Question

How is the Surrender Charge calculated?

a.

As a fixed amount deducted from the policy fund

b.

As a percentage of the sum assured

c.

As a percentage of the premium

d.

As a percentage of the fund or as a percentage of the annualized premiums

Posted under IC 14 Regulations of Insurance Business

Answer: (d).As a percentage of the fund or as a percentage of the annualized premiums Explanation:The Surrender Charge is usually expressed either as a percentage of the fund or as a percentage of the annualized premiums for regular premium contracts. This charge is levied on the unit fund at the time of surrender of the contract, i.e., pre-mature closure of the policy.

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