Financial Glossary

J

Joint-and-Survivor Annuity
A contract that provides income periodically, payable during the longer lifetime of two persons. The amount payable may decrease at the death of one or the other. (See Contingent Annuity Option)

K

Key-Person Insurance
Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.

L

Lapse
The cancellation of an insurance policy due to non-payment of renewal premiums during the grace period.
Lapse Subsidized
This refers to the practice of some life insurance companies to offer policies which are lower in price because they have assumed a high probability that the policies will be cashed in by their owners for one reason or another before the death benefit becomes available. It is a bold and risky offer by the insurance company because sometimes the purchasers of these policies simply don't lapse them.
Lapsed Policy
A policy terminated because of non-payment of premiums. This phrase sometimes is limited to a termination occurring before the policy has a cash or other non-forfeiture value.
Last To Die Coverage
This means that there are two or more life insured on the same policy but the death benefit is paid out on the last person to die. The cost of this type of coverage is much less than a first to die policy and it is generally used to protect estate value for children where there might be substantial capital gains taxes due upon the death of the last parent. This kind of policy is also valuable when one of two people covered has health problems that would prohibit obtaining individual coverage.
Law of Large Numbers
Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
Leasehold Mortgage
A mortgage on a property that is on land that is leased as opposed to freehold.
Legal Reserve
The minimum reserve that a company must keep to meet future claims and obligations.
Level Premium Life Insurance
This is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
Level Premium
A premium that remains unchanged throughout the life of a policy.
Level Term Life Insurance
A form of life insurance in which the death benefit remains the same throughout the term of the plan.
Liability Limits
The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
Liability Without Fault
Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.
Liability
Any legally enforceable obligation.
Life Annuity With 10 Years Certain
An annuity which pays an income to the annuitant for as long as he or she lives, but if death occurs within 10 years after the annuity payments begin, payments are continued to a named beneficiary for the remainder of the 10 years.
Life Annuity
A contract that provides an income for life.
Life Expectancy
The average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table.
Life Income Fund
Commonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income pay out as opposed to Registered Retirement Savings Plan (RRSP) holders choice of pay out through Registered Retirement Income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80.
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
Insurance providing for the payment of benefits upon the death, whether by accident or otherwise, of the life insured.
Lifetime Disability Benefit
A benefit to help replace income lost by an insured person as long as he/ she is totally disabled, even for a lifetime.
Limited Payment Life Insurance
Permanent life insurance that pays a benefit on the death of the life insured whenever that occurs, and for which premiums are payable for a specified number of years, or until the death of the life insured if this occurs before the end of the specified period.
Limited Policy
One that covers only specified accidents or sicknesses.
Liquidation
Dissolving a company by selling its assets for cash.
Liquidity
Ability to convert assets into cash or cash equivalents without significant loss.
Living Benefit
Some insurance companies include this benefit at no cost to their policyholders. The insurer considers on a case-to-case basis, the need for insurance funds before death. If the insured can demonstrate a shortened life of less than two years and with some insurers one year, the insurer will consider releasing up to 50% or a maximum of $100,000 of the life insurance coverage held by the insured. Not all insurers offer this benefit for free. The need has resulted in specific stand-alone living benefit/ critical illness policies coming into existence. Look under "Different types of Life Insurance" for further information. You might have heard of "Viatical Settlements", the practice of seriously ill people selling the rights to their life insurance policies to third parties. This practice is common in the United States but has not caught on in Canada.
Living Trust
A trust created while the creator of the trust is living. Also known as an inter vivos trust.
Living Will
This is a will that specifically expresses the testator's desire not to be kept alive on life support machines, should the occasion arise.
Lloyd's of London
insurance marketplace where brokers, representing clients with insurable risks, deal with Lloyd's underwriters, who in turn represent investors. The investors are grouped together into syndicates that provide capital to insure the risks.
Loan to Value
The ratio, expressed as a percentage, of the mortgage to the appraised value or purchase price whichever the lesser.
Locked-in Trade
A securities transaction in which all of the terms and conditions of the trade are accepted by the buyer and seller; once a transaction is locked in, reporting to an exchange and to the clearing corporation are processed electronically.
Long-Term Care
Range of medical and/ or social services designed to help people who have disabilities or chronic care needs. Services may be short or long-term and may be provided in a person's home, in the community, or in residential facilities.
Long-Term Disability Income Insurance
Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee's earned income lost through serious and prolonged illness or injury during the normal work career. (See also Integration.)
Loss
The happening of the event for which insurance pays.