Question

Solve the following :

A person holding a life policy of ₹1,20,000 for a term of 25 years wants to discontinue after paying premium for 8 years at the rate of ₹58 per thousand p. a. Find the amount of paid up value he will receive on the policy. Find the amount he will receive if the surrender value granted is 35% of the premiums paid, excluding the first year’s premium.

Answer 1

Given, Policy value = ₹1,20,000
Period of policy = 25 years
∴ Paid up value of one year = `"Policy value"/"Period of policy"`

= `(1,20,000)/(25)`
= ₹4,800
But, the person wishes to discontinue after paying premium for 8 years
∴ Paid up value = 4,800 x 8 = ₹38,400
Amount of premium paid for one year

= `(58)/(1000) xx 1,20,000` = ₹6,960
∴ Amount of premium paid for 8 years
= 6,960 x 8
= ₹55,680
Surrender value
= 35% of (premium paid for 8 years – premium paid for first year)

= `(35)/(100) xx (55,680 - 6,960)`

= `(35)/(100) xx 48,720`
= ₹17,052
∴ The person holding life policy will get amount of ₹17,052.