INSURANCE GLOSSARY
The Insurance Terms Glossary is divided alphabetically for ease of browsing. Select the alphabet letter that corresponds to the first letter of the word you would like to be informed about to open the appropriate heading.

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Glossary Terms ' L '

Labor-Management Relations Act of 1947 (Taft-Hartley Act) - Law which controls conditions under which an employer may pay any money to a representative (eg. union representative) of employees.

Lapse - The termination or discontinuance of an insurance policy due to non-payment of a premium.

Lapsed Policy - (1) A policy terminated for non-payment of premiums. (2) A policy terminated for non-payment occurring before the policy has a cash or other surrender value.

Larceny - 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.

Leasehold Interest Insurance - Coverage designed to protect a tenant in the event his or her lease is terminated. It is a form of time element coverage that serves to provide coverage for the difference between the old rental and a new likely more expensive rental.

Legal Reserve - The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under state insurance regulations.

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 that 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 earned serve to balance out the underpayments of the later years.

Liabilities - Portion of an insurer's balance sheet which denotes legal obligations of the company including anticipated future payments of losses covered under policies issued.

Liability - Any legally enforceable obligation.

Liability Insurance - Insurance designed to protect the policyholder from financial loss due to liability resulting from injuries to other persons or damage to their property.

Liability Limits - The sum or sums stipulated in an insurance contract 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 contract that provides for a series of payments under which payments once begun continue throughout the remaining lifetime of the annuitant but not beyond.

Life Annuity With 10 Years Certain - A annuity contract which pays an income for as long as the annuitant 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 certain cases to the policyholder at a specified date.

Life Insurance in Force - Amount reported in an insurance company's financial statements that sets out 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.

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 - An insurance contract which covers only certain specified diseases or accidents.

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

Liquor Liability Insurance - Coverage designed to protect an individual or entity for bodily injury or property damage to another for which an insured may be held liable by reason of causing or contributing to the intoxication of any person; furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or violating any statute ordinance or regulation relating to the sale gift distribution or use of alcoholic beverages.

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.

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. See also Integration.

Loss - The occurrence 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 of Maintenance Fees Insurance - Coverage designed to protect an association (such as a condominium association) against the loss of maintenance fees when occupancies have been interrupted or impaired by the occurrence of any insured peril. This is a form of business interruption insurance for the association. It assures continuous income while a building is untenantable.

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 (either earned or written) for a given period.

Loss Reserve - The amount set up as the estimated cost of a claim. See IBNR Reserve.

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 1/2.