Glossary: L

Letter of intent – An agreement whereby an investor agrees to make a series of purchases of mutual fund units.

Level Premium (Life Insurance) – life insurance for which the premium remains the same from year to year. The premium is normally more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The payments in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years.

Leverage – The financial advantage of an investment that controls property of greater value than the cash invested. Leverage is usually achieved through the use of borrowed money.

Liabilities – All debts or amounts owing by a company in the form of accounts payable, loans, mortgages and long-term debts.

Life annuity – An annuity under which payments are guaranteed for the life of the annuitant.

Life expectancy adjusted withdrawal plan – A plan through which a mutual fund investor’s holdings are fully depleted while providing maximum periodic income over the investor’s lifetime.

Lifelong Learning Plan (LLP) – The Lifelong Learning Plan (LLP) allows you to withdraw amounts from RRSPs to finance training or education for you or your spouse or common-law partner. You cannot use the RRSP funds to finance a child’s education, such as your child or the child of your spouse or common-law partner.

Lifetime maximum benefit – the maximum amount a health plan will pay in benefits to an insured individual.

Limitations – a restriction on the amount of benefits paid out for a particular covered expense.

Liquidity – Refers to the ease with which an investment may be converted to cash at a reasonable price.

Load – Commissions charged to holders of mutual fund units. (See “sales charge”.)

Loan (Policy Loan) – A loan made by a life insurance company from its general funds to a policyowner on the security of the cash value of a policy.

Long-term debt – Debt that becomes due after more than one year.

Long-term disability (LTD) – insurance which pays employees a percentage of monthly earnings in the event of disability.