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
     the policy.
                                                          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.