L – Glossary of Terms

ALPHABETICAL LISTING 

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Lapse:
The termination of an insurance policy due to non-payment of premium(s).

Lapsed Policy:
A policy terminated for non-payment of premiums.

Larceny:
The unlawful taking of personal property of another.

Law of Large Numbers:
A concept that the greater number of exposures, the more closely actual results approach the probable results expected from a number of exposures.

Legal Reserve:
The minimum reserve which an insurance company must keep to meet future claims and obligations, as calculated under their state insurance code.

Level Premium:
A premium which remains unchanged throughout the life of a policy, example: level term insurance and long term care insurance.

Level Premium Life Insurance:
Life insurance for which the premium remains the same from year to year.

Liability:
Any legally enforceable act or obligation.

Liability Insurance:
Insurance covering the legal liability of the insured resulting from injuries to a third party to their body or damage to their property.

Liability Limits:
The maximum sums listed on a liability policy which an insurance company provides protection.

License and Permit Bond:
A type of surety bond guaranteeing that a person bonded will comply with all laws and regulations that govern their activities.

Life Annuity:
A series of payments which once begun, continue throughout the remaining lifetime of the annuitant but not beyond.

Life Expectancy:
The average number of years of life remaining for a group of persons of a given age.

Life Income:
A life insurance settlement option in which the policy proceeds are paid during the lifetime of the beneficiary.

Life Insurance:
Insurance providing payment of a specified amount on the insured’s death, either to his or her estate or to a designated beneficiary.

Life Insurance in Force:
The total sum of the face amount, plus dividend additions, of life insurance polices outstanding at a given time.

Lifetime Disability Benefit:
A disability benefit to replace income lost by an insured person as long as they are totally disabled, even for a lifetime.

Limited Policy:
A contract which covers only certain specified diseases or accidents.

Liquidation:
The dissolving of a company by selling its assets for cash.

Liquor Liability Insurance:
Provides protection for the owners of an establishment that sells alcoholic beverages against liability arising out of accidents caused by intoxicated customers.

Living Benefits Rider:
A rider that allows insureds to add Long Term Care benefits to a life insurance policy.

Living Trust:
A trust created while the creator of the trust is living.

Long-Term Care:
The care of broad-ranged maintenance and health services to the chronically ill or disabled. Services may be provided on an inpatient (rehabilitation facility, nursing home, mental hospital), outpatient, or at-home basis. Most long term care premiums are level.

Long-Term Disability Insurance:
Insurance to provide a reasonable replacement of a portion of an employee’s earned income lost through serious illness or injury during the normal work career.

Loss:
The reduction in the value of an insured’s property caused by a covered peril.

Loss Control:
Any actions intended to reduce the frequency or severity of losses.

Loss Payable Clause:
A mean 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:
A measure which reduces the probability of a particular loss but does not eliminate completely all possibility of that loss

Loss Ratio:
The ratio of claims to premiums.

Loss Reserve:
An amount set up as the estimated cost of a claim.

Lump-Sum:
Payment within one taxable year of the entire balance payable to a beneficiary.
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