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Glossary of Insurance Terms - L

Glossary of terms used in insurance - L

  1. Life Time Maximum Benefit: The maximum amount to be paid by the insurance company to the individual as benefits during his lifetime.
  2. Limitations: This is the maximum amount a company will pay for a covered expense. It is included in the certificate of insurance.
  3. Long Term Care Policy: Insurance plans which cover fixed services for a fixed amount of time. These policies differ between states and companies. Services like nursing, custodial services etc are included.
  4. Long Term Disability Insurance: These plans ensure that you get a certain percentage of your earnings in case you become disabled.
  5. LOS: The full form is Length of Stay; it is the amount of time an individual stays at a hospital or at an inpatient facility.
  6. Lapse: The end or discontinuation of an insurance policy due to the failure of the member to pay a premium.
  7. Lapsed Policy: This refers to a policy which has ended due to nonpayment of premiums. The term is sometimes used to describe a discontinuation in policy occurring before it has cash value.
  8. Laddering: This refers to the purchase of bond investments that mature at specific intervals of time.
  9. Lapse Ratio: This refers to the ratio between the insurances that lapsed during a specific period of time and the total number that was there before the start of the period.
  10. Least Expensive Alternative Treatment: This is the amount of money an insurance company will pay according to its determination of cost for a specified procedure.
  11. Leverage or Capitalization: This measures the exposure suffered by the company’s surplus due to different financial practices. A poorly capitalized or highly leveraged company might be instable, even if it is producing a high return on surplus.
  12. Liability: This refers to any obligation that is legally enforceable.
  13. Liability Insurance: This refers to the insurance that services and provides for the costs of losses arising out of negligence and liabilities.
  14. Licensed: This indicates that the company is incorporated in a separate state but is an admitted insurer for a separate state. It is allowed to write particular lines of business according to its license.
  15. Licensed For Reinsurance only: This phrase means that a particular company is authorized to write reinsurance in a particular state.
  16. Lifetime Reserve Days: This refers to an additional period of 60 days that Medicare is paid for a patient after 90 days of continuous stay at a hospital. They can be availed only once in a lifetime. For these days, Medicare covers all costs provided in the plan except a daily coinsurance.
  17. Liquidity: This refers to the ability of a company to convert assets into cash at any time without suffering too many losses. They are of two kinds-quick and current. The former refers to those assets which can be converted fast. These are assets like short term investments, govt. bonds and cash. The latter refers to assets like real estate which can be converted but not very fast. It indicates the financial strength of the company.
  18. Living Benefits: This is a provision included in life insurance policies which allow for the provision of certain benefits before the death of the owner of the plan. They are also called accelerated death benefits.
  19. Lloyd’s: This is an institution under which risks are offered or rejected by underwriters. It is generally referred to as Lloyd’s of London. The support facilities are provided by Lloyd’s corporation.
  20. Lloyd’s Organizations: These are basically voluntary organizations of individuals. Each individual is assigned a specified part of the liabilities under each policy. They function under a common attorney appointed for this specific purpose. The laws under which such organizations function are determined by the state. The laws are not as strict as those governing mutual funds companies and stock companies.
  21. Loss Adjustment Expenses: These are the costs incurred on investigating and settling losses.
  22. Loss and Loss Adjustment Reserves to Policyholder Surplus Ratio: The Company’s reserves adequacy determines the solvency of the company. The increase in multiples of loss reserves and surplus increases the dependency.
  23. Loss Control: These refer to the methods taken to bring down the severity of losses. These include loss reduction, loss prevention and noninsurance risk transfer. The core of risk management programmes include risk control techniques and risk financing methods. Methods include risk avoidance, loss of control, self insuring and other techniques.
  24. Loss Ratio: This is the ratio of net earned premiums to incurred losses and its expenses.
  25. Loss Reserve: This is an estimate of the liabilities as would appear in an insurance company’s statement. It includes unpaid insurance claims or losses. These include IBNR and amounts that are not yet due. For individual claims, a loss reserve measures what will be ultimately paid to them.

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