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Definitions
- L
Lapse
The termination or
discontinuance of an insurance policy due to non-payment of
a premium.
Lapse
Notice
Written notice by an insurer that the policy has lapsed.
Lapsed
Policy
A policy terminated for non-payment of premiums.
The term is sometimes limited to a termination occurring before
the policy has a cash or other surrender value.
Lapse
Ratio
Surrenders and lapses as a percentage of average insurance
in force for the year.
Legal
Reserve Company
A company that maintains policy reserves according to
the standards established by the insurance laws of the various
states.
Level
Premium
Rating structure under which the premium level remains
the same throughout the life of the policy.
Level
Premium Life Insurance
Life insurance for which the premium remains the same
from year to year. The premium is more than the actual cost
of protection during the earlier years of the policy and less
than the actual cost in the later years. The building of a
reserve is a natural result of level premiums. The overpayments
in the early years, together with the interest that is to
a earned, serve to balance out the underpayments of the later
years.
Level
Term Insurance
A type of Term Life policy where the face value remains
the same from the effective date until the expiration date.
Life
Expectancy: The average number of years of life remaining
for persons of a given age according to a particular mortality
table.
Life
Income
A settlement option under which equal installments are
paid as long as the beneficiary lives, even if the principal
has been exhausted.
Life
Insurance
Insurance providing for payment of a specified amount
on the insured's death, either to his or her estate or to
a designated beneficiary; or in the case of an endowment policy,
to the policy holder at a specified date.
Life Insurance
in Force
The sum of the face amounts, plus dividend additions,
of life insurance polices outstanding at a given time. Additional
amounts payable under accidental death or other special provisions
are not included.
Life
Insurance Trust
A type of life insurance policy where a trust company
is named as the beneficiary and distributes the proceeds of
the policy under the terms of the trust agreement.
Limit
Maximum amount a policy will pay either overall or under
a particular coverage.
Living
Benefits
Benefits available to owners of life insurance contracts
while the insured is still living. This term may refer to
the availability of policy loans and collateral assignments,
but it is typically used to refer to advances on policy proceeds
taken in the case of terminal illness. Also known as Accelerated
Death Benefit.
Loan
Borrowing from the insurer and securing the amount of
the loan with the cash value in the life insurance policy.
If the insured dies when there is an outstanding loan balance,
the amount of the loan and any unpaid interest will be deducted
from the proceeds.
Loan
Value
The amount that can be borrowed from the insurer, using
the policy cash value as collateral.
Long
Term Care Policy
A plan designed to cover the insured's long-term care
(nursing home) costs.
Lump
Sum
A method of settlement whereby the beneficiary receives
the entire proceeds of a policy at once rather than in installments.
Some whole
life policies let you pay premiums
for a shorter period such as 20 years, or until age 65. Premiums
for these policies are higher since the premium payments are
made during a shorter period.
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