LAPSE
A policy lapses if the policyholder fails to pay premiums when they are due or fails to renew a general insurance policy when it expires.

LIABILITY
A requirement or commitment to make a payment. For example, an insurance company's liabilities include: benefits payable to policyholders and payments to staff, agents and suppliers.

LIABILITY CLAIMS
A claim made against a policyholder by a THIRD PARTY for injury, property damage or financial loss caused by the policyholder. The third party may have to sue the policyholder to establish legal liability through the courts.

LIFE ASSURANCE
A (euphemistic) term for a death benefit.

LIFE OFFICE
A life assurance company. Often referred to simply as an "office".

LIFE TABLE
A hypothetical table showing the progression of the numbers of survivors and deaths in a cohort of individuals.

LIMITED COMPANY
A business where the owners (ie the SHAREHOLDERS) have limited liability. Shareholders are liable for the debts of the company up to the fully paid value of the shares they hold (ie the full share price on the date the shares were purchased).

LINE (OF BUSINESS)
A CLASS (or subclass) of insurance eg household contents insurance.

LIQUID
An investment is liquid if it can readily be converted to CASH without a loss in value.

LLOYD'S
An insurance organisation housed in the Lloyd's building in the City of London. A large number of syndicates, financed by individual Lloyd's members ("names"), write insurance business there. It is governed by separate legislation from other insurers.

LOADINGS
Adjustments made to the RISK PREMIUM to calculate the OFFICE PREMIUM. Loadings include allowances for office expenses, commission and profit.

LOAN
An arrangement under which a lender provides a sum of money to a borrower, who is required to repay the lender according to an agreed set of conditions. The borrower pays interest on the outstanding amount of the loan.

LOAN SCHEDULE
A table showing the interest and capital payments in each period under a loan agreement.

LIABILITY CLAIMS are often long tail. Long tail claims are often for large amounts. So the graph
of the LOSS DISTRIBUTION has a "long tail" extending to the right.

LONG TERM BUSINESS
Official terminology for life assurance and annuity business, as opposed to general insurance.
So called because policies set out the terms that will apply for many years, and policies are not
renewable annually. See also: SHORT TERM BUSINESS.

LUMP SUM
A single payment, as opposed to an ANNUITY.