Dictionary of Financial Terms - L

Land registration

A record, held by the Land Registry, which lists the registered owner of a plot and whether there are any legal charges upon it.

LAPR

Life Assurance Premium Relief.

Lapse

The termination of an insurance policy due to non-payment of premium(s).

Lapsed Policy

A policy terminated for non-payment of premium(s).

Late Entrant

These are individuals who wish to join a group insurance scheme beyond the date at which they were automatically eligible for membership.

Lease

n. Contract by which the owner of property allows another to use it for a specified time, usu. in return for payment. —v. (-sing) grant or take on lease. New lease of (US on) life improved prospect of living, or of use after repair. [Anglo-French lesser let, from Latin laxo loosen]. The grant of an interest in leasehold land (see below at Leasehold Land). It must give exclusive possession of the land and be for a fixed term. To be a legal lease it must be created by deed, unless it is for less than three years, take effect on possession (i.e. start immediately), and be for the best rent obtainable without taking a premium. A lease that is not a legal lease may, however, be valid in equity as an agreement for a lease. This must be registered or any rights under it may be lost on the sale of the freehold or of a superior lease. A lease generally constitutes a bargain between the landlord and tenant, containing rights and obligations on both sides. It may come to an end on the expiry of the term; alternatively it may be ended earlier, by the tenant surrendering it to the landlord or by the landlord ending it for the breach of some condition (e.g. failure to pay the rent or leaving the premises in disrepair). A lease may be assigned to someone else; for example, a leasehold flat may be sold for a capital sum. The new tenant will then take over the responsibilities under the lease. A repairing lease is one in which the tenant is obliged to pay for all repairs and is usually bound to leave the property at the end of his lease in the same condition as he found it at the start of the lease.

Leaseback (renting back)

A method of raising finance in which an organization sells its land or buildings to an investor (usually an insurance company) on condition that the investor will lease the property back to the organization for a fixed term at an agreed rental. This releases capital for the organization, enabling it to be used for other purposes.

Leasehold

If you buy a property that is leasehold it means that you own the property but not the land the property is on, unlike freehold where you would own both.

Leasehold land

Land held under a *lease. The land will eventually revert to the freehold owner, although there has been some statutory modification of this right to repossession (e.g. in the Rent Acts). This is the most common way for blocks of offices to be owned. The landlord maintains possession of the common parts and creates separate leases for each office. The ownership of each office may subsequently change as leases are assigned.

Leasing

Hiring equipment, such as a car or a piece of machinery, to avoid the capital cost involved in owning it. In some companies it is advantageous to use capital for other purposes and to lease some equipment, paying for the hire out of income. The equipment is then an asset of the leasing company rather than the lessor. Sometimes a case can be made for leasing rather than purchasing, on the grounds that some equipment quickly becomes obsolete.

Legal charge

The legal document held by the Land Registry that identifies who has a claim on your property. The main lender will normally be identified as the first charge (i.e., have first claim to the property) but there may also be other charges registered (i.e., second, third, etc.).

Level Premium

Rating method in which the premium level remains the same throughout the life of the policy.

Level Term Insurance

A type of term policy where the cover remains the same from the effective date until the expiration date.

Life Annuity

A contract that provides an income during the remaining lifetime of the purchaser.

Life Assurance Premium Relief

Income tax relief on life assurance premiums. The March 1984 Budget stopped this relief for new policies, but life policies that commenced before this date can continue to receive the relief. Relief is granted by means of a deduction from the premium, which is paid to the insurance company net of this deduction. The insurance company later claims the balance from the Inland Revenue so the amount paid and, if appropriate, invested on behalf of the policyholder is the full gross figure as shown in the policy document.

Life Insurance

Any insurance relating to a risk depending on human life.

This includes contracts providing payment on the insured person's death, endowments providing payment either on survival to a specified date or on earlier death and annuities which are paid throughout the annuitant's lifetime but cease on death.

Limited Price Indexation

Occupational pension schemes are required to provide Limited Price Indexation on all pensions benefits accruing after 5 April 1997. The annual LPI increase is 5% per annum or the increase in the Retail Price Index, if less.

Lloyds

The London-based insurance market, best known for marine and aviation cover. The name is taken from Edward Lloyd who owned the coffee shop in Tavern Street from where the market began in 1689.

Loading

The extent to which an individual is charged more than the "standard" or "average" rate for their insurance.

Long Term Care Insurance

A health-insurance variation designed to cover the costs of long term care at home or in a nursing home.

Long Term Disability Insurance

Insurance to provide a reasonable replacement of a portion of a person's income lost through serious illness or injury.

Loss Adjuster

A Loss Adjuster is an independent third party who may be used by an insurance company to assess the value of a claim, particularly if there is a disagreement between the insurer and the insured.

Loss Assessor

A Loss Assessor is a professional who can be employed by a claimant to value a loss and present the insurance company with a supporting case for this valuation. Loss assessors are most often encountered in respect of claims under home contents or buildings insurance.

Low cost endowment

A savings plan which includes decreasing term insurance. It pays out at the end of the term, and also if you die within the term. Usually used to pay off an interest only mortgage.

Lower Earnings Limit

The minimum amount that must be earned in any period before National Insurance contributions are payable.

LTV

Loan to Value. This is the amount of the mortgage expressed as a percentage of the value of the property, or the price you are paying for the property. So a £60,000 mortgage on a £80,000 property would mean a LTV of 75%.

Lump Sum

A settlement whereby the beneficiary receives the entire proceeds of a policy at once rather than in instalments.

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