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how liabilities work | a liability is generally an obligation between one party and another that s not yet completed or paid a financial liability is also an obligation in the world of accounting but it s defined more by previous business transactions events sales exchange of assets or services or anything that would provide economic benefit... | |
how do i know if something is a liability | a liability is anything that s borrowed from owed to or obligated to someone else it can be real like a bill that must be paid or potential such as a possible lawsuit a liability isn t necessarily a bad thing a company might take out debt to expand and grow its business or an individual may take out a mortgage to purch... | |
how are current liabilities different from long term non current ones | companies segregate their liabilities by their time horizon for when they re due current liabilities are due within a year and are often paid using current assets non current liabilities are due in more than one year and most often include debt repayments and deferred payments 3 | |
what is a contingent liability | a contingent liability is an obligation that might have to be paid in the future but there are still unresolved matters that make it only a possibility not a certainty lawsuits and the threat of lawsuits are the most common contingent liabilities but unused gift cards product warranties and recalls also fit into this c... | |
what are examples of liabilities that individuals or households have | an individual s or household s net worth is also arrived at by balancing assets against liabilities liabilities for most households will include taxes due bills that must be paid rent or mortgage payments loan interest and principal due the work owed may also be construed as a liability if you re prepaid for performing... | |
what is a liability driven investment | a liability driven investment ldi is an investment in assets that can generate the cash to pay for financial obligations liabilities this type of investing is common with defined benefit pension plans because companies and pension funds are obligated to provide the guaranteed income promised to the beneficiaries with t... | |
how did liability driven investing start | it goes back to the day when defined benefit pension plans were in abundance and companies had to meet their financial guarantees to the beneficiaries of those plans who uses ldis in addition to pension funds other investors that use them include foundations endowments insurance companies and even individual investors ... | |
do liability driven investment portfolios usually include equities | they can be included depending on the investor s tolerance for risk but many portfolios don t have them due to their greater risk the main goal of an ldi is to match assets to liabilities and manage risk so that income is available to satisfy specific financial obligations investments that offer high returns can potent... | |
what is liability insurance | liability insurance is an insurance product that provides protection against claims resulting from injuries and damage to other people or property liability insurance policies cover any legal costs and payouts an insured party is responsible for if they are found legally liable intentional damage and contractual liabil... | |
how liability insurance works | liability insurance is critical for those who are liable and at fault for injuries sustained by other people or in the event that the insured party damages someone else s property as such liability insurance is also called third party insurance liability insurance does not cover intentional or criminal acts even if the... | |
how does personal liability insurance differ from business liability insurance | personal liability insurance covers individuals against claims resulting from injuries or damage to other people or property experienced on the insured s property or as a result of the insured s actions business liability insurance instead protects the financial interests of companies and business owners from lawsuits ... | |
what is umbrella insurance | an umbrella insurance policy is additional liability insurance coverage that is purchased and goes beyond the dollar limits of the insured s existing homeowners auto or watercraft insurance umbrella policies tend to be affordable and offered in increments of 500 000 or 1 million | |
what is backdated liability coverage | usually you must have liability coverage in place when an event happens that results in a claim backdated liability insurance however is insurance that provides coverage for a claim that occurred before the insurance policy was purchased these policies are uncommon and usually available only to businesses | |
what is a liar loan | a liar loan is a category of mortgage loan that requires little or no documentation of income because the lender does not verify income and assets by looking at w 2 forms income tax returns and other records such loans are said to be liar loans because lenders simply take the borrower at their word learn more about wha... | |
how a liar loan works | for certain low documentation loans such as stated income stated asset mortgages sisas income and assets are simply noted on the loan application on the other hand with no income no asset mortgages nina the lender doesn t even require you to disclose income and assets at all some liar loans take the form of ninja loans... | |
how borrowers and brokers use liar loans | low doc and no doc loans are called liar loans because they open the door for abuse or lies when borrowers their mortgage brokers or loan officers overstate income or assets in order to qualify the borrower for a larger mortgage borrowers or brokers might do this in order to secure mortgages that would otherwise not be... | |
is lying on a loan application illegal | if you lie on a loan application you could be committing a crime especially if it is an intentional lie you could potentially go to jail for lying on a loan application | |
what happens if you lie on a loan application | if you lie on an application to borrow money you can be rejected for the loan if the lender determines the information is false if you received funds for the loan and then the lender detects false information on your loan you may have to repay all the funds finally you could potentially go to jail for lying on a loan a... | |
are stated income loans illegal | stated loans or loans where you do not need to provide proof of your income are illegal today a stated loan is a loan in which you only state your income on your loan application the bottom linea liar loan is a loan in which the lender does not require proof that the borrower has met financial requirements instead the ... | |
what is liar s poker | liar s poker is a betting game often associated with wall street traders it involves wagering on the frequency of digits appearing in the serial numbers of u s paper currency in each round players take turns proposing an ever increasing number of digits e g a sequence may involve three 5s three 6s four 5s etc the game... | |
what is libel | libel involves the act of publishing a statement about an individual either in written form or by broadcast over media platforms such as radio television or the internet that is untrue and threatens to harm the reputation and or livelihood of the targeted person libel is considered a civil wrong tort and can therefore ... | |
why is broadcast speech libel if it is not written | even though broadcast media e g tv or radio typically involves spoken words without text it is nonetheless considered libel because according to the law this is because broadcast media has the capacity to reach large audiences just as written words do making it less temporary 1can you be guilty of libel ii you leave di... | |
what is a liberty bond | a liberty bond is a debt obligation issued by the u s department of the treasury in conjunction with the federal reserve also known as a liberty loan it was a war bond issued in four installments in 1917 18 as a means to finance the u s participation in world war i and the allied war effort in europe 1the u s governmen... | |
what is the libor curve | the libor curve is the graphical representation of the interest rate term structure of various maturities of the london interbank offered rate commonly known as libor libor is a short term floating rate at which large banks with high credit ratings lend to each other the libor curve depicts the yield curve for short te... | |
what is the libor scandal | the libor scandal was a highly publicized scheme in which bankers at several major financial institutions colluded with each other to manipulate the london interbank offered rate libor the scandal sowed distrust in the financial industry and led to a wave of fines lawsuits and regulatory actions although the scandal ca... | |
what is a licensee | a licensee is any business organization or individual that has been granted legal permission or certain rights by another entity who owns certain assets to engage in any activity related to these assets the permission or license can be given on an express or implied basis licensees will compensate the owner of the lice... | |
what is a licensee of a property | a licensee is one who has been given limited permission to use or occupy a property physical or intellectual property the licensee will pay or compensate the actual owner of the property for its use the terms of which will be spelled out in a licensing agreement as such the tenant of a rented apartment may be construed... | |
what is the difference between a licensor and a licensee | the licensor is the owner of some property or the rights thereof that grants permission to a licensee to use them in return for compensation | |
what is a license holder business | this term implies that a business has applied for and holds a valid license obtained from the proper authority to legally operate or do business in a certain location or locations | |
what is a licensing agency | a licensing agency is a broker that brings together license owners with potential licensees and arranges licensing agreements between these parties a licensing agent may approach the owner of a license to see if they would be interested in such an arrangement | |
what is a licensing agreement | the term licensing agreement refers to a legal written contract between two parties wherein the property owner gives permission to another party to use their brand patent or trademark the agreement which is set between the licensor the property owner and the licensee the permitted party contains details on the type of ... | |
what is a licensing fee | a licensing fee is money paid to buy specific rights from another party for example this fee may be paid to a government agency by people or companies for the privilege of offering professional services or engaging in a specific type of business in other cases licensing fees are paid for the right to use intellectual p... | |
how professional licensing fees work | many professions require licenses before a person can perform the work in that field these licenses are usually granted after the individual has passed a certification exam and completed a required amount of training for example licenses are required to become a professional in many fields including once licensed an in... | |
how other licensing fees work | a licensing fee can also refer to a sum paid to use intellectual property of various kinds such as a copyrighted work like a photograph or a logo that is owned by someone else for example a t shirt company that wants to sell shirts imprinted with a certain major league baseball team s logo would need to pay a licensing... | |
what is intellectual property | as the world international property organization a united nations agency defines it intellectual property refers to creations of the mind such as inventions literary and artistic works designs and symbols names and images used in commerce the legal ownership of intellectual property is protected by trademarks copyright... | |
are professional licensing fees tax deductible | professional licensing fees are usually tax deductible however some licensing fees may be amortized over 180 months amortized fees include the cost of acquiring or renewing a liquir license tv or radio broadcasting license or taxicab medallion | |
is the education required for licensing tax deductible | for education costs to be tax deductible you must already be working in that field and show either that the education maintains or improves required skills for your profession or is required by regulations education expenses that are necessary to meet the minimum requirements of your present procession aren t tax deduc... | |
what is a lien | a lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt a creditor or a legal judgment could establish a lien a lien serves to guarantee an underlying obligation such as the repayment of a loan if the underlying obligation is not satisfied the creditor may be able to seiz... | |
how liens work | a lien provides a creditor with the legal right to seize and sell the collateral property or asset of a borrower who fails to meet the obligations of a loan or contract the owner cannot sell the property that is the subject of a lien without the consent of the lien holder a floating lien refers to a lien on inventory o... | |
what does a lien mean | a lien is simply the legal right of a lender to sell your property a house or a car for example if don t meet your contractual obligations on the loan you took out to purchase it | |
how do i get rid of a lien | you can get rid of a lien on your property car or other asset by paying off your loan in full the bottom linea lien is a claim or legal right against assets that are normally used as collateral to satisfy a debt that lien could be established by a creditor legal judgment or tax authority and it serves to guarantee an u... | |
what is a lien | a lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt a creditor or a legal judgment could establish a lien a lien serves to guarantee an underlying obligation such as the repayment of a loan if the underlying obligation is not satisfied the creditor may be able to seiz... | |
how liens work | a lien provides a creditor with the legal right to seize and sell the collateral property or asset of a borrower who fails to meet the obligations of a loan or contract the owner cannot sell the property that is the subject of a lien without the consent of the lien holder a floating lien refers to a lien on inventory o... | |
what does a lien mean | a lien is simply the legal right of a lender to sell your property a house or a car for example if don t meet your contractual obligations on the loan you took out to purchase it | |
how do i get rid of a lien | you can get rid of a lien on your property car or other asset by paying off your loan in full the bottom linea lien is a claim or legal right against assets that are normally used as collateral to satisfy a debt that lien could be established by a creditor legal judgment or tax authority and it serves to guarantee an u... | |
what is a lien waiver | a lien waiver is a written agreement between a payer and a counterparty where said counterparty gives up their right to place a lien on the payer s property or goods understanding lien waiversa lien waiver is quite common in the construction business essentially it is a document from a contractor subcontractor supplier... | |
how to apply a lien waiver in the construction and development process | lien waivers may see frequent use in the construction industry through many phases of a project a lien waiver could be exchanged as each service is completed and payment is received by each party some parties will not release payment until a lien waiver is signed and delivered to them it might not always be prudent to ... | |
what is a life annuity | a life annuity is a financial product sold by an insurance company that features a predetermined periodic payout amount until the death of the annuity owner who is called the annuitant an annuitant typically pays into the annuity periodically when they are still working annuitants may also buy the annuity in one large ... | |
how a life annuity works | life annuities come in two different phases the first is the accumulation phase this is the period when the buyer funds their annuity with premiums or with a lump sum payment the second stage is the income or the annuitization phase during this period the issuer or insurance company makes regular payments to the annuit... | |
what is the difference between a fixed annuity and a variable annuity | a fixed annuity pays out a fixed percentage or interest rate on the owner s contributions to the annuity a variable annuity pays out based on the performance of a basket of investments variable annuities offer the potential for higher returns or payouts when markets are performing well however they also contain more ri... | |
what is a joint annuity | a joint annuity makes payouts until both spouses die sometimes at a reduced amount after the death of the first spouse | |
what is a qualified longevity annuity contract qlac | a qualified longevity annuity contract qlac is a type of deferred annuity that is purchased using funds from a qualified retirement plan or an individual retirement account ira a qlac provides monthly payments until death and is exempt from the required minimum distribution rmd rules from the internal revenue service i... | |
what is a life cycle | the term life cycle refers to the course of events that leads from the beginning to the end of a product business or industry this means that a life cycle brings new products companies and industries into existence sees them grow and eventually leads to their critical mass and decline there are several key steps that l... | |
how the life cycle works | the idea of a cycle in a business context is borrowed from biology in biology a life cycle represents a series of changes that an organism undergoes from birth to death extended to a business setting an entity s formation and eventual decline follow a similar path to biological applications the life cycle represents th... | |
what are the stages of a product life cycle | the product life cycle is the time it takes to go from development to decline put simply the life cycle for a product takes place from conception to the time it is removed from the market in what stage of the business life cycle does seed financing occur seed financing is a form of financing that is used to help busine... | |
what impact does the life cycle have on a small business | businesses of any kind or size are affected by a life cycle this means that if a small business can experience growth and maturity if it makes a product or provides a service to its customers it can also go into decline which means the business could fail if challenges aren t properly addressed in which part of the bus... | |
what is a life cycle fund | life cycle funds are asset allocation funds in which the share of each asset class is automatically adjusted to lower risk as the desired retirement date approaches as a practical matter this usually means that the percentage of bonds and other fixed income investments increases life cycle funds are also known as age b... | |
how a life cycle fund works | life cycle funds are designed to be used by investors with specific goals that require capital at set times these funds are generally used for retirement investing however investors can use them whenever they need capital at a specific time in the future each life cycle fund defines its time horizon by naming the fund ... | |
what is the life cycle hypothesis lch | the life cycle hypothesis lch is an economic theory that describes the spending and saving habits of people over the course of a lifetime the theory states that individuals seek to smooth consumption throughout their lifetime by borrowing when their income is low and saving when their income is high the concept was dev... | |
what is the concept of the life cycle hypothesis | this economic theory says that people try to maintain approximately the same level of consumption throughout their lives that means generally speaking when they are young they may take on debt when they are in their prime earning years they save more and and when they are old they live off the wealth they accumulated e... | |
what is an example of the life cycle hypothesis | a good example of the lch theory in practice is saving for retirement during your working years you save money for when you are no longer working knowing that you may not have income when you re older the bottom linethe life cycle hypothesis developed in the 1950s posits that people tend to maintain a consistent spendi... | |
what is a life estate | a life estate is a property usually a residence that an individual owns and may use for the duration of their lifetime this person is called the life tenant and shares ownership of the property with a second person the second person is referred to as the remainderman and automatically receives the title to the property... | |
how to create a life estate | there are only a few steps involved in creating a life estate alternatives to a life estatea life estate is an excellent tool for securing your assets to pass on to your beneficiaries and bypass lengthy probate but it isn t the only option available you can also create a life estate and medicaidmedicaid is a state prog... | |
what is a life estate | a life estate is a legal document that splits ownership of property so that the first party retains rights to use the property and the second party retains rights to inherit it | |
what are the disadvantages of a life estate | you can t refinance sell or alter title to the property without the remainderman s permission if you have a life estate on the property who owns the property in a life estate the property is owned by all designated parties in a life estate deed but the life tenant retains the right to occupy the estate until their deat... | |
what is life expectancy | life expectancy is a statistical estimate of the average number of years a person is expected to live based on actuarial data there are many uses for life expectancy in the financial industry including for life insurance pension planning and u s social security benefits in most countries the calculations for actuarial ... | |
when couples are planning for retirement they often use a joint life expectancy this approach takes the life expectancy of their partner who may become the beneficiary of a retirement fund or pension plan into account as well as their own the irs provides tables to help you calculate joint life expectancy 4 | most retirement plans including traditional roth sep and simple ira plans also use life expectancy to determine the implementation of required minimum distributions rmds for the plan most retirement plans expect participants to begin taking at least the rmd by the time they reach the age of 72 or age 73 starting in 202... | |
what is the average life expectancy in the us | the average lifespan at birth for a woman in the united states is 79 1 years as of 2021 according to the centers for disease control the average lifespan for men at birth was 73 2 years this represents a decline from prior years largely due to drug overdoses accidents and the covid 19 pandemic the overall life expectan... | |
how does life expectancy factor in to insurance | life insurance companies use mortality tables to estimate the life expectancy of their policyholders based on the statistical averages for people with similar ages and health this allows them to predict how much money they will have to pay out in claims | |
how does life expectancy affect premiums | your age is the primary factor companies consider when deciding how much to charge for life insurance followed by your health condition life expectancy is greater at younger ages so the younger you are when you apply for coverage the lower your rates 9the bottom linelife expectancy indicates how much longer the average... | |
what does life income fund mean | a life income fund lif is a type of registered retirement income fund rrif in canada that can be used to hold locked in retirement accounts liras and other assets for retirement income a lif is meant to live up to its name and funds aren t to be withdrawn in a lump sum owners must use it to support retirement income re... | |
what is life insurance | understanding how life insurance works and how to shop for a policy can help you find the best coverage to meet your family s needs life insurance is a contract between an insurance company and a policy owner in which the insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured perso... | |
when shopping for insurance you might want to start with our list of the best life insurance companies some of which are listed below | term vs permanent life insuranceterm life insurance differs from permanent life insurance in several ways but tends to best meet the needs of most people looking for affordable life insurance coverage term life insurance only lasts for a set period of time and pays a death benefit should the policyholder die before the... | |
what affects your life insurance premiums and costs | many factors can affect the cost of life insurance premiums certain things may be beyond your control but other criteria can be managed to potentially bring down the cost before and even after applying your health and age are the most important factors that determine cost so buying life insurance as soon as you need it... | |
what to do before buying life insurance | because life insurance policies are a major expense and commitment it s critical to do proper due diligence to make sure the company you choose has a solid track record and financial strength given that your heirs may not receive the death benefit until many decades into the future investopedia has evaluated scores of ... | |
what expenses couldn t be met if you died if your spouse has a high income and you don t have any children maybe it s not warranted it is still essential to consider the impact of your potential death on a spouse and consider how much financial support they would need to grieve without worrying about returning to work ... | if you re buying a policy on another family member s life it s important to ask what are you trying to insure children and seniors really don t have any meaningful income to replace but burial expenses may need to be covered in the event of their death beyond burial expenses a parent may also want to protect their chil... | |
how life insurance works | a life insurance policy has two main components a death benefit and a premium term life insurance has both two components while permanent or whole life insurance policies also have a cash value component the death benefit or face value is the amount of money the insurance company guarantees to the beneficiaries identif... | |
how do you qualify for life insurance | to qualify for life insurance you need to submit an application life insurance is available to almost anyone however the cost or premium level can vary greatly based on your age health and lifestyle some types of life insurance don t require medical information however no exam policies generally have much higher premiu... | |
how does life insurance work | life insurance works by providing a death benefit in exchange for paying premiums one popular type of life insurance term life insurance only lasts for a set amount of time such as 10 or 20 years permanent life insurance also features a death benefit but lasts for the life of the policyholder as long as premiums are pa... | |
what is a life settlement | a life settlement refers to the sale of an existing insurance policy to a third party for a one time cash payment payment is more than the surrender value but less than the actual death benefit after the sale the purchaser becomes the policy s beneficiary and assumes payment of its premiums by doing so they receive the... | |
when an insured party can no longer afford their insurance policy they can sell it for a certain amount of cash to an investor usually an institutional investor the cash payment is primarily tax free for most policy owners the insured person essentially transfers ownership of the policy to the investor as we noted abov... | by selling it the insured person transfers every aspect of the life insurance policy to the new owner this means the investor who takes over the policy inherits and becomes responsible for everything related to the policy including premium payments along with the death benefit so once the insured party dies the new own... | |
why choose a life settlement | there are many reasons why people choose to sell their life insurance policies and are usually only done when the insured person doesn t have a known life threatening illness the majority of people who sell their policies for a life settlement tend to be older people those who need money for retirement but haven t been... | |
when someone becomes terminally ill and has a very short life span they may sell their life insurance to someone else in exchange for a large lump sum of money the buyer takes on the premium payments becoming the policy s new owner after the insured party dies the new owner receives the death benefit | viatical settlements are generally riskier because the investor basically speculates on the death of the insured even though the original policy owner may be ill there s no way of knowing when they will actually die if the insured person lives longer the policy becomes cheaper but the actual return becomes lower after ... | |
which life insurance settlement option guarantees payments | a life settlement can be structured as an annuity that will feature guaranteed payments until the death of the policy s beneficiaries | |
what is a single life settlement option | in a single life settlement any payments agreed upon will cease upon the death of the annuitant or beneficiary in contrast a joint life settlement will continue paying out until the annuitant s spouse also passes away assuming they survive the annuitant | |
what is lifestyle creep | lifestyle creep occurs when an individual s standard of living improves as their discretionary income rises and former luxuries become new necessities the rise in discretionary income can happen either through an increase in income or decrease in costs a hallmark of lifestyle creep is a change in thinking and behavior ... | |
what is lifetime cost | lifetime cost is an estimate of how much an item such as a car a home or a piece of industrial machinery will cost to own over the expected useful life of that item it also includes cost of purchasing the item in the first place understanding and calculating lifetime costbusinesses will frequently calculate lifetime co... | |
how debt adds to lifetime cost | lifetime costs can also include debt repayments for example the lifetime cost of an item financed through a credit card or line of credit loc can be much greater than the purchase would have cost had it been paid for with cash unless the debt is paid off right away the interest and fees on the credit card or credit lin... | |
what is depreciation | depreciation is an accounting method that is used to allocate the cost of a particular item over its useful lifetime for example a piece of office equipment that is expected to last for five years would lose 20 of its value every year until it has been fully depreciated depreciation is often taken into account in estim... | |
what is residual value | residual value refers to what an asset is worth after it has been fully depreciated for accounting purposes the item may still be saleable to another buyer in which case the seller will recoup some of the item s expected lifetime cost a car for example may still have some resale or trade in value even if you ve driven ... | |
what is the lifetime learning credit llc | the lifetime learning credit llc is a provision of the u s federal income tax code that lets parents and students lower their tax liability by up to 2 000 to help offset higher education expenses unfortunately the llc is not refundable which means you can use the llc to pay the taxes you owe but you don t get a refund ... | |
how the lifetime learning credit llc works | the llc may be claimed when a student is enrolled in undergraduate graduate or professional degree courses the credit may also be used for courses in specific career related skills 1to be eligible for the credit a student must be enrolled at an educational institution considered eligible by the internal revenue service... | |
how to claim the llc | to be eligible to claim the aotc or llc the law requires a taxpayer or their dependent to get form 1098 t tuition statement from an eligible educational institution this statement helps you determine what your credit will be the form will have an amount in box 1 to show the amounts received during the year but this amo... | |
how much is the lifetime learning credit | the llc is worth up to 2 000 or 20 of the first 10 000 of qualified education expenses each tax year depending on your magi 1 | |
how many times can you claim the lifetime learning credit | there is no limit to the number of times you can claim the lcc during your lifetime if you are eligible you can claim it every tax year 1can parents claim the lifetime learning credit yes parents can claim the lifetime learning credit on the behalf of a dependent child however you can only claim it once so if you have ... | |
what s the difference between the american opportunity credit and the lifetime learning credit | the american opportunity credit formerly the hope credit can be used for the first four years of undergraduate studies only the lifetime learning credit can be used for undergraduate and graduate studies plus some professional programs and trade schools may be eligible the american opportunity credit is worth up to 2 5... | |
when does the lifetime learning credit expire | the llc doesn t expire you can use it annually for as many years as you qualify for the credit 1the bottom linethe u s government s tax credits tax deductions and tax advantaged savings plans are all useful tools to help afford the rising costs of higher education if you are eligible for these subsidies it is worthwhil... | |
what is a lifo liquidation | a lifo liquidation is when a company sells the most recently acquired inventory first it occurs when a company that uses the last in first out lifo inventory costing method liquidates its older lifo inventory a lifo liquidation occurs when current sales exceed purchases resulting in the liquidation of any inventory not... | |
how a lifo liquidation works | the lifo method is a financial practice in which a company sells the most recent inventory purchased first lifo matches the most recent costs against current revenues some companies use the lifo method during periods of inflation when the cost to purchase inventory increases over time the lifo method provides tax benef... | |
what is lifo reserve | lifo reserve is an accounting term that measures the difference between the first in first out fifo and last in first out lifo cost of inventory for bookkeeping purposes the lifo reserve is an account used to bridge the gap between fifo and lifo costs when a company uses the fifo method to track its inventory but repor... |
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