Glossary
Insurance Terms Glossary
This page provides a glossary of insurance terms and definitions that are commonly used in the insurance business. New terms will be added to the glossary over time.
The definitions in this glossary are developed by the NAIC Research and Actuarial Department staff based on various insurance references. These definitions represent a common or general use of the term. Some words and/or phrases may be defined differently by other entities, or used in a context such that the definition shown may not be applicable.
Terms beginning with L
- Lapse
- – termination of a policy due to failure to pay the required renewal premium.
- Level Premium Insurance
- – life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout.
- Liability
- – a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future.
- Life – Endowment
- – insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age.
- Life Settlements
- – a contract or agreement in which a policyholder agrees to sell or transfer ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of a policy.
- Lifetime Disability Benefit
- – a provision in some disability income policies to recoup lost wages for the term of disability or remainder of insured's life in case of permanent disability.
- Limited Benefit
- – policies that provide coverage for vision, prescription drug, and/or any other single service plan or program.
- Limited Payment Life Insurance
- – a form of whole-life insurance with a pre-defined number of premiums to be paid.
- Limits
- – maximum value to be derived from a policy.
- Line of Business
- – classification of business written by insurers.
- Liquor Liability
- – coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages.
- Living Benefits Rider
- – a rider attached to a life insurance policy providing long term care for the terminally ill.
- Lloyd's Of London
- – association offering membership in various syndicates of wealthy individuals organized for the purpose of writing insurance for a particular hazard.
- Long-Term Care
- – policies that provide coverage for not less than one year for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital.
- Long-Term Disability Income Insurance
- – policy providing monthly income payments for insureds who become disabled for an extensive length of time, typically two years or longer.
- Loss
- – physical damage to property or bodily injury, including loss of use or loss of income
- Loss Adjustment Expense (LAE)
- – expected payments for costs to be incurred in connection with the adjustment and recording of losses.
- Loss Frequency
- – incidence of claims on a policy during a premium period.
- Loss Of Use Insurance
- – policy providing protection against loss of use due to damage or destruction of property.
- Loss Ratio
- – the percentage of incurred losses to earned premiums.
- Loss Reserve
- – the amount that insurers set aside to cover claims incurred but not yet paid.
- Losses Incurred
- – Includes claims that have been paid and/or have amounts held in reserve for future payment
Ready to talk to a verified agent?
Search top insurance agents, financial advisors and Registered Social Security Analysts near you, then choose the best match for your goals.