What does liquidity mean in a life insurance contract?
Some life insurance policies can be considered assets if policyholders have access to cash values that can be withdrawn or borrowed once a determined amount of premium has been paid. The liquidity of a life insurance policy refers to the availability of cash value to the policyholder.
Why liquidity is important for insurance company?
Current liquidity is expressed as a percentage and is used to determine the amount of an insurance company's liabilities that can be covered with liquid assets. A high ratio indicates that the insurer is not dependent on new premiums to cover existing liabilities.
How do you define liquidity?
Share. Liquidity definition. Liquidity is a company's ability to convert assets to cash or acquire cash—through a loan or money in the bank—to pay its short-term obligations or liabilities. How much cash could your business access if you had to pay off what you owe today —and how fast could you get it?
What does liquidity refer to in a life insurance policy Primerica?
Liquidity in life insurance refers to availability of cash to the insured through cash values.
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