An exemption that allows a debtor to apply a certain dollar amount to any type of property to make it -- or more of it -- exempt.
Life insurance coverage that runs for the insured’s natural life. Whole life insurance provides both term life insurance and a savings plan (i.e., accumulation of “cash value” or “surrender value”) that allows for the insured, at any time after an initial period but before the insured’s death, to surrender the policy for that value or sometimes to borrow against it without surrendering the policy. Also termed ordinary life insurance; straight life insurance; permanent insurance.
Stock that is sold with a face value that is much greater then its actual (market) value. While watered stock may appear to be a good value, due to corporation laws, the stock holder may be exposed to liability up to the face value (rather then having their liability limited to the price paid).
The selling and repurchasing of an asset, usually stocks or bonds, within a very short time frame. People used to do this to realize a loss for tax purposes, but the IRS caught on and made such losses nondeductible for most taxpayers.
An annuity — periodic payments to a recipient — that varies in amount based on the performance of the underlying investments.
Extending credit at an exorbitant or illegally high interest rate. States set their own maximum interest rates, and courts will not enforce payment of interest on a loan if the rate is usurious. Most credit card issuers are based in states with no usury laws or caps on credit card interest rates.
Exceeding the maximum interest rate on a debt that is allowed by law.
A form of life insurance that offers flexible premiums, adjustable death benefits, and the ability of the insured to make partial withdrawals from the cash value. Universal life insurance policies generate cash value as the insured’s premium payments are invested into the insurer’s investment fund. The insurer pays the interest at a rate that is competitive with other investments, such as treasury bills, and the insured may use that interest to pay for his or her life insurance premiums.