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L-SHARE VARIABLE
ANNUITIES |
A form of variable annuity
contract usually with short surrender periods and
higher mortality and expense risk charges.
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LADDERING |
A technique that consists of
staggering the maturity dates and the mix of
different types of bonds.
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LAW OF LARGE NUMBERS |
The theory of probability on
which the business of insurance is based. Simply
put, this mathematical premise says that the
larger the group of units insured, such as
sport-utility vehicles, the more accurate the
predictions of loss will be.
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LIABILITY INSURANCE |
Insurance for what the
policyholder is legally obligated to pay because
of bodily injury or property damage caused to
another person.
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LIFE INSURANCE |
See
Ordinary life insurance;
Term insurance;
Variable life insurance;
Whole life insurance
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LIMITS |
Maximum amount of insurance
that can be paid for a covered loss.
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LINE |
Type or kind of insurance,
such as personal lines.
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LIQUIDATION |
Enables the state insurance
department as liquidator or its appointed deputy
to wind up the insurance company’s affairs by
selling its assets and settling claims upon those
assets. After receiving the liquidation order, the
liquidator notifies insurance departments in other
states and state guaranty funds of the liquidation
proceedings. Such insurance company liquidations
are not subject to the Federal Bankruptcy Code but
to each state’s liquidation statutes.
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LIQUIDITY |
The ability and speed with
which a security can be converted into cash.
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LIQUOR LIABILITY |
Coverage for bodily injury
or property damage caused by an intoxicated person
who was served liquor by the policyholder.
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LLOYD'S OF LONDON |
A marketplace where
underwriting syndicates, or mini-insurers, gather
to sell insurance policies and reinsurance. Each
syndicate is managed by an underwriter who decides
whether or not to accept the risk. The Lloyd’s
market is a major player in the international
reinsurance market as well as a primary market for
marine insurance and large risks. Originally,
Lloyd’s was a London coffee house in the 1600s
patronized by shipowners who insured each other’s
hulls and cargoes. As Lloyd’s developed, wealthy
individuals, called “Names,” placed their personal
assets behind insurance risks as a business
venture. Increasingly since the 1990s, most of the
capital comes from corporations.
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LLOYDS |
Corporation formed to market
services of a group of underwriters. Does not
issue insurance policies or provide insurance
protection. Insurance is written by individual
underwriters, with each assuming a part of every
risk. Has no connection to Lloyd’s of London, and
is found primarily in Texas.
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LONG-TERM CARE INSURANCE |
Coverage that, under
specified conditions, provides skilled nursing,
intermediate care, or custodial care for a patient
(generally over age 65) in a nursing facility or
his or her residence.
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LOSS |
A reduction in the quality
or value of a property, or a legal liability.
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LOSS ADJUSTMENT EXPENSES |
The sum insurers pay for
investigating and settling insurance claims,
including the cost of defending a lawsuit in
court.
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LOSS COSTS |
The portion of an insurance
rate used to cover claims and the costs of
adjusting claims. Insurance companies typically
determine their rates by estimating their future
loss costs and adding a provision for expenses,
profit, and contingencies.
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LOSS OF USE |
A provision in homeowners
and renters insurance policies that reimburses
policyholders for any extra living expenses due to
having to live elsewhere while their home is being
restored following a disaster.
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LOSS RATIO |
Percentage of each premium
dollar an insurer spends on claims.
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LOSS RESERVES |
The company’s best estimate
of what it will pay for claims, which is
periodically readjusted. They represent a
liability on the insurer’s balance sheet.
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