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 Insurance
Definitions
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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.
- Living Benefits Rider: A rider that
allows insured's 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.
- Loading: The amount that must be
added to the pure premium for expenses, profit,
and a margin for contingencies.
- 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.
- Loss: The happening of the event for
which insurance pays.
- 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: The percent which losses
bear to premiums for a given period.
- Loss Ratio: The ratio of claims to
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 life reserves.
- Loss Reserve: The amount set up as
the estimated cost of a claim.
- 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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