22.30 ndian onom
Universal life insurance was created to in installments. Typically, most life insurance
provide more flexibility than whole life insurance policies make lump sum payment settlements.
by allowing the policy owner to shift money
between the insurance and saving components of liquiDAtion
A process of ‘winding up’ a joint-stock company
vAriAble universAl life insurAnce Policy as a legal entity.
A form of whole life insurance policy, this is a
policy for those who weigh high risk threshold. liquiD Asset
It offers cash values that fluctuate based on the
The monetary asset that can be used directly as
performance of the underlying mutual funds in
the investment account. It is this investment of payment.
premiums in the equity market that carries with it
an element of uncertainty. liquiDity
The extent to which an asset can be quickly and
completely converted into currency and coins.
This is the amount that the policy holder pays to
the insurance company for the benefits provided
liquiDity coverAge rAtio
under an insurance policy. The frequency of
premium payments is opted by the individual. Liquidity coverage ratio (LCR) is a clause of Basel
Typical premium modes include monthly, III norms (of the Basel based Bank for International
quarterly, semi-annual, and annual. Settlement) which aims at prudential regulation of
the banking sector. Under it banks are supposed
Annuity to maintain enough short-term liquidity (their
An agreement sold by a life insurance company needs of the next 30 days) so that they can survive
that provides fixed or variable payments to the acute financial stress if such situations arise in the
policy holder, either immediately or at a future economy.
grouP life insurAnce liquiDity preference
A life insurance policy issued to a group of people, A term denoting a preference among the people
usually through an employer. for holding money instead of investing it.
lAPse liquiDity trAp
Defaulting on premium payments leads to the
termination of an insurance policy. A lapse notice A situation when the interest rate is so low that
is sent in writing to the policy holder when the people prefer to hold money rather than invest it.
policy has lapsed. In such situations investors do not go to
increase investment even if the interest rates on
lumP sum loans are decreased. J. M. Keynes suggested for
It refers to the proceeds of the policy that is increased government expenditure or reduction in
paid to the beneficiary all at once rather than taxes to fight such a situation.