Question

When is the Surrender Charge or Discontinuance charge levied?

a.

At the time of policy issuance

b.

When the policyholder opts for a partial withdrawal of the contract

c.

When the policyholder opts for complete withdrawal of the contract

d.

Annually, regardless of policyholder actions

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).When the policyholder opts for complete withdrawal of the contract Explanation:The Surrender Charge or Discontinuance charge is levied on the unit fund/policy account value when the policyholder opts for complete withdrawal of the contract. This charge is usually expressed either as a percentage of the fund or as a percentage of the annualized premiums (for regular premium contracts).

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Q. When is the Surrender Charge or Discontinuance charge levied?
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