1
Calculate total bonus = (500 × 45 × 20) = Rs. 4,50,000
2
Assume Final Addition Bonus = Rs. 50,000
3
Maturity Amount = 5,00,000 + 4,50,000 + 50,000 = Rs. 10,00,000
Worked Example 2:
Calculate surrender value for a policy after 5 years. Sum Assured Rs. 2,00,000, total premiums paid Rs. 1,00,000, Guaranteed Surrender Value factor is 30% of premiums paid.
1
GSV = 30% of 1,00,000 = Rs. 30,000
2
Since policy completed 5 years, GSV applies
3
Surrender Value = Rs. 30,000
Shortcut Trick #2: For surrender value calculation, remember "3-2-1 Rule" - After 3 years GSV applies, 2 years continuous premium payment needed, 1st two years no surrender value.
Shortcut Trick #3: Premium calculation shortcut - Age + Policy Term should not exceed 75 for most traditional plans (Entry age limit rule).
Common Mistake (#1 Trap): Students confuse Sum Assured with Maturity Amount. Sum Assured is the base amount guaranteed, while Maturity Amount includes bonuses and additions. Always read questions carefully to identify what is being asked.
Another frequent error is mixing up Guaranteed Surrender Value with Special Surrender Value. GSV is percentage of premiums paid, while SSV considers policy's asset share and is usually higher