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Insurance Definitions J - K - L
Joint life and survivorship annuity: An annuity contract covering two or more lives and continuing in force as long as any one of them survives.
Joint life annuity: An annuity contract covering the lives of two or more persons and terminating at the first death among the lives covered.
Joint life policy: A contract which covers two or more lives; the payment of proceeds varies by plan.
Judgment rates: Rates established by the judgment of the underwriter with or without the application of a formal set of rules or rate schedule.
Juvenile insurance: Life insurance policies written on the lives of children who are within specified age limits.
Keogh plan (for self-employed - HR-10 Plan): A retirement plan individually adopted by self-employed persons that allows a tax-deductible contribution to a deferred-contribution or defined-benefit plan.
Key-executive (or key-person) insurance: Protection of a business firm against the financial loss caused by the death of or disablement of a vital member of a firm. It is a means of protecting a business from the adverse results of the loss of individuals possessing special managerial or technical skill or experience.
Lapse: The termination of a policy because of the failure of the insured to pay the renewal premium.
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 an insured hazard, such as fire, etc.
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: Policy that covers civil liabilities to third parties, arising from bodily injury, property damage, or other wrongs due to action or inaction of the insured. Such insurance only covers civil liabilities, not criminal liabilities.
License: Certification issued by a State Department of Insurance that an individual is qualified to solicit insurance applications for the period covered. Such license is usually issued for a period of one year, but is renewable on application. Agents should carefully study the licensing laws and regulations of their own states.
Lien: The legal claim that entitles a creditor to a debtor’s asset until a loan is paid.
Lienholder: The creditor with a financial entitlement to a property equivalent to the amount borrowed or still owed.
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, which refers to a person’s total estimated lifetime, or estimated age at death.
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.
Limits of liability: The maximum amount an insurance company agrees to pay in the event of a covered loss.
Loan value: The amount that can be borrowed from the cash value of a life insurance policy.
Loss: Typically refers to: (1) the amount sought through an insured's claim; (2) the amount of reduction in the value of an insured's property caused by a covered peril; (3) 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 claimant's 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 of use: Loss of Use coverage pays for extra expenses an insured incurs from either an accident or damage to his/her vehicle. If a loss occurs over 50 miles from home, such coverage pays for extra expenses to return the repaired car to its home or destination. In the case of total theft, this coverage pays an extra amount per day in excess of the amount provided on a standard policy.
Loss ratio: The rate of incurred losses to earned premiums.
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.