to assess the attractiveness of an annuity payout option versus lump sum.
Lump sum distribution — one-time payment from pension for the full value.
Annuity distributions — recurring payments paid out to the retiree (and sometimes to their spouse) for life.
A surrender charge is a predetermined period of time established at an establishment and reduces the value/return of the annuity. Fee charged to policyholder upon cancellation of policy unless advance notice is given.
Amount that the insurance company pays to a policyholder once the policy is voluntarily terminated.
Type of annuity where value is tied to an underlying portfolio of investments. Possibility of higher returns, but also higher risk of portfolio value falling.
Process of converting annuity contract into a series of recurring payments. Length of payments can vary based on the annuity contract.


Compensation program that requires employees to meet certain benchmarks in order to receive unvested company stock, cash, or capped options.
Commonly seen with company retirement plans and stock bonuses. Used as an incentive to entice employees to remain with a company. When shares are vested, the employee has full ownership. If the employee leaves the company before vesting schedule is complete, he or she will forfeit the right to any unvested shares.
Roth option — Employees pay tax on contributions immediately and can withdraw funds in the future without any taxes due on earnings.
Pre-tax — Contributions are made directly from paycheck before any taxes are deducted. Withdrawals will be taxed at ordinary income tax rates in the future.
After-tax — Contributions made past the tax-deductible limit. Earnings will be taxed at the ordinary income rate.
Allows a person who exceeds the Roth contribution income limits to contribute to a Roth IRA through their traditional IRA.


Process of selling a security to capture a loss in order to offset taxes on any gains or income.
Position that has gained value since it was initially acquired and results in a realized gain if sold.
Qualified dividend income is taxed at capital gain rates, which ranges from 0-23.8%. Non-qualified income, such as interest or dividends, is taxed at ordinary income rates which ranges from 10-37%.
Tax planning strategy to change tax treatment of company stock gains in an employer-sponsored plan from ordinary income to long-term capital gains rate. This can save as much as 20% in taxes on gains.
Company stock granted to employee that vests at future date set by the employer. If employee leaves the company before shares are fully vested, or fails to meet performance benchmarks, shares are subject to forfeiture.
When RSUs vest, it is a taxable event at ordinary income rates.
Tax-advantaged account for individuals covered under high-deductible health plans. Employer or individual can make contributions each year. Contributions can be invested and are used to pay for qualified medical expenses.
Employee benefit plan in which a company allots shares of company stock to employees for meeting performance standards, attaining seniority, or as a bonus. Once stock is vested, the employee can either hold the stock, sell it on the public market, or have the company buy it back.
Gains and losses are only realized once a stock is sold. If the price of a stock fluctuates, but the investor has not executed any sell orders, the gain or loss would be considered unrealized.
We'd Like to Hear From You

Home Ownership

Deed that allows real estate to be transferred to named beneficiaries after owner’s death without going through probate. Owner can mortgage or sell the property while alive without the consent of the named beneficiaries.
Paying down a debt over a period of time. For mortgage amortization, majority of initial mortgage payments will go toward paying off interest vs. principal.
Protects a primary residence from creditors collecting unsecured debt. The exemption is applied differently in each state, and some states require homeowners to file a claim to receive it.
Allow homeowners who are 62 and older to borrow against home equity and receive funds as a lump sum, a recurring monthly payment, or a line of credit. Typically used for cash flow when equity is mostly tied up in a home.
Feature in some mortgages where borrower pays a large amount toward the principal balance of the loan. The lender then recalculates the amortization schedule based on remaining principal. Primary purpose of a recast is to reduce monthly payments.
Contributions are made directly from paycheck before any taxes are deducted. Withdrawals will be taxed at ordinary income tax rates in the future.
Contributions made past the tax-deductible limit. Earnings will be taxed at the ordinary income rate.

Estate Planning

Legal term stipulating that a beneficiary’s direct heirs receive an inheritance if the beneficiary dies before the account holder.
Legal term stipulating that all beneficiaries receive an equal share in a distribution. If one beneficiary dies first, their share will be split equally among the other living beneficiaries.
A person or organization specified by account holder that will receive the decedent’s assets if the primary beneficiary has passed or disclaims.
A person named in a will or a court of law who has the legal responsibility to care for a minor or adult who does not have the capacity for self-care. The guardian will be responsible for that individual’s affairs and is expected to prepare documentation proving fiduciary responsibility.
Acts as the owner of trust assets and must distribute assets according to the terms of the trust.
Fiduciary responsible for managing the affairs of a deceased person’s estate.
An irrevocable trust that owns a life insurance policy so the proceeds from the policy will not be taxed with the decedent’s estate.
An irrevocable trust created to provide funds for a beneficiary who is physically/mentally ill or chronically disabled without disrupting their eligibility for public assistance programs.
Trust created when the first spouse dies. When the second spouse dies, the trust passes to designated heirs.
Legal document that describes distribution of assets upon the testator’s death.
Created in a testator’s Last Will and Testament and does not take effect until testator is deceased. Allows decedent to set boundaries on how quickly their assets will be distributed to beneficiaries.


Tax mitigation strategy that involves tax planning two years at a time. Bunching strategies may include paying two years’ worth of deductible costs and charitable gifts before the end of the first calendar year in order to itemize on tax returns. The year prior and following, the standard deduction is taken.
Expenses or deductible items that reduce your adjusted gross income in order to reduce tax bill. This can used to lower the tax bracket that you file under.
Acronym for state and local taxes.
Income from all sources including wages, dividends, interest, IRA distributions, pensions, annuities, and Social Security benefits.
Earned income minus any deductions or exemptions allowed in that tax year.
Contributions made past the tax-deductible limit. Earnings will be taxed at the ordinary income rate.
The percentage of tax applied to your income for each tax bracket in which you qualify.
Represents the actual percentage of taxable income that an individual must pay in taxes.
Gain Confidence and Peace of Mind

Free Second Opinion

The team at Financial Harvest invites you to get the answers you need for sound and confident decision making in 2021. We invite you to a free, no strings attached, Second Opinion Financial Checkup.
Financial Harvest Wealth Advisors creates a safe environment in our office for visiting clients by practicing social distancing, wearing masks, and we have installed UV lights in our A/C system. Or, we'll work with you via Zoom or telephone conference. Your health, well-being, and peace of mind is our primary concern. 
Skip to content