Keogh Act (HR-10) Plan. A plan under the Self-Employed Individual’s Tax Retirement Act that permits a self-employed individual to establish a formal retirement plan and to obtain tax advantages similar to those available in qualified corporate pension plans.
Key Employee Insurance. (1) Insurance on the life or health of a key employee, the loss of whose services would cause an employer financial loss. The policy is owned by and payable to the employer. (2) In health insurance the term is also used to designate salary continuation insurance or a medical benefit plan payable to the key employee, with the employer paying all or part of the premium.
Kidnapping Coverage. Insurance against the hazard of a person being seized outside the insured premises and forced to return and open the premises of a safe, or to give information that enables the criminal to do so. This has frequently been one of the perils covered under a package crime policy. See also Extortion Coverage Form.
Kidnap-Ransom Insurance. This insurance is written primarily for financial institutions and covers named employees for individual or aggregate amounts paid as ransom, with a deductible requiring the insured to participate in about 10 percent of any loss. There are few markets for this coverage and no standardization of rates. See also Extortion Coverage Form.
Labor and Material Bond. See Payment Bond.
Lag Coverage. See Endorsement Extending Period of Indemnity.
Land Contract. An instrument used in connection with the sale of real estate. It differs from a mortgage in that title to the land remains with the seller until the buyer has completed the payments, though possession rests with the buyer. This contract is the instrument that conveys the deed of land from one person to another upon full payment of the stated purchase price.
Landlords Protective Liability. Coverage provided to the owner of property who leases the entire premises to another.
Lapse. Termination of a policy because of failure to pay the premium.
Lapse Ratio. The ratio of the number of life insurance contracts lapsed within a given period to the number in force at the beginning of that period.
Lapsed Policy. A policy allowed to expire because of nonpayment of premiums.
Larceny. The unlawful taking of a person’s personal property without his consent and with intent to deprive him of ownership or use. It is a broader term than burglary or robbery, largely synonymous with theft.
Large Claim Pooling. A system designed to help stabilize premium fluctuations in smaller groups. Large claims (those over a stated amount) are charged to a pool contributed to by many small groups who belong and share in that pool. The smaller the group, the lower the pooling level. Larger groups will have a larger pooling level.
Laser Beam Endorsement. An endorsement to a “claims made” liability form used to exclude specific accidents, products, work or locations.
Last Clear Chance. A doctrine that liability may attach to a person who, immediately before an accident, had a last clear chance to avoid it and did not.
Last In, First Out. See LIFO.
Latent Defect. A defect not immediately apparent.
Law of Large Numbers (LLN). This law states that the larger the number of exposures considered, the more closely the losses reported will match the underlying probability of loss. Under the LLN, the insurer knows from experience approximately how many policies will suffer a loss and how severe most of those losses will be. While actual experience may differ from expectation, pooling a large number of policies allows the company to be fairly accurate with its prediction. The simplest example of this law is the flipping of a coin. The more times the coin is flipped, the closer it will come to actually reaching the underlying probability of 50 percent heads and 50 percent tails. See also Degree of Risk, Odds and Probability.
Leader Location. A location that attracts customers to the insured’s business. One of the four types of dependent properties for which business income coverage may be written.
Lease. Contract whereby the property owner/user (lessor) agrees to let another party (lessee) use the property for a consideration (money or rent).
Leasehold. An agreement that gives a person the right to use and occupy property.
Leasehold Interest Coverage Form. Commercial property coverage form that insures an insured tenant’s interest in a favorable lease under which the rent paid is less than the rental value of alternative premises. It pays the difference between rent paid and the rental value for the remainder of the lease if the lease is canceled because of property damage caused by a peril insured against.
Leasehold Interest Insurance. A form of property insurance that provides protection against the loss of a favorable lease should it be terminated as a result of damage to the property by a peril covered by the contract. A leasehold value is determined by finding the difference between the rental value of the property at current rates and the rent payable under the terms of the lease. This amount is multiplied times the remaining term of the lease.
Leasing Companies. Lessors in a similar position to lending companies, in that they have an insurable interest in autos they have leased to their customers. Since the leasing company remains the legal owner of the leased vehicle, it is possible forthat company to become legally liable for injury or damage involving the leased vehicle. For these reasons, leasing companies usually require that they be included as additional insureds on the policies of people leasing vehicles.
Ledger Cost. The net cost of a life insurance contract, calculated by subtracting the cash value of the contract at the end of a given year from the premiums paid, less all dividends.
Legacy. A gift of personal property in accordance with the provisions of a will.
Legal Expense Insurance. Group coverage that provides members with legal services paid for on a schedule basis. Similar to dental insurance.
Legal Hazard. Increased likelihood that a loss will occur because of court actions.
Legal Liability. Liability under the law as opposed to liability arising from contracts or agreements. It is most often used to refer to a person’s liability if he should negligently injure another party.
Legal Reserve. The minimum reserves required to be established for a life insurance contract under the laws of the jurisdiction within which an insurer operates.
Legal Reserve Life Insurance Company. A life insurer that maintains the reserves required by the jurisdiction within which it operates.
Legend Drug. A drug that has on its label “Caution: Federal law prohibits dispensing without a prescription.”
Legislated Coverages. Coverages provided through programs legislated by federal or state law (e.g., FAIR Plans, the Flood Insurance Program and assigned risk pools).
Legislative Risk. A risk faced by investors whereby changes in tax laws can result in adverse effects on the individual’s investment results.
Length of Stay (LOS). The total number of days a participant stays in a facility such as a hospital.
Lessee. The person to whom a lease is granted. Commonly called the “tenant.”
Lessee’s Safe Deposit Box Coverage Form. Commercial crime coverage that protects against loss of property other than money while it is in the insured’s safe deposit box inside a depository premises.
Lessor. The person granting a lease. Also known as the “landlord.”
Level Annual Premium Funding Method. A method of accumulating money for payment of future pensions under which the level annual charge is payable each year until retirement so that the benefit is fully funded.
Level Commission System. A system of commissions in which the first year and all renewal commissions are the same percentage of the premium.
Level Death Benefit Option. Under universal life insurance, the level death benefit option provides the greater of: 1) the face amount of the policy at the time of death; or 2) a stipulated percentage of the accumulation value.
Level Premium Insurance. Insurance with premiums that remain the same throughout the life of the contract. Most whole life insurance works this way. The amount of a level premium is higher than needed for the protection afforded in the early years of the contract but less than needed in the later years. It levels off the cost of insurance so as not to have it increase each year until it becomes too expensive. See also Net Level Premium.
Level Term Insurance. (1) A term life insurancepolicy where the death benefit and premium remain level for the policy term. See also Decreasing Term Insurance, Increasing Term Insurance and Term Insurance. (2) A term policy where the face value remains the same from the effective date until the expiration date. See also Term Insurance.
Liabilities. Money owed or expected to be owed. Insurance company financial statements, for instance, show assets and liabilities.
Liability. See Legal Liability.
Liability Insurance. Insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility to others imposed by law or assumed by contract.
Liability Limit. The maximum amount the liability insurance company pays for any one occurrence (an accident or an exposure to substantially the same conditions over a period of time which causes an injury). This limit is the same regardless of the number of insureds, claims made or persons injured. See Per Person Limit.
Liable. Being legally responsible for damages suffered by a third party.
Libel. (1) The defaming of another by writings, pictures or other publication injurious to the person’s reputation. See also Defamation and Slander. (2) In maritime law it means legal action brought against the owner of another ship.
Libel Insurance. A form of liability insurance that protects the insured against legal liability for libelous statements he may write.
Liberalization Clause. A clause in property insurance contracts that provides: if policy or endorsement forms are broadened by legislation or rulings from rating authorities and no additional premium is required (e.g., if it drops a policy exclusion), then all existing similar policies are assumed to include the broadened coverage. This eliminates the need of the insurance company to endorse all existing policies when coverage is expanded without a change in premium.
License. A certification of authority for an agent or insurer to operate, given by the appropriate jurisdiction.
License and Permit Bonds. Bonds often required by jurisdictions to be posted by persons performing certain services, such as security dealers and plumbers. It provides indemnification in the event that the licensee fails to conform to pertinent regulations of the jurisdiction.
Licensee. (1) One who is licensed. (2) A person who uses or enters the property of another for his own interests. The owner of the property must use ordinary care not to injure a licensee (e.g., a person using another’s land for a shortcut, as long as he had the permission of the owner). See Degree of Care.
Lien. A claim against property, which then serves as security for the payment of that claim.
Lien Plan. (1) A plan for issuing coverage on substandard risks under which a standard premium is paid; less than the full face amount of the policy is payable if death occurs within a certain period of years. These are rarely used and are illegal in some states. (2) A plan under which an impairment of the insurer’s assets if offset by pro rata liens against policies to be deducted from the face amount when paid as a claim.
Life Annuity. A contract providing a stated income for life, payable annually or more frequently. (AN)
Life Conservation. The administration of efforts to preserve human life through research, legislation and appeals to society.
Life Estate. Ownership of land for an individual’s lifetime.
Life Expectancy. The average number of years remaining for a person of a given age to live as referenced on a mortality or annuity table.
Life Expectancy Term Insurance. Term life insurance that provides protection for a person’s “expectation of life.” This becomes the term of the policy, as opposed to ordinary term policies that are for a given number of years or to a stated age, such as 65.
Life Income Option. An option for paying the proceeds of a life insurance policy to beneficiaries under which equal installments are paid as long as the beneficiary lives, even if the principal has been exhausted. Proceeds are retained by the insurer and paid in equal installments (monthly, quarterly, semiannually or annually). However, this option provides no refund when the beneficiary dies—even if only one installment has been paid. It is frequently elected as the form of payment for a death benefit to a surviving spouse, or for payment of cash values to an insured who lives to retirement age.
Life Income with Period Certain Option. Guaranteed payments for a specified period of time. Under this option, the benefits are guaranteed for a certain period (usually five, 10 or 20 years). If the beneficiary dies before the end of the period, benefits will continue to be paid to another person for the remainder of the period. If the original recipient lives beyond the period certain, the benefit payments continue for as long as he lives.
Life Insurance (Generic). A contractual system of risk sharing under which contributions are accumulated and redistributed to meet the economic consequences of the uncertain duration of life.
Life Insurance, Ordinary. See Ordinary Life Policy.
Life Insurance (Narrow). An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured, or under other circumstances specified in the contract, such as total disability.
Life Insurance Cost Surrender Index. The guaranteed cash surrender value of a life insurance policy is often required to be calculated into an index for presentation to prospective life insurance buyers. Such an index determines the guaranteed cash surrender value, if any, available at the end of the 10th and 20th policy years according to the accumulation of the annual cash dividends at 5 percent interest compounded annually to the end of a selected period, if the policy is a participating policy.
Life Insurance, Straight. See Ordinary Life Policy.
Life Insurance Trust. A type of life insurance policy where a trust company is named as the beneficiary and distributes the proceeds of the policy under the terms of the trust agreement.
Life Insurance, Whole Life. See Whole Life Insurance.
Life Insurers Conference. An organization that provides for the exchange of information on management problems among the member insurers.
Life Office Management Association (LOMA). An organization serving a large proportion of the life insurance business by providing educational programs relating to administrative and technical procedures within the industry. It confers the designation of Fellow, Life Management Institute (FLMI) upon those who complete a prescribed course of study.
Life Paid Up at Age. A form of limited payment life insurance that provides protection for the whole of life but with payment of premiums to stop at a particular age, thus paying up the policy. A common form would be Life Paid Up at Age 65.
Life Underwriter. Usually, a life insurance agent. It can be more narrowly defined as a risk appraiser. See also Risk Appraiser.
Life Underwriting Training Council (LUTC). An organization that prepares and administers training programs for life insurance agents.
Life with Period Certain. An annuity option that provides a lifetime income to the annuitant plus an extra guarantee of income for a specified period of time such as 5 or 10 years. The period certain provides income to the annuitant or the annuitant’s survivor.
Lifetime Benefit. An optional benefit that provides lifetime disability income benefits—usually if the disability commences prior to a certain age. Otherwise, benefits may be restricted.
Lifetime Policy. (1) A policy guaranteed renewable or non-cancelable to age 65 or some later date. (2) A policy paying disability benefits for life.
LIFO. Last in, first out. A method of keeping inventory records for accounting purposes where the last item purchased is the first item used.
Limit, Aggregate. See Aggregate Limit.
Limit, Basic. See Basic Limit.
Limit, Excess. See Excess Limit.
Limit of Liability. The maximum amount of insurance or upper limit that the insurance company is legally obligated to pay if a covered loss occurs.
Limit of Liability Rule. A prescribed procedure for allocating property insurance losses among insurers that provide protection on a given piece of property. It is called the “pro rata liability rule” in a standard fire policy.
Limit, Standard. See Basic Limit.
Limitations. Exceptions to coverage and limitations of coverage in an insurance contract (e.g., a limit of liability in an auto policy, policies covering only certain described vehicles or, in the case of general liability insurance, certain described premises).
Limited Agent. An agent authorized to transact only a limited form of insurance, such as travel, accident or credit insurance. In many states, limited agents are exempt from licensing examination and education requirements.
Limited Health Insurance. Special policies that provide limited coverage for specific injuries or illnesses, such as travel-accident, hospital income and specified disease coverage.
Limited Partnership. An association of two or more persons who operate and manage a business for profit; at least one the partners does not work in the business but does have some management voice and financial investment. The limited partner has limited liability.
Limited Payment Life. A life insurance contract providing protection for the whole of life with premiums paid for an indicated number of years. See also Life Paid Up At Age.
Limited Payment Whole Life. A whole life policy that allows the policyholder to pay the entire premium in a shorter period of time (such as a 20 year period or to age 65). Compare with Continuous Premium Whole Life and Single Premium Whole Life.
Limited Policies. (1) Health insurance contracts, such as those offered by newspapers to their customers, with low limits and somewhat restricted forms. (2) Policies paid only upon the occurrence of certain contingencies, such as cancer, in contrast to policies covering all contingencies other than those excluded.
Limited Pollution Liability Coverage Form. Commercial form providing pollution liability coverage on a “claims made” basis, but not providing any coverage for clean-up costs.
Limited Theft Coverage Endorsement. This form may be attached to a dwelling policy to provide theft coverage for a named insured who is not an owner occupant.
Limits. (1) Ages below or above which the insurer will not issue a policy or above which it will not continue a policy presently in force. (2) The maximum benefit payable for a given situation or occurrence (e.g., a limit of $50,000 on the contents of a home, or a $40,000 per accident limit for property damage liability). See also Limit of Liability.
LIMRA International. An organization that, through research, seeks solutions to the problems of administering the agency costs of a life insurer.
Line. A colloquial term with several meanings. It may describe a particular type of insurance, such as the liability “line,” or the various types of insurance written for a property owner (e.g., carrying all “lines” of the XYZ Company). It also describes the amount of insurance on a given property (e.g., a $250,000 “line” on buildings of the XYZ Company).
Line Card. A record kept by a property insurer of the insurance sold to an insured.
Line of Business. The general classification of business as utilized in the insurance industry (e.g., fire, allied lines and homeowners).
Lines. The amount a reinsurer accepts, usually in multiples of a net retention, under a surplus policy. If a policy specifies a retention of $10,000, and a risk is written for $50,000, 4 lines ($40,000) would be reinsured. See also Surplus Reinsurance.
Line Sheet. A schedule showing the limits of liability to be written by an insurer for different classes of risks. It is also used by a ceding company to define the limits of liability it will assume on various exposures.
Line Slip. A document that describes a risk to be insured. Underwriters subscribe to it by indicating what percentage of the risk they are willing to take.
Liquidated Damages. Damages that are agreed to either by the court or by the parties to a suit or action. These damages are often negotiated or calculated to represent a present value of monies that would otherwise be paid in the future.
Liquidation of Insurer. Action undertaken by a state insurance department to dissolve an impaired or insolvent insurer that cannot be restored to sound financial standing.
Liquidity. The ability of an insurer to convert its assets into cash to pay claims if necessary.
Liquor Control Laws. See Dram Shop Laws.
Liquor Liability Insurance. See Dram Shop Liability Insurance.
Litigant. One who is engaged in a lawsuit.
Litigation. Settling disputes about coverage or the amount of a claim in court.
Litigation Bond. See Court Bond.
Livery Use. Use of a vehicle for hire to carry persons. This is usually excluded in automobile insurance contracts unless otherwise stated.
Livestock Coverage Form. A commercial property form that may be attached to a farm coverage part to insure livestock. This form replaced various inland marine forms that were commonly used to insure farm property and livestock.
Livestock Insurance. A named perils contract that provides a prescribed lump sum payment to an insured upon the death of any animal covered by the policy.
Livestock Mortality Insurance. The equivalent of life insurance for livestock.
Livestock Transit Insurance. Insurance against accidents causing death or crippling on shipments of livestock while in transit by rail, truck or other similar means of transportation.
Living Benefits Rider. A rider attached to a life insurance policy that provides LTC benefits or benefits for the terminally ill. The benefits provided are derived from the available life insurance benefits.
Living Need Benefits. A combination of life insurance and long-term care insurance that allows life insurance benefits to generate long-term care benefits. Up to a certain percentage of the life insurance policy’s death benefit may be used in advance to offset nursing home or medical expenses, reducing the face amount of the life policy.
Living Needs Clause. A clause that combines life insurance and LTC benefits, drawing on the life insurance benefits to generate LTC benefits. Also called an accelerated benefit.
Living Trust. A trust created by a person during his lifetime. Also called an inter vivos trust.
Lloyd’s. Generally refers to Lloyd’s of London, England, an institution where individual underwriters accept or reject the risks offered to them. The Lloyd’s Corporation provides the support facility for their activities.
Lloyd’s Association. A group of individuals who band together to assume risks are sometimes called a Lloyd’s association. They are organized along the same lines as, though not connected with, Lloyd’s of London. Each person is responsible only for the share of the risk that he assumes. There are a limited number of these associations in the U.S.
Lloyd’s Broker. A person who has the authority to negotiate insurance contracts with the underwriters on the floor at Lloyd’s. See also Lloyd’s.
Lloyd’s Syndicate. A consortium of individual Lloyd’s underwriters. Usually one person acts for the syndicate in accepting or rejecting risks.
Lloyd’s Underwriter. An individual who underwrites risks through the facility of Lloyd’s of London. These individuals are liable only for their own assumptions of risk and not those assumed by others in the same syndicate or in the overall Lloyd’s organization.
Loading. The amount added to the pure insurance cost to cover the operations cost of an insurer, the possibility that losses will be greater than statistically expected and fluctuating interest rates on the insurer’s investments. The “pure” insurance cost is that portion of the premium estimated to be necessary for losses.
Loan Value. A term that refers to the amount of money an insured can borrow using the cash value of his life insurance policy as security.
Local Agent. An agent representing companies in a sales and service capacity as an independent contractor on a commission basis. A local agent usually has a small territory, and agent powers are limited by contract.
LOMA. See Life Office Management Association.
Longshoremen’s and Harbor Workers’ Act. A federal act that stipulates compensation levels for injured longshoremen and harbor workers.
Long-Term Care (LTC). Care provided for persons with chronic diseases or disabilities.
Long-Term Care (LTC) Insurance. A policy that reimburses daily health and social service expenses incurred when an insured is confined to a convalescent or nursing home facility. Often marketed as a rider to a life insurance policy, this coverage pays for the care of persons with chronic diseases or disabilities, and may include a wide range of health and social services provided under the supervision of medical professionals.
Long-Term Care Facility. Usually a state licensed facility that provides skilled nursing services, intermediate care and custodial care.
Long-Term Care Riders. In recent years, some insurers have begun to offer long-term care coverage in the form of riders attached to life insurance policies or annuity contracts—and even in connection with some other policy forms, such as disability income insurance. Life insurance LTC riders provide benefits very similar to those found in LTC policies.
Long-Term Disability Insurance. A group/individual policy that provides coverage for longer than a short term, often until the insured reaches age 65 in the case of illness and for life in the case of accident. See also Short-Term Disability Insurance.
Loss. (1) The amount of reduction in the value of an insured’s property caused by an insured peril. (2) The amount sought through an insured’s claim. (3) The amount paid on behalf of an insured under an insurance contract.
Loss Adjustment Expense. The cost of adjusting losses, excluding the amount of the loss itself.
Loss and Expense Data. Insurance rates are based on broad averages of loss and expense data and include components for expected losses and expenses. Individual companies have generally been permitted to deviate from published rates based on individual company differences in experience and expense factors.
Loss Assessment Charge. An insured’s share of a loss assessment for property damage or liability, which is charged by a corporation or association of property owners. Homeowners policies provide some coverage for loss assessments charged against the insured as owner or tenant of a residence.
Loss Clause. See Automatic Reinstatement Clause.
Loss Constant. A flat amount included in the premium for small workers’ compensation policies, for dwellings in some jurisdictions and for some prescribed inland marine insurance lines. The loss constant offsets the greater-than-average loss experience that most small risks have when compared to all other risks in a given classification.
Loss Control. Any combination of actions taken to reduce the frequency or severity of losses (e.g., installing locks, burglar alarms or sprinklers).
Loss Conversion Factor. A factor applied to the losses in the formula to give the insurer the funds needed to handle the investigation of claims (used in a retrospective rating plan).
Loss Cost Multiplier. A multiplier insurers use to account for individual company expenses, underwriting profit and contingencies, in order to arrive at final rates.
Loss Costs. In 1989, ISO began a transition from providing advisory base rates to providing only prospective loss costs, made up of claims payments and loss adjustment expenses. Each insurer develops its own rating factors to reflect its own underwriting expense and profit/contingencies.
Loss Development. The difference between the amount of losses initially estimated by the insurer and the amount reported in an evaluation at a later date.
Loss Development Factor. This was a development under retrospective rating plans to consider the effect of inflation on losses that take a long time to settle. It gives the insurer additional money to allow for the subsequent development of losses and to reimburse for claims that are late in being reported. See also IBNR.
Loss Expectancy. An underwriter’s estimate of the maximum loss suffered on an exposure being considered, with focus on the expected level of loss prevention activities on the part of the insured.
Loss Frequency. The number of times a loss occurs over a specific period of time.
Loss Limitation. Another term used in retrospective rating formulas, designed to limit the effect of catastrophic losses that would otherwise be considered in full when figuring the final retrospective premium.
Loss Loading. A factor applied to the pure loss cost to produce a reinsurance rate or premium.
Loss of Future Earnings. Claims that seek money for income that might have been earned in the future. People hurt while in someone else’s car, or their own car and even the families of people killed in car accidents often make these claims. In most cases, courts allow coverage for lost wages only during a period of recuperation from injuries suffered in an accident. It is not an indefinite benefit.
Loss of Income Insurance. Insurance paying loss of income benefits.
Loss of Market. The inability to sell a product to prospective buyers. This is considered a normal business risk and not covered except in some cases such as meats, where spoilage can result in loss of market. However, if spoilage is the result of a storm at sea or a derailing, coverage can be purchased for an additional premium.
Loss of Time Insurance. See Loss of Income Insurance.
Loss of Use Insurance. Coverage for the loss of use of property if it cannot be used because of a peril covered by the policy. If a covered loss makes the residence premises uninhabitable, this covers—at the insured’s option—either additional living expenses related to maintaining the normal standard of living of the household or the fair rental value of the part of the residence where the insured lives. (If a part of a residence rented to others is uninhabitable, coverage is offered for loss of fair rental value.) See Additional Living Expenses.
Loss Payable Clause. A provision in property insurance contracts authorizing payment to persons other than the insured to the extent that they have an insurable interest in the property. This clause may be used when there is a lien or loan on the property, and it protects the lender.
Loss Payee. The party to whom money or insurance proceeds is to be paid in the event of loss, such as the lienholder on an automobile or the mortgagee on real property.
Loss Payment. A condition that specifies the rights and obligations of the insurance company after a covered loss occurs. The insurer has the option of paying the value of lost or damaged property, paying the cost of repairing or replacing lost or damaged property or of repairing, rebuilding or replacing property with property of like kind and quality. It may also take possession of any part of the property at an agreed or appraised value. An insurer must give notice of its intent within 30 days after receiving a sworn statement of loss.
Loss Prevention Engineer. See Engineer.
Loss Prevention Service. Engineering and inspection by an insurance company or independent organization with the aim of removing or reducing dangerous conditions in order to prevent losses.
Loss Ratio. The losses divided by the premiums paid. The numerator (losses) can be losses incurred or losses paid, and the denominator (premium) can be earned premiums or written premiums, depending on how the loss ratio is going to be used.
Loss Report. See Claim Report.
Loss Reserve. The estimated liability for unpaid insurance claims or losses that have occurred as of a given evaluation date, including losses incurred but not reported (IBNR), losses due but not yet paid and amount not yet due. The above refers to a loss reserve in an insurer’s financial statement. As to individual claims, the loss reserve is the estimate of what will ultimately be paid out on that case.
Loss Severity. The amount of a loss expressed in financial terms.
Losses Incurred. The total losses, whether paid or not, sustained by an insurer in a given period.
Losses Outstanding. A summary statement prepared by property, life and liability insurers showing claims not yet settled.
Losses Paid. A summary of claims paid.
Loss-of-Income Benefits. Benefits paid for inability to work for remuneration because of disability resulting from accidental bodily injury or sickness. The loss of income may be real or presumptive.
Lost Instrument Bond. When the owner of a stock certificate loses it, the insurer of the certificate will not issue a duplicate until the owner furnishes an indemnity bond guaranteeing that if he finds the original he will give it to the surety company.
Lost Policy Release. A statement signed by an insured releasing the insurer from all liability for a lost or mislaid contract of insurance (usually signed after a replacement policy has been issued).
Lost-or-Not-Lost Clause. (1) A provision in an ocean marine contract that assures coverage whether the property is in existence at the time the contract is written or has been destroyed. (2) Coverage of a ship at sea “afloat or sunk.”
LTC. See Long Term Care insurance.
Lump Sum. A method for paying the proceeds of a life insurance policy whereby the beneficiary receives the entire proceeds of a policy at once rather than in installments.
LUTC. See Life Underwriting Training Council.