Definitions

Canadian financial glossary

27 terms Canadians encounter when planning insurance, retirement, investments and estates, each defined in one or two sentences and then explained in Canadian context. Last reviewed August 25, 2026.

Registered plans

RRSP (Registered Retirement Savings Plan): A Registered Retirement Savings Plan is a Canadian account that allows contributions to be deducted from taxable income, with investments growing tax-deferred until they are withdrawn and taxed as income.
TFSA (Tax-Free Savings Account): A Tax-Free Savings Account is a Canadian registered account where contributions are made with after-tax dollars and investment growth and withdrawals are not taxed.
RRIF (Registered Retirement Income Fund): A Registered Retirement Income Fund is the income-paying continuation of an RRSP, requiring a minimum taxable withdrawal each year based on age and account value.
RESP (Registered Education Savings Plan): A Registered Education Savings Plan is a Canadian account for saving toward a beneficiary's post-secondary education, eligible for federal grants, with growth taxed to the student on withdrawal.

Government benefits

CESG (Canada Education Savings Grant): The Canada Education Savings Grant is a federal payment deposited into an RESP that matches a percentage of annual contributions, up to annual and lifetime maximums per beneficiary.
CPP (Canada Pension Plan): The Canada Pension Plan is a contributory federal program that pays a monthly retirement pension based on your contribution history and the age at which you start receiving it.
OAS (Old Age Security): Old Age Security is a federal monthly pension based on age and years of Canadian residency rather than employment contributions, and it is reduced by a recovery tax above an annual income threshold.

Life insurance

Term life insurance: Term life insurance provides a death benefit for a fixed period, such as 10, 20 or 30 years, with level premiums during the term and no cash value.
Permanent insurance: Permanent insurance is life insurance designed to remain in force for the insured's lifetime as long as required premiums are paid, and most designs accumulate cash value.
Whole life insurance: Whole life insurance is permanent coverage with premiums set by the insurer and a schedule of guaranteed cash values; participating versions may also credit non-guaranteed policy dividends.
Universal life insurance: Universal life insurance is permanent coverage that separates the cost of insurance from an investment account, allowing flexible deposits and owner-directed investment options within legislated limits.
Cash value: Cash value is the amount accumulating inside a permanent life insurance policy that the owner may be able to access through withdrawal, policy loan or collateral assignment.
Death benefit: The death benefit is the amount a life insurer pays when the insured dies while the policy is in force, generally received tax-free by a named beneficiary in Canada.
Policyholder (Policy owner): The policyholder is the person or entity that owns a life insurance contract and controls it, including the right to name beneficiaries, access cash value and cancel the policy.
Insured: The insured is the person whose life or health the policy covers, and whose death, illness or disability triggers the benefit.
Premium: A premium is the payment made to keep an insurance policy in force, set at issue based on underwriting and payable monthly, annually or on another agreed schedule.
Surrender value (Cash surrender value): Surrender value is the amount a policyholder receives if they cancel a permanent policy, equal to the cash value less any surrender charges and outstanding loans.

Living benefits

Critical illness insurance: Critical illness insurance pays a lump sum if the insured is diagnosed with a condition listed in the policy and survives a stated waiting period, commonly 30 days.
Disability insurance: Disability insurance replaces a portion of earned income when illness or injury prevents the insured from working, after a waiting period and for a defined benefit period.

Investing

Segregated fund: A segregated fund is an insurance contract invested in an underlying pool of assets that includes maturity and death benefit guarantees, beneficiary designations and, in some circumstances, potential creditor protection.
Annuity: An annuity is a contract with a life insurer in which a lump sum is exchanged for a series of guaranteed payments, either for a fixed period or for the annuitant's lifetime.

Estate

Beneficiary: A beneficiary is the person, entity or estate named to receive proceeds from an insurance policy, registered plan or trust when a specified event occurs.
Estate: An estate is the collection of property, rights and obligations a person leaves at death, administered by an executor or liquidator according to the will or provincial intestacy rules.
Probate: Probate is the court process that confirms the validity of a will and the executor's authority; most provinces charge a fee or tax based on the value of the estate passing through it.
Estate liquidity: Estate liquidity is the cash available to an estate to pay taxes, debts, probate fees, funeral costs and administration expenses when they fall due.

Business

Key-person insurance: Key-person insurance is a policy owned by a business on an individual whose death or disability would materially harm the company, with the business paying premiums and receiving the benefit.
Buy-sell agreement: A buy-sell agreement is a contract among business owners setting out how ownership interests are transferred on death, disability, retirement or departure, including how the price is determined.

This page is educational information about Canadian financial concepts. It is not personalized financial, tax, insurance or legal advice, and it does not consider your individual circumstances. Product availability, eligibility, pricing and tax treatment depend on the provider, your situation and current Canadian rules. Speak with a professional licensed in your province before acting.

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