Glossary L 

LIMRA See LIMRA International.

LOMA See Life Office Management Association.

LUTC See Life Underwriting Training Council.

lapse The termination of a policy because of the failure of the insured to pay the renewal premium.

law of large numbers A mathematical principle of probability stating that the actual losses in a given category of insurance will come closer to a predictable number as the number of units of exposure increases. In insurance, a prediction must be made from actuarial experience or statistical analysis of the number of losses to be expected in a group of exposures. (The larger the sample, the more accurate the prediction.)

lease A contract for the use and possession of land and buildings or parts thereof for a specified time and cost.

leasehold insurance Protection against loss of a leasehold in case the lease is terminated as a result of fire, etc.

legal reserve company An advance premium company which maintains loss reserves, unearned premium reserves, and other miscellaneous reserves as prescribed by the laws of the states. Practically all insurance companies are legal reserve companies.

legal reserves The amount of money which most insurance carriers are required by law to set aside for the payment of claims and for unearned premiums.

lessee The person to whom a lease is granted, often called a tenant.

lessor The person who grants the lease, often called the landlord.

level premium insurance Insurance for which the cost is distributed evenly over the premium-paying period. The annual premium remains the same from year to year.

liabilities All debts owed by a person, whether immediate or contingent.

liability insurance Insurance protecting the insured against financial loss arising out of legal liability imposed upon him/her in connection with bodily injuries (or death) suffered, or alleged to have suffered, by persons of the public, or damage caused to property other than property owned by or in the custody of the insured as a result of the maintenance of the premises, or the business operations of the insured.

license Certification issued by a State Department of Insurance, that an individual is qualified to solicit insurance applications for the period covered. Usually issued for a period of one year, renewable on application. Agents should study carefully the licensing laws and regulations of their own states.

life annuity An annuity which is payable during the continued life of the annuitant. No provision is made for the guaranteed return of the unused portion of the premium.

life expectancy The average duration of the life remaining to a number of persons of a given age, according to a given mortality table. The term life expectancy should not be confused with probable lifetime. The latter refers to the difference between a personís present age and the age at which death is most probable, i.e., the age at which most deaths occur.

life insurance Insurance in which the risk insured against is the death of a particular person, the insured, upon whose death while the policy is in force, the insurance company agrees to pay a stated sum or income to the beneficiary.

Life Office Management Association (LOMA) This organization offers educational programs related to the administrative and technical procedures within the life insurance business. For those who complete the prescribed course of study, a designation of Fellow, Life Management Institute (FLMI) is awarded.

Life Underwriting Training Council (LUTC) An organization that prepares and administers training material for life insurance agents.

limits of liability The maximum sums of money in which an insurance company agrees to pay in the event of a loss covered by the policy.

LIMRA International (LIMRA) A marketing research organization in the financial services industry. Its worldwide members include life/health insurance companies and financial services companies.

loading The amount added to net premiums to cover the companyís operating expenses and contingencies. The loading includes the cost of securing new business, collection expenses, and general management expenses. Precisely: The excess of the gross premiums over net premiums.

loan value The amount that can be borrowed from the cash value of a life insurance policy.

loss typically refers to: ∑ the amount sought through an insuredís claim; ∑ the amount of reduction in the value of an insuredís property caused by a covered peril; ∑ the amount paid on behalf of an insured under an insurance policy.

loss control Risk management activities that are taken to reduce the frequency and severity of losses.

loss expense The cost of investigation and adjustment of claims, as distinguished from the amount of a claimantís recovery from the insurance carrier under the policy. Unallocated loss expense is for expenses outside the office overhead. Allocated loss expense is for expenses outside the organization.

loss ratio The rate of incurred losses to earned premiums.

loss report A report submitted by an agent or claimant giving the facts of a claim.

lump sum Payment of the entire proceeds of a life insurance policy in one sum.