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Insurance Glossary - L

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 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
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.