Personal Finance Vocabulary (Chapter 1)

• Beneficiary- the person who will receive the insurance money.


• Insurer- The company providing the insurance.


• Policy- a written contract or certificate of insurance.


• Premium- how much you pay for an insurance policy (monthly, semi-annually, or annually).


• Amortization period- the length of time in years that you will need to pay off a mortgage.


• Equity- The portion of the valuebof your property that you own.


• Interest- The cost of borrowing money.


• Principal- the amount you initially borrowed.


• Unpaid balance- the portion of the value of your property owed to the financial instiution.


• Closed mortage- a mortgage which does not allow payments on the principal.


• Fixed-rate mortgage- a mortgage with the interest rate locked in for specified period of time.


• Open mortgage- a mortgage that allows additional payments on the principal.


• Variable-rate mortgage- a mortgage where the interest rate may change from month to month.


• Gross debt service ratio- a formula used by most financial institutions to determine whether or not you can afford the property you have selected.


• Market value- the age and deterioration of the items reflected in the appraisal


• Replacement value- with reference to insurance policies, it means stolen or damaged items are replaced with new items.


• Tenant's package policy- insurance policy that protects renters from loss of contents of their rental units or personal belongings.


• Metro- with referance to homeowner's insurance, this means a location within city limits.


• Protected- with referance to homeowner's insurance, this means a location within 300 metres of a fire hydrant.


• Semi-protected- with referance to homeowner's insurance, this means a location within 8km of a firehall.


• Unprotected- with referance to homeowner's insurance, this means a location more than 8km from a fiehall.