A formal written document issued by companies that are offering securities or mutual fund shares for sale. The document is filed with the SEC. The prospectus describes the details of the investment offering and the offering’s prospects so that investors can make informed decisions.

Profit-sharing plan

A savings plan where employees receive a portion of company’s profits. The company determines the amount that is contributed to the plan each year, depending on the company’s performance.


The process of reviewing a will to ensure that it is valid, as well as the general administration of the terms of the will. An executor (or an administrator if an executor is not named in the will) will manage the process of collecting assets, paying any liabilities and transferring assets to the beneficiaries.


A regular payment made by the policyholder of an insurance policy to the insurer in return for coverage.

Power of attorney

A legal document that gives one person the authority to act on the behalf of another. The authority can be broad or limited to certain activities, depending on the terms of the agreement.

Policy loan

A loan made by an insurance company to the policyholder where the cash value of the life insurance policy serves as collateral. A policyholder can use the loan for nearly any purpose.


An insurance contract that sets out the term, coverage, premiums and deductibles.

Paper gain (loss)

The unrealized capital gain (or loss) of an asset held in a portfolio. The paper gain (loss) is determined by comparing the market price of the security to the original purchase price, allowing you to see how much money you would make (or lose) were you to sell the asset.