Vested Interest

Updated: 11 March 2024

What Does Vested Interest Mean?

Vested interest is a person’s entitlement to money or property. In terms of insurance, it is often about the stocks or amount that an employee will get from the company he or she is working for. These stocks or amount may be considered as retirement funds depending on company policy.

Insuranceopedia Explains Vested Interest

A retirement plan has vested interests. Employees expect that once they retire or even at some point in their employment, they will receive a certain amount (or bonds and stocks that bare equal to that amount). The time waiting for this amount is called the vesting period. The time when this amount can be acquired is called fully vested time. In the US, it takes three to five years to be fully vested.

An example is the Employee Stock Ownership Plan (ESOP). In ESOP, employers can allocate shares of the company. The employees are also given the chance to buy shares. The employees wait for a certain time to get their shares. They often do so during retirement.

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