Simple English definitions for legal terms
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A face-amount certificate of the installment type is a type of investment where you pay a certain amount of money in installments, and in return, the issuer promises to pay you a fixed amount of money at a later date. This type of investment usually lasts for more than 2 years. There is also a fully paid face-amount certificate, where you pay a lump sum of money upfront, and the issuer promises to pay you a fixed amount of money at a later date. Another similar type of investment is a periodic-payment-plan certificate, where you make periodic payments and receive an undivided interest in certain securities or funds.
A face-amount certificate of the installment type is a type of investment contract or security that represents an obligation by its issuer to pay a stated or determinable sum at a fixed or determinable date or dates more than 24 months after the date of issuance. The payment is made in consideration of the payment of periodic installments of a stated or determinable amount.
For example, if an investor purchases a face-amount certificate of the installment type for $10,000, the issuer may agree to pay the investor $15,000 in five years, with the investor making periodic payments of $200 per month until the maturity date.
Another type of face-amount certificate is a fully paid face-amount certificate, which represents a similar obligation on the part of the issuer, but the consideration for which is the payment of a single lump sum.
Periodic-payment-plan certificates are also similar to face-amount certificates of the installment type. They provide for a series of periodic payments by the holder and represent an undivided interest in certain specified securities or in a unit or fund of securities purchased wholly or partly with the proceeds of those payments.
Overall, face-amount certificates of the installment type are a way for investors to make periodic payments and receive a fixed return on their investment at a later date.
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