Glossary

This glossary is intended as a general aid to help you understand some of the commonly occurring phrases and jargon used in the insurance world.  If you have any questions about the use or meaning of a term or expression in any particular product or literature, you should raise them with the provider concerned.

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Lapse
Where the customer stops paying premiums or a policy that is not renewed.
Legal expenses insurance
An insurance policy which covers the cost of legal advice or the legal costs involved in pursuing or defending a civil claim.
Level annuity
A type of annuity that pays you the same amount of regular income from the start of your retirement until the end of any guarantee period, or until you die.
Level premium
A payment that stays at the same amount throughout the term of a policy.
Liability
Liability insurance covers business owners, independent professionals and self-employed people against the cost of compensation claims following fault of negligence brought against them by employees, clients, customers, shareholders, investors, or members of the public. Liability insurance usually covers the cost of compensation to a third party for personal injury and loss of or damage to property.
Life expectancy
This is the length of time you are likely to live, taking into account factors such as your age, gender, health and occupation.
Life fund
The pool of money into which all life insurance premiums are paid and out of which all claims are paid.
Life of another
When the owner of the policy is not the person covered by the policy, for example a policy that is owned by a wife but covers her husband’s life.
Lifetime allowance

This is the total amount you can save in your lifetime while still getting tax relief. If you exceed this allowance, your pension savings can be subject to additional taxation. This allowance may be reviewed and changed by government – it is currently £1.055 million.

Liquidation
The process of closing down a company by paying its debts and distributing any money left over.
Lloyds of London
The largest British insurance and reinsurance market.
Loading
This is an increase to a premium if your risk is higher than normal, for example if you are in a dangerous job or have serious health conditions.
Loss
Injury or damage to an insured property or person as a result of an accident or misfortune.
Loss adjuster
Professional appointed by your insurer to confirm the circumstances of your claim and the extent of any damage caused, and to make sure the claim is covered by your policy. The loss adjuster will tell your insurer the amount that should be paid out for your claim.
Loss assessor
An independent person who evaluates and negotiates claims on behalf of the policyholder.