Dictionary of Finance and Investment Terms: periodic payment plan
periodic payment plan
plan to accumulate capital in a mutual fund by making regular investments on a monthly or quarterly basis. The plan has a set pay-in period, which may be 10 or 20 years, and a mechanism to withdraw funds from the plan after that time. Participants in periodic payment plans enjoy the advantages of dollar cost averaging and the diversification among stocks or bonds that is available through a mutual fund. Some plans also include completion insurance, which assures that all scheduled contributions to the plan will continue so that full benefits can be passed on to beneficiaries in the event the participant dies or is incapacitated.
