early retirement age
An age specified in a pension plan
that is earlier than the plan's normal retirement age but at which a
plan participant can still receive an immediate pension benefit. The
benefit received at early retirement is usually actuarially reduced
from the amount that would have been received had retirement
occurred at the normal retirement age. See also late retirement age
and normal retirement age.
election period
A 60-day period following notification
of an insured's eligibility for COBRA continuation coverage, during
which the individual can accept or decline the coverage.
elective contributions or elective deferrals
In the
United States, contributions to an employee's Section 401(k) plan
(cash or deferred arrangement) that are made by the employer on the
employee's behalf. The contributions are made using before-tax
dollars obtained through a voluntary reduction of the employee's
salary. The contributions are tax-deferred to the employee. See also
matching contributions and nonelective contributions.
eligibility period
In contributory group insurance
plans, the period of time, usually 31 days, during which a new
employee may apply for group insurance coverage.
eligibility requirements
The conditions a person must
meet in order to be a participant in a group life insurance, group
health insurance, or retirement plan.
Employee Retirement Income Security Act of
1974 (ERISA)
A United States federal law establishing (a) the
rights of pension plan participants, (b) standards for the
investment of pension plan assets, and (c) requirements for the
disclosure of plan provisions and funding. ERISA also established
the Pension Benefit Guaranty Corporation (PBGC).
employee's cost basis
In the United States, an amount
that is subtracted from the total amount of a distribution to a
pension plan participant, in order to determine the portion of the
distribution that is subject to federal taxation. The cost basis is
the amount on which an employee has already been taxed. It includes
the amount of the nondeductible contributions made to the plan by
the participant, any cost of plan-provided life insurance that was
reported as taxable income by the participant, and other factors,
including the amount of any employer contributions previously taxed
as income to the participant.
Employees Profit Sharing Plan (EPSP)
In Canada, a type
of profit sharing plan in which the employer deposits funds into a
trust account and may deduct the deposited amount for tax purposes.
Employees are generally taxed on contributions on their behalf in
the year the contributions are made and on interest earnings when
they are earned, but are not taxed when they leave the plan and
receive the benefits. There are few limitations on the size of the
contributions employers may make or on the ways that plan funds may
be invested.
employee stock ownership plan
(ESOP)
Generally, any qualified employee-benefit plan which
invests some or all plan assets in employer stock. In the United
States, ERISA further defines an ESOP as either a qualified stock
bonus plan or a combination qualified stock bonus plan and defined
contribution pension plan designed to invest primarily in employer
securities. The employer's contributions are tax deductible for the
employer and tax deferred for the employee.
endorsement method
A method of changing the beneficiary
of a life insurance policy. The change may be made in one of two
ways: (a) The policyowner returns the policy to the insurance
company, and the insurer attaches the endorsement with the name of
the new beneficiary to the policy, or (b) the policyowner does not
send the policy to the insurer but only requests the change by
letter or telephone, and the insurer sends an endorsement with the
change to the policyowner. Contrast with recording method.
endowment insurance
A type of life insurance that
provides a benefit (a) if death occurs during a specified number of
years or (b) if, at the end of the specified number of years, the
insured is alive.
enhancement type policy
A life insurance policy in
which part of each dividend provides paid-up additions, while the
other part provides one-year term insurance to produce a
predetermined total death benefit.
enrolled actuary
In the United States, a pension
actuary who meets the standards of and is enrolled by the federal
agency known as the Joint Board for the Enrollment of Actuaries.
entire contract provision
A life insurance policy
provision which states that the policy itself, along with a copy of
the application for insurance, if attached, constitutes the entire
agreement between the insurer and the policyowner.
equitable assignment
An assignment that does not meet
the requirements of a legal assignment but which will be enforced in
an equitable action if fairness so requires.
equity-based insurance product
A life insurance or
annuity product in which the cash value and benefit level fluctuate
according to the performance of a portfolio of equity investments.
The owners of this type of insurance product accept the risk of
sharing in the insurer's investment gains and losses. Equity
investments are investments by virtue of which investors gain part
ownership in a corporation. The primary type of equity investment is
corporate stock. See also variable annuity, variable life insurance,
and variable universal life insurance.
E: Part
Two
