life annuity with period certain
A life annuity which
promises that if the annuitant dies before the end of a designated
period (usually 5, 10, or 20 years), the insurer will continue
payments to a contingent payee until the end of the designated
period. Also called a life income with period certain annuity.
life income option
A life insurance settlement option
under which the insurer uses the policy proceeds and interest to pay
the beneficiary a series of equal payments for as long as the
beneficiary lives.
life income option with period
certain
A life insurance settlement option in which the
insurer guarantees to pay the beneficiary a series of equal payments
for a designated period, such as 10 years; thereafter, the payments
will continue only as long as the original beneficiary lives. If the
original beneficiary dies during the guaranteed period, payments
will be made to a recipient designated by the original beneficiary
until the end of the guaranteed period, at which time all payments
will stop.
life income option with refund
A type of life income
settlement option in which the insurer guarantees that if the
beneficiary dies before the total amount paid under the option
equals the proceeds of the policy, then the insurer will pay the
difference to a contingent payee. Also call a refund life income
option. See also cash refund option, installment refund option, and
settlement options.
life insurance
Insurance that provides protection
against the economic loss caused by the death of the person insured.
life insured
In the common law provinces of Canada, the
person whose life is insured by an individual life insurance policy.
Called the insured in the United States and Quebec. (For the
purposes of this glossary, we have used the United States term
"insured", except in definitions of purely Canadian terms, in which
cases we have made it clear that "life insured" is a Canadian term.)
lifetime limit
A cap on the
benefits paid under a policy. Many policies have a lifetime limit of
$1 million, which means that the insurer agrees to cover up to $1
million in covered services over the life of the policy.
lifetime maximum
For any individual, the maximum amount
that a medical expense policy will pay for all the eligible medical
expenses the individual incurs while insured under the policy.
limited coverage policy
A type of
medical expense policy designed to cover only those medical expenses
caused by a specified disease, such as cancer, which is named in the
policy. Also called a dread disease policy.
limited-payment whole life insurance
A type of whole
life insurance that does not require premium payments during the
entire lifetime of the insured. Some limited-payment policies
specify the number of years during which premiums are payable, while
other policies specify an age after which premiums are no longer
payable. Single-premium whole life insurance, in which only one
premium payment is made, is an extreme type of limited-payment
insurance.
living benefit rider
A life insurance policy rider
which allows the insured to receive all or part of the policy's
death benefit before the insured's death if certain conditions are
met. This type of provision is often used to help an insured pay
health care costs if he or she becomes terminally ill.
loading
A charge that the insurer adds to the net
premium to produce the gross premium actually paid by the
policyowner. The loading is designed to cover the operating expenses
of the company, to compensate the company for the loss of income
when policies lapse and to provide margins for profits and
contributions to surplus.
location-selling distribution system
A system that
distributes insurance products by locating insurance offices and
agents in places where consumers generally shop for other items or
take care of other business matters, such as department stores,
grocery stores, and banks. Also known as the retail outlet
distribution system.
lock-box banking
A method of premium collection in
which premium payments are received at a specified post office box.
The insurer authorizes a bank to have access to that box and to
remove and open the mail. All premium payments are deposited
immediately in the bank, and the returned portions of the premium
notices, along with a record of deposits, are sent to the insurer.
long-form reinstatement application
A reinstatement
application similar to a policy application in that both address the
long-term health history of the insured.
long-term care (LTC) insurance
Coverage available on an
individual or group basis to provide medical and other services to
patients who need constant care in their own home or in a nursing
home.
long-term disability income insurance
Disability income
insurance which typically provides disability income benefits that
begin at the end of a specified waiting period and that continue
until the earlier of the date when the insured person returns to
work, dies, or becomes eligible for pension benefits. See also
disability income insurance and short-term disability income
insurance.
loss ratio
In pricing health insurance, the loss ratio
is a means of comparing claims losses to premium earnings. To
determine its loss ratio, an insurer divides the dollar amount of
claims it incurred during a given year by the dollar amount of
premiums it earned during the same year.
