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Abbott-Langer & Associates Business Glossary

This glossary of business definitions contains over 2,000 business terms used in compensation and benefits administration. Continually updated, this specialized business dictionary focuses on definitions of Human Resources terms and business terms.

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Labor Grade

Salary classification to a specific job title.

Labor Market

The market in which workers compete for jobs and employers compete for workers.

Laissez Faire Tax Policy

A policy to cut taxes.

Last In, First Out (LIFO)

Used in inventory accounting terminology to reflect the fact that sales are made against the latest inventory purchases, which tends to minimize inventory profits and losses. Contrast with First In, First Out (FIFO).

Lead Lag Structure Policy

The practice of setting salary structures at the beginning of the year, to what the competition would reach at the middle of the year. This is based on competitive information and market research.

Lead Structure Policy

The practice of setting salary structures at the beginning of the year- for the entire year. This is based on competitive information and market research.

Learning Management System (LMS)

A software system that automates the administration of training events.

Learning Service Provider (LSP)

Training delivery software on a hosted or rental basis through a specialized ASP offering learning management.

Leased Employees

A three-party relationship whereby the user business purchases services of a worker, on a more or less full-time basis, from a business that pays the worker's salary. Any interrelationship between these parties can lead to an affiliated service group relationship, which is treated separately.

Least Squares Line

Actual y- values. A line fitted to the points that minimize the sum of the squared deviations of the points. This occurs in regression analysis.

Level Annual Premium Funding Method

The cost of providing a pension where the contributions for any employee remain constant until normal retirement age.

Level Cutters

Phrases or words used to distinguish the variety of levels in a particular employment arena. (i.e. accounting, senior vs. junior accountant)

Level Of Work

Important information about the content of a job. It will include skill effort, responsibility and working conditions. (9)

Leverage In Financing

A debt to equity ratio is a measure of the entity's leverage.

Leveraged Employee Stock Ownership Plan (LESOP)

A qualified stock bonus plan or a qualified stock bonus and money purchase plan. Like a stock bonus plan, the contributions need not be dependent on profits, and benefits are distributable in the stock of the employer corporation. Typically, the ESOP is used as a financing vehicle for the employer corporation. The plan borrows money from the employer or uses the employer's credit, and purchases employer stock. The borrowed money is paid to the employer for its stock. The loan is repaid with annual employer contributions. See also Stock Bonus Plan.

Leveraged Stock Option

An option in which the underlying is the common stock of a corporation. The Company matches a multiple of the stock options at the employee's purchase price.

Liabilities

A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.

Liability Insurance

A type of insurance that provides a benefit payable on behalf of a covered party who is held legally responsible (liable) for harming others or their property.

Licensed Broker

An insurance solicitor, licensed by the state, who places business with a variety of insurance companies and who represents the buyers of insurance rather than the companies even though he or she is paid commissions by the companies.

Lien

The right to take and hold or to sell a debtor's property as security or payment for a debt..

Life Annuity

An annuity payable during one's life.

Life Annuity With Period Certain

An annuity payable during one's life. If the insured dies before the designated period of time, the payments will continue to a contingent payee.

Life Cycle Pension Plan

A defined benefit plan that expresses benefits as a lump-sum benefit rather than as an annuity. There are no account balances for the plan participants. In addition, this plan recognizes final average salary in the benefit calculation. Under the life cycle plan, a participant earns credits for each year of service. Age is not directly a factor, except as it pertains to how much service an individual could accrue. The total of these credits is considered a percentage, which is multiplied by the annual final average salary of the participant to determine what lump sum will be paid at retirement. Also known as retirement bonus plan and lump-sum plan.

Life Income Option

A life insurance settlement option that guarantees the beneficiary a payout of equal payments as long as the beneficiary lives.

Life Income Option With Period Certain

A life insurance settlement option that guarantees the beneficiary designated equal payments for a specified period of time. Then the beneficiary will continue to pay out the life insurance as long as the beneficiary lives. If the beneficiary dies during the specified period of time, payment will be continued during the rest of the specified time to another recipient designated by the original beneficiary.

Life Income Option With Refund

A life insurance settlement option that guarantees a total amount due to the beneficiary. If the beneficiary dies prior to the total pay out amount, the remaining amount will be given to a contingent payee.

Life Income With Period Certain Annuity

An annuity payable during one's life. If the insured dies before the designated period of time, the payments will continue to a contingent payee.

Life Insurance

The act or system of insuring against death, a contract by which the insurer undertakes, in consideration of the payment of a premium (usually at stated periods), to pay a stipulated sum in the event of the death of the insured or of a third person in whose life the insured has an interest.

Life Insured

Canadian term for a person whose life is insured by an insurance company.

Life Underwriter

A sales representative of an insurance company.

Life-Only Annuity

Payment of an annuity, until the death of the annuitant.

Lifetime Maximum

The maximum amount of eligible medical expenses that the medical policy will pay for. This is during the lifetime of the insured.

Limited Coverage Policy

A medical policy that covers only a specific illness, or designated disease. Also called a Dread Disease policy.

Limited-Payment Whole Life Insurance

A life insurance policy that does not require payment during the entire lifetime of the insured.

Linear Regression

The relation between variables when the regression equation is linear, e.g., y = ax + b

Linear Relationship

A situation in which the relationship between an x-variable and a y-variable can best be described by a straight line.

Linear Scales

Lines on which equal distances between increments represent equal intervals between increments.

Link

A link generally refers to any highlighted words or phrases in a hypertext document that allow you to jump to another section of the same document or to another document on the World Wide Web.

Liquidity

Being in cash or easily convertible to cash.

Listserv

The heart of an electronic mailing list, Listserv software automatically subscribes and unsubscribes list members and sends copies of every e-mail message to every list subscriber.

Living Benefit Rider

A provision in a life insurance policy that allows the insured to receive part or all of the benefit prior to death. This is in the case of terminal illness.

Living Wage

A wage sufficient for a worker and family to subsist comfortably.

Local Area Network (LAN)

An acronym for Local Area Network, LAN refers to a local network that connects computers located on the same floor or in the same building or nearby buildings.

Local National

Employees hired by a local subsidiary or branch in the country of operation. Usually nationals of that country but may be citizens of any country.

Localization

To become local, especially to become fixed in one area or part.

Location Selling Distribution System

Also known as Retail Outlet Distribution System. A system of selling insurance products in high traffic consumer locations. I.e. department stores, grocery stores, and banks.

Lock Box Banking

Premium payments are received at a post office box. The insurer allows the bank to have access to the post office box. The bank opens all the mail, and deposits the premium. The bank sends receipts of all transactions to the insurer.

Log In / Log On

To access a network or remote system. Logging on often requires a password.

Log Off

To exit a network or remote system.

Logarithm

One of a class of auxiliary numbers, devised by John Napier, of Merchiston, Scotland (1550-1617), to abridge arithmetical calculations, by the use of addition and subtraction in place of multiplication and division.

Logarithmic Model

A calculation under which the x-variable is transformed into logarithms. The equation is y = a + blogx. It is used to describe certain nonlinear relationships, where y increases at an ever-decreasing rate as x increases.

Logarithmic Scales

Scale on which actual distances from the origin are proportional to the logarithms of the corresponding scale numbers.

Long Form Reinstatement Application

A reinstatement application. This application is used if the policy has lapsed for a specific reason, and the policyholder would like to reinstate the policy.

Long-Term Bonus

An income stream in the form of a bonus. It is a form of deferred compensation.

Long-Term Care

A product designed to provide coverage for necessary diagnostic, preventative, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital, such as a nursing home or even one's own home. Also known as LTC insurance.

Long-Term Debt

Also known as liabilities. These are often divided into current liabilities, which are due within a year of the date entered on the balance sheet and non-current liabilities, which are due more than a year after the date on the balance sheet.

Long-Term Disability Income Insurance

Policy pays an income benefit when the insured is unable to work due to illness or injury (even if injured on vacation). Benefits are paid weekly or monthly and determined at a percentage of the insured's past earnings, normally 60 to 70%.

Long-Term Disability Plan / Long-Term Disability Insurance

Long-Term Disability insurance (LTD) is a common offering in an employee benefit program. The purpose of this insurance is to offer employees protection from the effects of an illness or injury that results in a long term absence from employment. LTD is ordinarily group insurance which provides compensation to employees because of their loss of income. This coverage is characterized by benefit periods of either two years, five years, or to age 65. Typically, group LTD insurance policies will pay an employee 50 to 60 percent of pre-tax salary, subject to a monthly cap. Most LTD policies become effective after a waiting period that can range from six months to one year. Most often, LTD begins at the time that the employee's sick leave and short-term disability benefits have been exhausted. Some LTD programs include rehabilitation services and wellness programs as a means of managing disability insurance costs and aiding the employee in returning to work as soon as possible.

Long-Term Incentive Plan

An incentive plan typically limited to executives. It requires a level of performance for a predetermined amount of time, for the maximum benefit to the employee.

Long-Term Income Protection

Insurance plans that provide financial protection in the event of retirement, disability, and financial security for family needs.

Loss Of Limbs

An insurance policy that covers the incident of accidental loss of limbs. See also Accidental Death &Dismemberment; (AD&D;) insurance.

Loss Ratio

The ratio of paid and incurred claims plus expenses to premium.

Lost Wages

Lost wages is generally an element of damages recoverable from the defendant under state law. Lost wages is not the same as loss or reduction of future earnings. The plaintiff has the burden of proving to the court or juries the damages, which he or she has suffered as a direct result of defendant's wrongdoing. Generally, testimony of a medical expert may be needed to prove the reason and type of disability preventing the plaintiff from earning his or her regular wages. Proof of the wages actually lost is also part of the evidence needed to substantiate a claim for lost wages. It is important to determine if your case allows recovery for lost wages and what evidence is needed to prove your damages. For more information on lost wages, contact a qualified attorney.

Lump Sum Bonus

An award that is paid in a single cash payment.

Lump Sum Distributions

A payment of the entire amount to the employee from a qualified retirement plan within one tax year. (4)

Lump Sum Incentive Award

An incentive award that is paid in a single cash payment.

Lump Sum Increase

An increase in pay made in the form of one large payment.

Lump Sum Merit

Merit pay in the form of one lump sum cash payment. This is separate from the base pay.

Lump Sum Merit Payment

The payment of a one lump sum cash payment, based upon merit.

Lump Summing

A method of determining expatriate employee compensation. In this approach, a lump sum is provided to an expatriate to spend as he or she wishes. It can be broken into lump sums for pre-departure, at the post, and repatriation.

Lurking

Visiting an online discussion and reading other people's comments without contributing. Lurking is a good way for a beginner to get familiar with a newsgroup or forum.

Luxury Automobiles

A luxury automobile is defined by the IRS as one with a fair market value of more than a certain amount.