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Surrender

Surrender
 
Surrender Value = Paid up Value×Surrender Value Factor×Monthly Adjustment Factor 1000

where, Surrender Value Factor(SVF) = 1000/ (1.06) n+1

n = Number of complete years remaining for maturity from the date of surrender

Paid up Value = Paid up Sum Assured + Vested Bonus

Monthly Adjustment Factor(MAF) =1+0.5% of number of complete months between the Surrender date - previous Policy Anniversary

EXAMPLE :

  • Type Of Insurance : Asian Sabadhik (Endowment)
  • Sum Assured : 101000/-
  • Term : 20 yrs
  • Mode Of Payment : Yearly
  • Date of Commencement : 2008/09/16
  • Date of Maturity : 2028/09/16
  • Date of last premium paid : 2009/10/11
  • Date of Surrender : 2010/12/16
  • Rate of Bonus : 0
  • Total No. of premium paid in years : 2
  • Total No. of premium payable in years : 20 years
  • Paid Sum Assured = No of Premium paid in years×Sum Assured×Bonus Rate / No of Premium payable in year = 2*101000/2 =10,100
  • Bonus = No of Premium paid in years×Sum Assured×Bonus Rate / 1000
  • Paid Up Value = Paid up Sum Assured + Vested Bonus = 101000+0 = 10100
  • n = Number of complete years remaining for maturity from the date of surrender (The period from 2010/12/16 (Date of Surrender) to 2028/09/16 (Date of Maturity) is 17 Year and 9 months. Thus there are 17 complete years) Thus n = 17
  • Surrender Value Factor(SVF) = 1000/ (1.06) n+1
    = 1000/ (1.06) n+1 = 350.340 per thousand.
  • Hence the Factor is 350.340 per thousand.
  • Monthly Adjustment Factor = The Period from 2010/09/16 (Date of last Policy anniversary) to 2010/12/16 (Date Of Surrender) is 3 complete months.
  • =1+0.5% *3 = 1+0.015 =1.015
  • Therefore, Surrender Value =
    Paid of Value×Surrender Value Facotor×Monthly Adjustment Factor
    1000
    = 101000*350.340*1.015 / 1000
    = Rs 3591.51 = Rs 3591