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Question
A person takes a life policy for ₹2,00,000 for a period of 20 years. He pays premium for 10 years during which bonus was declared at an average rate of ₹20 per year per thousand. Find the paid up value of the policy if he discontinues paying premium after 10 years.
Solution
Given, Policy value = ₹2,00,000
Period of policy = 20 years
∴ Premium per year = `"Policy Value"/"Period of policy"`
= `(2,00,000)/(20)`
= ₹10,000
But, the person pays premium for 10 years.
∴ Premium paid by the person
= 10,000 x 10
= ₹1,00,000
Rate of bonus = ₹20 per year for thousand,
Bonus for 1 year = `(20)/(1,000) xx 2,00,000`
= ₹4,000
∴ Bonus for 10 years
= 4,000 x 10
= ₹40,000
∴ Paid up vallue of the policy
= Perimum paid of the person + Bonus for 10 years
= 1,00,000 + 40,000
= ₹1,40,000
∴ Paid up value of the policy is ₹1,40,000 if the person discontinues paying the premium after 10 years.
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An installment of money paid for insurance is called Premium
Policy value = ₹ 80,000
Period of policy = 20 years
Amount of money paid in 10 years = `square`
Annualized average rate per bonus = ₹ 20 per thousand per year
For one year, bonus = `square/1000 xx 80,000`
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Bonus for 10 years = `10 xx square`
= ₹ 16,000
Total amount after 10 years = `square + 16000`
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