Glossary L – M terms used in Financial Services

Land Registry: Established by the Land Registration Act 1925 to maintain details of land ownership e.g. describes the land and any rights, the owner and any charges noted against the land.
Last Survivor: Term used in joint life policies where the policy proceeds are paid out only on the last death.
Lease: A lease is a contract by which a property owner grants exclusive use of a property for an agreed period.
Leasehold Property: Property held under lease.
Legal Expenses Insurance: Covers the cost of legal proceedings in circumstances defined in the policy.
Lending Multiple: Money borrowed to help with a house purchase is usually calculated with reference to a ceiling multiple of income(s).
Lending Panel: Generally used in relation to a group of lending organisations e.g. building societies, used by a life company to provide advances for house purchase.
Letters of Exchange: A method of creating a trust for a one-person pension arrangement such as an EPP. The method works simply by the employer writing to the employee setting out the scheme details; the employee replies accepting.
Letters of Administration: Authority granted by the court to an individual permitting that person to administer the estate of someone who died intestate.
Level Premium: The same premium paid throughout the term of a policy.
Level Term Assurance: A term assurance policy where sum assured and premiums do not increase.
Liabilities: Items that are owed e.g. loans, debts in general.
Liability: Legal responsibility for causing loss to someone else by injuring them or damaging their property.
Licensed Deposit Taker: Business which is licensed to take money on deposit and pay interest on it e.g. building society or friendly society.
Life Assurance and Unit Trust Regulatory Organisation: Life Assurance and Unit Trust Regulatory Organisation. In addition to being authorised to do long term insurance business by the DTI, insurance companies had to register with LAUTRO prior to PIA, in respect of the marketing of its products.
Life Assurance Premium Relief: Tax relief on life insurance premiums. Applies only to policies taken out before 14 March 1984.
Life Assured: The person on whose life the life assurance policy is based.
Life of Another: Life policy option. A policy may be written in this way where the death of another person could leave the proposer worse off e.g. spouses (no insurable interest need be shown), business partners (insurable interest usually inherent in the relationship).
Life Assurance Premium Relief: Tax relief, still available, on policies in force and taken out pre-14th March 1984. The relief was abolished at that date for all new policies. The actual rate has fluctuated, generally being half the basic rate tax.
Life Business: General term that can be applied specifically to life assurance, but often is applied to all life, pensions, savings and investment business.
Life Expectancy: The average length of time people are likely to live, taking into account such factors as their present age, health and occupation.
Life Fund: The pool of money, maintained by an insurance company, into which all its life insurance policyholders’ premiums are paid and out of which all claims are paid.
Life Insurance: Although life insurance is probably the more correct term, life assurance has become generally accepted as the generic term for the market. It covers a variety of types of personal protection policy. The one thing they all have in common is that a pay out on death is the main purpose for the contract.
Life Offices: Generally taken to refer to those companies that sell life assurance, pensions and related packaged products.
Life Tenant: Person with an interest in property for their life only e.g. income from investments. At death the interest ceases and cannot be passed on.
Life Interest Trust: A trust which controls property which may be held only as life tenant.
Linked: Describes any savings product where the saver’s money buys, or is deemed to buy, “units” in an investment fund and the value of the saver’s fund is thus linked to the value of the units.
Liquidity: Cash and readily convertible (to cash) assets.
Liquidation: Distribution of a company’s assets to creditors prior to closing down.
Listed Security: A share that is quoted on a stock exchange. Specifically in the UK, this would be a listing in the main market (as opposed to the unlisted securities market or the third market).
Listing particulars: When a company applies to be listed as a member of the Stock Exchange it has to give detailed information about itself that is published in the form of a prospectus.
Lloyd’s of London: An insurance market organised into syndicates, which underwrites most types of policy.
Lloyd’s Members: Individuals on whose behalf Lloyd’s policies are issued. They pledge all their personal wealth to pay losses. Corporate members were also introduced in 1994.
Loading: The extent to which an individual is charged more than the “average” for his/her insurance.
Locum: Generally accepted short form of locum teneus, or short term substitute for an IFA in the event of absence from work for any reason e.g. holiday, sickness. The locum must be able to provide the same level of advice as the principal.
Long-term Care Insurance: Provides for the cost of long-term care. Intended mainly to cover the costs of elderly people being looked after either at home or in residential care.
Long-term Insurance: Insurance of risks where cover extends over a period of more than a year, and where predetermined premiums are often paid on a regular basis over a long period. Frequently, these insurance contracts are intended to provide an investment vehicle as well as risk insurance, e.g. endowment policies.
Loss Adjuster: A person, independent of an insurance company but engaged and paid by it, who checks that a claim is covered and negotiates with the policyholder the amount payable for a claim.
Loss Assessor: A person who negotiates claims on behalf of policyholders.
Lower Earnings Limit: Income qualifying for SERPS benefit forms a band of earnings between the Lower Earnings Limit (LEL) and an Upper Earnings Limit (UEL), this latter being usually between 6½ and 7½ the LEL.
Low Start Endowment: Endowment policy designed for use with mortgages where premiums increase at a fixed rate over a period of years.
Low Cost Endowment: A variation of the with profit endowment, but is combined with a decreasing term assurance so that the investment build up need not be quite so steep, thus reducing the cost.
Managed Fund: Usually a fund choice with a unit-linked policy Managed funds are generally made up of units from other funds e.g. equity fund, international fund, so that it represents a wide base for the investor happy to accept a medium risk investment. In most cases the fund receives the same investment management attention as any other fund, so perhaps a better name might be ‘mixed fund’.
Management Accounting: This describes the analysis of historical and current accounts of revenue and expenses to assist managers in their decision making.
Management Charge: An annual charge on investment funds to pay for the management of the funds, and usually expressed as a percentage of fund value.
Marine Aviation and Transport: The class of insurance which embraces damage to the hull and cargo of ships and aeroplanes, and liability for property damage, injury and death to passengers and others.
Market Counterparty: A category of experienced investor identified under financial services legislation, and someone who would normally transact the same type of business as the adviser.
Market Maker: A Market Maker deals as principal in the shares of companies that appoint him. He must offer the shares and is obliged to quote two-way prices (i.e. buy and sell prices) in them, and must deal in them at those prices throughout the mandatory quote period.
Maturity: An agreed date when an endowment policy comes to an end, and the sum insured plus any bonuses earned is payable.
Maximum Contributions: Pension contracts, both PPP and occupational, have maximum contribution levels. The PPP maxima are set out in a fixed table, the occupational effective maxima are governed by the projected benefits to prevent over provision.
Maximum Investment Plan (MIP): Effectively, a unit linked version of the endowment policy i.e. a regular savings plan with life assurance cover, paying out on maturity or earlier death or surrender. The major difference is that MIPs do not attract bonuses, their value depending on the unit price.
McDonald Report: A report produced on training and competence standards in the financial services industry, and making recommendations on competence, training, knowledge, skills and entry level qualifications.
Mechanical Breakdown Insurance: Covers against the cost of breakdowns of household appliances or motor vehicles.
Medical Attendant’s Report (MAR): Evidence of a proposer’s medical history that may be required during the underwriting stage of the proposal process, provided by the proposer’s doctor.
Medical Evidence: Because of the risk implicit in any proposal of life assurance, an insurance company will reserve the right to call for evidence of the proposers state of health during the proposal process.
Medical Examiner’s Report (MER): In addition to the medical history received from the proposers own doctor in the MAR, it is sometimes necessary to seek additional information regarding current state of health. This is done via medical examination, the result being sent to the underwriting department in the form of a MER.
Memorandum of Association: In conjunction with the Articles, the Memorandum of Association forms the official documentation of the limited company. Where the general purpose of the Articles is to govern the internal operation of the company, the Memorandum governs the companies external operations and business relationships.
Merchant Bank: A bank that deals in corporate finance rather than domestic bank accounting.
Minors: Generally, someone not of voting age.
MIRAS: Mortgage Interest Relief At Source. System of tax relief on property purchase borrowing, whereby repayments to the lender are paid net of tax on the interest on the loan. The lender then reclaims the relevant sum from the Revenue.
Mitigate: To alleviate, make less onerous.
Money Market Accounts: The money market operates through the buying and selling of short-term loans and securities e.g. Treasury bills and bills of exchange. Private investors, individuals or companies, can invest in this market, usually with a minimum input of £10,000, and receive a higher rate of interest over a shorter term.
Moral Hazard: The potential for the attitudes, lifestyle and conduct of individuals to affect the level of risk attaching to a proposal for life assurance.
Morbidity: The incidence of sickness and disability. Used as a guide in calculating Permanent Health Insurance premiums, in a similar way to the use of mortality statistics with life insurance.
Mortality Table: A statistical table showing the likelihood of death at any particular age.
Mortality Risk: The risk of the life assured dying during the term of the policy.
Mortgage: A legal charge on a property, giving security for a loan. The borrower (mortgagor) gives the mortgage to the lender (mortgagee).
Mortgage Indemnity Insurance: Provides cover for a mortgage lender for any loss they might suffer as a result of a property on which they provided a loan being sold for less than the amount of the loan.
Mortgage Payment Protection Policy: Cover for monthly mortgage repayments in the event of accident, sickness or unemployment
Mortgage Protection Policy: Generally refers to a type of reducing term assurance used in conjunction with a repayment mortgage. The idea is for the sum assured under the policy to reduce in line with the outstanding loan.
Mortgage-Related Policies: Policies used both to provide protection for a mortgage loan and as a savings vehicle to repay the loan at maturity.
Motor Insurance: Covers legal liabilities arising from the use of a motor vehicle. Comprehensive policies also cover damage to the vehicle.
Mutual Life Offices: An insurance company which is owned by its policyholders.

Glossary L – M terms used in Financial Services

Legals