Question

Solve the following :

A 35-year old person takes a policy for ₹1,00,000 for a period of 20 years. The rate of premium is ₹76 and the average rate of bonus is ₹7 per thousand p.a. If he dies after paying 10 annual premiums, what amount will his nominee receive?

Answer 1

Given, Policy value = ₹1 lakh,
Period of the policy = 20 years
But, the person dies after paying 10 annual premiums.
∴ Nominee will get entire Policy value of ₹1,00,000 on account of death. Also, rate of bonus is ₹7 per thousand per annum

∴ Bonus (per year) = `(7)/(1,000) xx 1,00,000` = ₹7,00

∴ Bonus for 10 years = 700 x 10 = ₹7,000
∴ Amount received by his nominee
= Policy value + Bonus
= 1,00,000 + 7,000
= ₹1,07,000
∴ Amount received by his nominee is ₹1,07,000.