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Glossary of Financial Terms

The definitions of financial terms are not always intuitive. To assist you in deciphering the content that you see on the web and elsewhere, the Certified Financial Planners at Morris Financial Concepts have put together a glossary page of financial terms, separated by category. 

Browse the categories below and contact us for more information.

General Principles

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Income Tax

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Affordable Care Act (ACA)

Act that made insurance coverage mandatory and standardized healthcare plan offerings.


The individual who facilitates the buying and selling of securities on behalf of the customer.


Anything of value that you own and that increases your net worth. Assets include but are not limited to cash, property, and securities.


The entity (person, trust, estate) designated to receive the proceeds from an asset, account, and/or an insurance policy at the holder’s death.


Also referred to as a fixed income security. A bond is a debt certificate or IOU issued by a corporation or unit of government. In exchange for lending their funds to the bond issuer, lenders are promised interest payments and the return of their initial investment at a specified future date.


Completes both client transactions and often acts as the other side of the trade by selling from their own inventory of shares/funds.


The court-appointed entity that makes financial or personal decisions for a property or person

Disability income insurance

Type of insurance that replaces lost earnings when someone is unable to work due to accident or illness. This insurance typically only covers people until full retirement age.

Emergency fund

A sum of money set aside in a readily accessible savings account for unanticipated events such as unemployment, medical bills, and car repairs. Emergency fund amount guidelines vary, but a general rule of thumb is to have enough to cover at least three months of basic living expenses.


All of a person’s assets, including real estate, personal property, and securities.

Estate planning

The process of organizing your assets for use during your lifetime and distribution after death in accordance with your values, goals, and beliefs.

Fiduciary standard

Investment advisors and Financial Planners are held to the fiduciary standard are obligated to put their client’s interests above their own.

Financial planner

An individual who helps people look at their financial picture and help them make a plan as to the best way to proceed with their resources. This person is usually paid an hourly fee/flat fee for financial advice, may not necessarily trade in the investor’s portfolio


The Financial Industry Regulatory Authority. FINRA is a nonprofit government agency that oversees brokers to help ensure that they are operating fairly.


The person who set up and funded a trust with property and creates terms around its use that the trustee must follow in the best interest of the beneficiaries.

Group coverage

Type of insurance provided by employers. It is generally cheaper than if employees were to buy insurance individually.

Health savings account (HSA)

Allows individuals to pay for current health expenses and save for future qualified medical and retiree health expenses tax-free.

Homeowners insurance

A form of insurance that protects your home, its contents, people who are injured at your home, and provides liability protection. The main Homeowners Policy provides fire protection. You can get separate or combined policies to also protect against Wind & Hail and Flood Policies are sold separately.

Incapacity planning

Planning for what happens to your assets and to you if/when you are no longer able to express your wishes. Incapacity planning tools may include a living will, DNR, and health care power of attorney.

Individual coverage

Insurance coverage that is acquired on a personal basis and is not provided by an employer. It tends to be more expensive than group coverage.

Investment advisors

Manage client investments in exchange for a fee, generally in the form of a small annual percentage of the client’s account. Investment advisors are not allowed to share in profits as compensation.


Also known as debts. Money owed by an individual or a business that decreases net worth.

Life insurance

A contract with a life insurance company where a policyholder pays a premium in exchange for an amount paid to his or her beneficiaries in the event of death. Life insurance is not needed by everyone but often should be purchased by those who have financial dependents (e.g., children).

Living will

A legal document to direct life-sustaining procedures.

Long-term care insurance

Type of insurance that covers the cost of support services (e.g., home health care and nursing home care) when someone is unable to perform basic activities of daily living such as bathing, eating, and dressing for extended periods of time. Typically for those in retirement age. Sources of coverage include Medicare, Medicaid, and individual policies.

Net income

Also known as take-home income. The amount of money that a worker receives in a paycheck after items such as income taxes, Social Security (FICA) tax, retirement plan savings, union dues, and other items have been deducted.

Net worth

A snapshot of your financial situation calculated by subtracting your liabilities (debts) from your assets. Both assets and liabilities are assessed at the current fair market value.


The combined holding of stocks, bonds, cash and cash equivalents, and any other assets owned by an individual or household.

Powers of attorney

A document that appoints an entity to manage your estate when you are unable to do so.


The court-supervised process of validating a will, paying debts of the deceased, and distributing the proceeds to named beneficiaries (heirs).


The US Securities and Exchange Commission is an independent federal agency that protects investors


A term used to refer to stocks and bonds


Also known as equity. A type of investment (security) that represents a unit of ownership in a corporation. This ownership is represented by shares of stock, which are a claim on the corporation’s assets and earnings.


An individual who buys and sells securities on behalf of a client. Generally stock brokers get paid through a commission or mark-up on trades they execute.

Suitability standard

Investment advisors that are held to the suitability standard are only required to make suggestions that align with the client’s best interests. Rules concerning conflict of interest disclosure are not as stringent as they are with the fiduciary standard.

Taxable income

The amount of income that a taxpayer looks up in a tax table to determine the tax due after subtracting adjustments, deductions, and exemptions from gross income.

Term life

Temporary insurance that builds no cash value and must be renewed for a higher premium at the end of the term.


A legal instrument that grants control of specified assets to a person or financial institution (the trustee). Trusts contain guidance and instructions as to how the trustee must treat the property inside the trust. Trusts can be revocable or irrevocable and can manage property while the grantor is alive or following the grantor’s death (a testamentary trust).


A person or financial institution that manages the property of others. In the context of a trust, a trustee is the legal representative of the trust. A trustee must act as a fiduciary in regards to the trust’s beneficiaries

Umbrella liability insurance

Excess liability insurance that supplements the liability limits of a homeowner's or renter's policy and automobile insurance policy.

Universal life

Form of permanent insurance that offers flexibility in death benefit and premium payments.


Life insurance that is tied to investments. The death benefit and cash value fluctuate according to fluctuations of the separate account

Variable universal life insurance (VUL)

Flexible premium insurance with cash value and death benefit tied to the performance of the separate account.

Whole life

Most common form of permanent insurance with a guaranteed death benefit and minimum guaranteed cash value.


A legal document that states what people want done with their property after they die (e.g., charitable donations, distributions to their heirs) and who they want to manage their financial affairs, settle their estate, and serve as guardian for minor children.