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Insurance Glossary

Industry jargon and unfamiliar terminology can be confusing.

No insurance resource would be complete without a helpful menu of terms and concepts. This information-rich list will help you make sense of the solutions you are considering.

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Deferred Compensation Plan

‚ÄčAlso known as Salary Continuation Plan, this is a method of rewarding senior management and key employees of a company with special financial incentives. It is a written agreement between an employer and an employee that allows the employee to defer tax now so the funds can be withdrawn and taxed at a specified point in the future (usually at a lower rate). High cash value life insurance policies (with company as owner and beneficiary) with minimal death benefit are popular in these plans because the cash values grow tax-deferred and the death proceeds are income tax-free if the employee dies before receiving payments.‚Äč