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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.
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Last Survivor.
Term used in joint life policies where the policy proceeds are
paid out only on the last death.
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Launder. To ‘clean
up’ ‘dirty money’ earned through illegal means by easing it into
the normal monetary systems so that all traces of its origins
are removed, or ‘washed out’. The Criminal Justice Act 1993 contains
legislation dealing with money laundering and insider dealing.
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Lease. A lease
is a contract by which a property owner grants exclusive use of
property or assets for an agreed period.
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Leasehold Property.
Property held under lease.
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Ledger. Book in
which accounts are kept.
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Legacy. Property
inherited on the death of someone.
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Legal Tender. The
form of currency in which someone has the legal right to pay a
debt , and which a creditor must accept.
In the UK, banknotes have unlimited legal tender, but, for example,
50p coins have legal tender only up to £10.
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Legatee. Someone
who receives a legacy.
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Lending Multiple.
Money borrowed to help with a house purchase is usually calculated
with reference to a ceiling multiple of income(s).
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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.
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Lessee. Someone
who uses an asset owned by someone else, its use being governed
by an agreement called a lease. The Lessor is the owner of the
asset.
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Let. To make available
living or office accommodation in return for rent.
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Letter of Credit.
Document from a bank authorising payment on behalf of a client
to a third party.
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Letters of Administration.
Authority granted by the court to an individual permitting that
person to administer the estate of someone who died intestate.
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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.
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Level Premiums.
The incidence of mortality shows that the risk of death generally
increases with age. To match this risk increase, premiums should,
in theory, increase at the same rate. As this would at some point
make the cost prohibitive and unattractive, it has become the
norm to calculate a premium that will remain level throughout
the term of the contract. This effectively means 'overpaying'
at the start of the contract, which will counterbalance the 'underpayment'
later.
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Level
Term Assurance. A form of life assurance. The sum
assured remains contact throughout the term of the policy and
is paid on death during the term. Policy does not have a surrender
value.
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Leverage. See
‘Gearing’
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Leveraged Lease.
Where the lessor obtains the funds to purchase the leased asset
from a third party on a non-recourse basis.
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Levy. A tax, duty
or fine imposed by a government or other organisation, often on
a per capita basis.
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Liabilities. Items
which are owed e.g. loans, debts in general.
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Licence. Officially
authorised paperwork, effectively a permit to do something e.g.
import or export licence.
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Licensed Deposit Taker.
Business which is licensed to take money on deposit and pay interest
on it e.g. building society or friendly society.
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Lien. A charge
or claim over an asset, often for security as a loan.
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Lieu. As in "In
lieu of.....", meaning ‘instead of.......’
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Life
Assurance. A general term covering a variety of
types of personal protection policy. The one thing they all have
in common is that a payout on death is the main purpose for the
contract. PHI, for example, would not be covered by this term,
nor would pensions, nor some lump sum investments.
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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.
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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.
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Life Assured. The
person on whose life the life assurance policy is based.
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Life Business.
General term which can be applied specifically to life assurance,
but often is applied to all life, pensions, savings and investment
business.
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Life Insurance.
See Life Assurance. Although
life insurance is probably the more correct term, life assurance
has become generally accepted as the generic term for the market.
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Life Interest Trust.
A trust which controls property which may be held only as life
tenant.
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Life of Another.
Means of writing a policy on the life of another person. Policyholder
receives policy proceeds on the death of the life assured. Insurable
interest must exist when policy established. Often used as security
against death of spouse or business partners.
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Life Offices. Generally
taken to refer to those companies which sell life assurance, pensions
and related packaged products.
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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 by the life tenant’s will.
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Limited Liability.
A form of business which limits liability to the assets of the
company, and does not extend to the personal assets of the shareholders
or offices of the company.
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Limited Revaluation
Premium. A premium payable to the State when a
member of a contracted out salary related occupational pension
scheme ceases to be contracted out and the method of revaluation
is limited (one of 3 available options). The pension scheme contracts
to revalue the GMP in line with the Average Earnings Index up
to 5% pa. The state provides revaluation above 5%, on receipt
of the LRP. This method of revaluation ceased on 6th April 1997.
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Liquid Assets.
Assets that are easily converted to cash.
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Liquidation. Distribution
of a company's assets to creditors prior to closing down.
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Liquidator. Person
appointed to wind up a company and to distribute company assets,
or their value, to creditors and shareholders.
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Liquidity. Cash
and readily convertible (to cash) assets. The liquidity of a business
is its ability to meet outstanding debts.
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Liquidity
Ratios. It should be realised that ratio’s are
static, rather like the balance sheet, and should only be used
to discern trends.
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Current (working capital) ratio is a guide to financial safety
in that it shows how many times current assets will cover
current liabilities. It is expressed as Current assets divided
by current liabilities
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The ‘acid test’ ratio reveals the capability of a business
to repay current obligations immediately, and is calculated
as:
Cash and marketable securities and debtors divided by current
liabilities
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In some cash based businesses, the cash ratio may be a better
guide. This is practically the same as above, but excludes
debtors.
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Listed Company.
A company that satisfies the listings rules of the Stock Exchange,
and whose shares are quoted and traded on the Exchange.
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Listed Security.
A share which 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).
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Lloyds. The Corporation
of Lloyds, or Lloyds of London, is effectively a large insurance
market made up of small syndicates whose members underwrite insurance
risks i.e. promise to pay out in the event of loss.
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Loan Stock. A security
paying a fixed rate of interest which returns capital at the end
of a stipulated period of time. Secured by the company’s assets.
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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.
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London Commodity Exchange.
A marketplace for agricultural product derivatives.
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London International
Financial Futures and Options Exchange. A marketplace
for financial instrument derivatives.
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London Metal Exchange.
A marketplace for base metal product derivatives.
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Long Term Care.
A generic term given to an 'add on' contract option to, say, a
whole of life contract. Basically, cash is taken from the policy
and used to purchase an income to cover additional expenses incurred
by old age.
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Longs. Government
stock maturing in 15 years or more.
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Loophole. An admissible
interpretation of law or regulation which leads to a legal way
of avoiding the law.
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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.
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Low Start Endowment.
Endowment policy designed for use with mortgages where premiums
increase at a fixed rate over a period of years.
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Lower
Earnings Limit. The minimum amount which must be
earned in any pay period before NIC becomes payable. Also the
lower limit for SERPS accrual. 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.
See also ‘Middle Band Earnings’.
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Lower Rate Tax.
The rate of tax paid on the first band of income which exceeds
the personal allowance.
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