Laddering:

Purchasing bond investments that mature at different time intervals.

Lapse:

Termination of a policy due to the policy owner's failure to pay the premium within the grace period.

Lapse Ratio:

The ratio of the number of life insurance policies that lapsed within a given period to the number in force at the beginning of that period.

Leasehold Interest:

Property insurance covering the loss suffered by a tenant due to termination of a lease because of damage to the leased premises by a covered loss.

Least Expensive Alternative Treatment:

The amount an insurance company will pay based on its determination of cost for a particular procedure.

Lessee:

The person to whom a lease is granted.

Lessor:

The person granting the lease.

Leverage or Capitalization:

Measures the exposure of a company's surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.

Liability:

The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.  Broadly, any legally enforceable obligation. The term is most commonly used in a pecuniary sense.

Liability Insurance:

Insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility, due to negligence, to others imposed by law or assumed by contract. 

Liberalization Clause:

A provision within an insurance policy that broadens the coverage if the insurance company offers a broader coverage form within the first 45 days of coverage.

Licensed:

Indicates the company is incorporated (or chartered) in another state but is a licensed (admitted) insurer for this state to write specific lines of business for which it qualifies.

Licensed for Reinsurance Only:

Indicates the company is a licensed (admitted) insurer to write reinsurance on risks in this state. 

Lien:

An obligation that can be held by an individual who has an interest in a particular matter or property

Life Expectancy:

The average number of years a person is expected to live based on a national average per age group, and other factors.

Life Insurance:

Insurance coverage that pays out a set amount of money to specified beneficiaries upon the death of the individual who is insured.

Limit of Liability:

The most an insurance company agrees to pay in the case of loss.

Limited Pay Policy:

A type of whole life insurance designed to let the policyholder pay higher premiums over a specific time period such as 10 or 20 years so that they won't have to pay any premiums for the rest of his or her life.

Lifetime Reserve Days:

Sixty additional days Medicare pays for when you are hospitalized for more than 90 days in a benefit period. These days can only be used once during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance amount. 

Liquidity:

Liquidity is the ability of an individual or business to quickly convert assets into cash without incurring a considerable loss. There are two kinds of liquidity: quick and current. Quick liquidity refers to funds--cash, short-term investments, and government bonds--and possessions which can immediately be converted into cash in the case of an emergency. Current liquidity refers to current liquidity plus possessions such as real estate which cannot be immediately liquidated, but eventually can be sold and converted into cash. Quick liquidity is a subset of current liquidity. This reflects the financial stability of a company and thus their rating. 

Living Benefits:

This feature allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care, or confinement to a nursing home. Also known as "accelerated death benefits."

Lloyd's:

Generally refers to Lloyd's of London, England, an institution within which individual underwriters accept or reject the risks offered to them. The Lloyd's Corp. provides the support facility for their activities.

Lloyds Organizations:

These organizations are voluntary unincorporated associations of individuals. Each individual assumes a specified portion of the liability under each policy issued. The underwriters operate through a common attorney-in-fact appointed for this purpose by the underwriters. The laws of most states contain some provisions governing the formation and operation of such organizations, but these laws don't generally provide as strict a supervision and control as the laws dealing with incorporated stock and mutual insurance companies.

Longshore and Harbor Workers' Compensation Act:

A federal law that provides workers' compensation benefits to employees of a vessel injured in maritime employment - usually in loading, unloading, repairing or building a vessel - but not applicable to crew members.

Loss:

The amount an insurance company pays for damages under the terms of a policy.

Loss Adjustment Expense:

The cost assessed to a particular claim for investigating and adjusting that claim.

Loss and Loss-Adjustment Reserves to Policyholder Surplus Ratio:

The higher the multiple of loss reserves to surplus, the more a company's solvency is dependent upon having and maintaining reserve adequacy.

Losses and Loss-Adjustment Expenses:

This represents the total reserves for unpaid losses and loss-adjustment expenses, including reserves for any incurred but not reported losses, and supplemental reserves established by the company. It is the total for all lines of business and all accident years.

Loss Constant:

A flat charge added to the premium of small workers' compensation policies to offset higher loss ratios.

Loss Control:

A technique that is put in place to reduce the possibility that a loss will occur or reduce the severity of those that do occur.

Loss Payable Clause:

An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.

Loss Ratio:

Percentage of losses incurred against earned premiums.

Loss Report:

A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid and amount reserved for each loss.

Loss Reserve:

An estimated amount set aside for a particular claim that has not yet been paid.

Losses Incurred (Pure Losses):

Net paid losses during the current year plus the change in loss reserves since the prior year end.

Lost Policy Release:

A signed statement by the named when the insured wishes to cancel the policy, but has lost or mislaid the policy, which releases the insurance company from all liability or losses.