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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.

Quick Life Insurance Terms Glossary

(some definitions taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)

LIFE IS COMPLICATED....
BUT TERM LIFE INSURANCE DOES NOT HAVE TO BE.

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