Insurance Paid Up Value Calculation
Cover will be reduced to the value of paid up value calculated above.
Insurance paid up value calculation. The process for calculating their current value is similar to a normal paid up policy but more complex as it includes indexing to current markets tracking previous dividends and changing fee. A paid up policy may be free from payment of further premium. Paid up additions also offer a death benefit and earn dividends interest from the insurance company which are then put into your cash value. The policy will be cancelled after the payment of surrender value in insurance.
For example you may pay 2 000 per year for 20 years and have an aggregate cash value of 30 000 in a life insurance policy. Paid up value no of years premium paid policy term sum assured does my insurance cover remains same if i make my policy paid up. Also you will not be entitled to receive any other benefits from this policy later date. Paid up value number of premiums paid total number of premiums payable original sum assured in the above example that we took the policy has a paid up value of rs 10 000 after 3 years.
A paid up addition is categorized as a miniature life insurance policy. If you decided to convert to a reduced paid up insurance you may be able to receive a 30 000 guaranteed death benefit for the rest of your life without having to pay premiums. The cash value is built up through the amount paid in which if you pay 5 then you also accrue 5 in cash value. The insurance company will calculate surrender value by multiplying paid up value with the surrender value factor.
Paid up value is calculated by multiplying the original sum assured and the ratio of the number of premiums paid to the number of premiums payable. Paidup value is the reduced amount of sum assured paid by the insurer in case of discontinuation of the payment of premiums after paying the full premiums for the first three years. Once you make a life insurance policy paid up it does not qualify for any bonuses. Let us consider that you pay the rs 25 000 annual.
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