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Glossary
Table of Contents
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 | Labor-Management Relations Act of 1947 (Taft-Hartley Act): This law
controls conditions under which an employer may pay any money to a
representative of employees.
| Lapse: The termination or discontinuance of an
insurance policy due to non-payment of a premium.
| Lapsed Policy: A policy terminated for
non-payment of premiums. The term is sometimes limited to a termination
occurring before the policy has a cash or other surrender value.
| Larceny-theft: The unlawful taking, carrying,
leading or riding away of another person's property.
| Last Clear Chance Rule: Statutory
modification of the contributory negligence law allowing the claimant
endangered by his or her own negligence to recover damages from a defendant
if the defendant has a last clear chance to avoid the accident but fails to
do so.
| Law of Large Numbers: Concept that the
greater the number of exposures, the more closely will actual results
approach the probable results expected from an infinite number of exposures.
| Legal Reserve: The minimum reserve which a
company must keep to meet future claims and obligations as they are
calculated under the state insurance code.
| Legal Reserve Life
Insurance Company: A life insurance company operating under state
insurance laws specifying the minimum basis for the reserves the company
must maintain on its policies.
| Level Commission Scale: A commission
scale providing for payment of commissions at the same rate every year the
policy is in force.
| Level Premium: A premium which remains
unchanged throughout the life of a policy.
| Level Premium Life Insurance:
Life insurance for which the premium remains the same from year to year. The
premium is more than the actual cost of protection during the earlier years
of the policy and less than the actual cost in the later years. The building
of a reserve is a natural result of level premiums. The overpayments in the
early years, together with the interest that is to a earned, serve to
balance out the underpayments of the later years.
| Liability: Any legally enforceable obligation.
| Liability Insurance: Insurance covering
the policyholder's legal liability resulting from injuries to other persons
or damage to their property.
| Liability Insurance: Provides protection
for the insured against loss arising out of legal liability to third
parties.
| Liability Limits: The stipulated sum or
sums beyond which an insurance company is not liable to protect the insured.
| Liability Without Fault: Principle
on which workers compensation is based, holding the employer absolutely
liable for occupational injuries or disease suffered by workers, regardless
of who is at fault.
| License and Permit Bond: Type of
surety bond guaranteeing that the person bonded will comply with all laws
and regulations that govern his or her activities.
| Life Annuity: A series of payments under which
payments, once begun, continue throughout the remaining lifetime of the
annuitant but not beyond.
| Life Annuity: A contract that provides an
income for life.
| Life Annuity With 10 Years
Certain: An annuity which pays an income to the annuitant for as long as
he or she lives, but if death occurs within 10 years after the annuity
payments begin, payments are continued to a named beneficiary for the
remainder of the 10 years.
| Life Expectancy: The average number of years
of life remaining for a group of persons of a given age according to a
particular mortality table.
| Life Income Option: Life insurance
settlement option in which the policy proceeds are paid during the lifetime
of the beneficiary. A certain number of guaranteed payments may also be
payable.
| Life Insurance: Insurance providing for
payment of a specified amount on the insured's death, either to his or her
estate or to a designated beneficiary; or in the case of an endowment
policy, to the policy holder at a specified date.
| Life Insurance in Force: The sum of
the face amounts, plus dividend additions, of life insurance polices
outstanding at a given time. Additional amounts payable under accidental
death or other special provisions are not included.
| Life Insurance Programming:
Systematic method of determining the insured's financial goals, which are
translated into specific amounts of life insurance, then periodically
reviewed for possible changes.
| Lifetime Disability Benefit: A
benefit to help replace income lost by an insured person as long as he/she
is totally disabled, even for a lifetime.
| Lifetime Disability Benefit:
Disability income payable for the life of the insured as long as he is
totally disabled.
| Limited Payment Life Insurance:
Whole life insurance on which premiums are payable for a specified number of
years or until death if death occurs before the end of the specified period.
| Limited Policy: A contract which covers only
certain specified diseases or accidents.
| Limited Policy: One that covers only
specified accidents or sicknesses.
| Liquidation: Dissolving a company by selling its
assets for cash.
| Liquor Liability Law: See
Dramshop Law.
| Living Benefits Rider: A rider that
allows insureds who are terminally ill or who suffer from certain
catastrophic diseases to collect part of their life insurance benefits
before they die, primarily to pay for the care they require.
| Living Trust: A trust created while the creator
of the trust is living. Also known as an inter vivos trust.
| LLoyd's of London: insurance
marketplace where brokers, representing clients with insurable risks, deal
with Lloyd's underwriters, who in turn represent investors. The
investors are grouped together into syndicates that provide capital to
insure the risks.
| Loading: The amount that must be added to the pure
premium for expenses, profit, and a margin for contingencies. See Expense
Loading
| Long-Term Care: The continuum of broad-ranged
maintenance and health services to the chronically ill, disabled, or
retarded. Services may be provided on an inpatient (rehabilitation facility,
nursing home, mental hospital), outpatient, or at-home basis.
| Long-Term Disability
Income Insurance: Insurance issued to an employer (group) or individual
to provide a reasonable replacement of a portion of an employee's earned
income lost through serious and prolonged illness or injury during the
normal work career. (See also Integration.)
| Loss: The happening of the event for which insurance
pays.
| Loss Adjustment Expense: expenses
incurred in the process of evaluating, defending and paying claims.
| Loss Avoidance: A risk management technique
whereby a situation or activity that may result in a loss for a firm is
avoided or abandoned.
| Loss control: any conscious action (or decision
not to act) intended to reduce the frequency, severity, or unpredictability
of accidental losses.
| Loss Expense - Allocated: Handling
expenses, such as legal or independent adjuster fees, paid by an insurance
company in settling a claim which can be definitely charged to that
particular claim.
| Loss Expense - Unallocated:
Salaries and other expenses incurred in connection with the operation of a
claim department of an insurance carrier which cannot be charged to
individual claims.
| Loss Payable Clause: Means of protecting
a mortgagee's interest in property by directing the insurer to make a loss
payment to the mortgagee in the event of a loss.
| Loss Prevention: Any measure which reduces
the probability or frequency of a particular loss but does not eliminate
completely all possibility of that loss
| Loss Ratio: A ratio calculated by divinding
claims into premiums. It may be calculated in several different ways, using
paid premiums or earned premiums, and using paid claims with or without
changes in claim reserves and with or without changes in active reserves.
| Loss Reserve: The amount set up as the
estimated cost of a claim. (See IBNR Reserve)
| Loss Reserve Development: how
the latest estimate of an insurance company's claim obligations compares to
an earlier projection.
| Lump-Sum Distribution: Payment within
one taxable year of the entire balance payable to an employee from a trust
which forms part of a qualified pension or employee annuity plan on account
of that person's death, separation from service or attainment of age 59. |
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