Glossary Of Insurance Terms - Ohio Insurance Institute

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Glossary Of Insurance Terms (Rev. 04/07) K Key Person Insurance: Insurance on the life or health of a key individual whose services are essential to the continuing success of a business and whose death or disability could cause the firm a substantial financial loss. Kidnap and Ransom Insurance: Written for financial institutions and other corporations, this insurance covers named employees for individual or aggregate amounts paid as ransom, with deductibles requiring the insured to participate in approximately 10% of any loss. OII Glossary Of Insurance Terms 26
Glossary Of Insurance Terms (Rev. 04/07) L Lapsed Policy: A life or health insurance policy terminated as a result of non payment of a premium before the end of the grace period. Law of Large Numbers: The theory of probability on which the business of insurance is based. Simply put, this mathematical premise says that the larger the group of units insured, such as sport-utility vehicles, the more accurate the predictions of loss will be. Legal Expense Insurance: Insurance to reimburse policyholders for legal fees incurred for defense from lawsuits involving areas of civil law not covered by standard liability insurance. Examples include: discrimination, wrongful discharge, contract disputes and patent disputes. Level Premium Life Insurance: Insurance for which the cost is distributed evenly over the period during which premiums are paid. The premium remains the same from year to year and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up a reserve which helps meet the costs in later years. Liabilities: An insurance company’s liabilities consist of its immediate or contingent policy obligations and unpaid claims, as well as the usual obligations arising out of doing business such as taxes, payroll, etc. Liability Insurance: Provides protection for the insured against loss arising out of his/her legal liability to third parties. Liability Limits: The stipulated sum or sums beyond which an insurance company is not liable to protect the insured. License—Agent or Broker: Certification issued by a state’s department of insurance that an individual is qualified to solicit insurance applications in the state for the period covered. License—Company: Certification issued by a state’s department of insurance that an insurance company is qualified to do business in the state. Limit: The maximum amount of benefits that an insurer agrees to pay in the event of a loss. Line: A type or kind of insurance. Liquidation: Enables the state insurance department as liquidator or its appointed deputy to wind up the insurance company’s affairs by selling its assets and settling claims upon those assets. After receiving the liquidation order, the liquidator notifies insurance departments in other states and state guaranty funds of the liquidation proceedings. Such insurance company liquidations are not subject to the Federal Bankruptcy Code but to each state’s liquidation statutes. Liquidity: The ability and speed with which a security can be converted into cash. Liquor Liability: Coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder. Litigation: The process of a lawsuit. OII Glossary Of Insurance Terms 27
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Glossary Of Insurance Terms - Ohio Insurance Institute

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