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
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.