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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

Caselet: Meera, 40, buys a non-linked traditional plan with an annual premium of ₹1,00,000 and a sum assured of ₹12,00,000, paying premiums for 10 years. She dies in the 3rd policy year, having paid all premiums due, and the policy has no declared bonus. The policy is a non-participating plan with death benefit defined as the higher of 10 times the annualised premium, sum assured, or 105% of premiums paid. What death benefit is payable?

The death benefit is ₹12,00,000. Of the three components, ten times annualised premium is ₹10,00,000, sum assured is ₹12,00,000 and 105% of premiums paid is ₹3,15,000. The benefit is the highest of these, which is the sum assured.

  1. A₹10,00,000
  2. B₹12,00,000Correct
  3. C₹3,15,000
  4. D₹13,00,000

Explanation

Compute each component: 10 times annualised premium = ₹10,00,000; sum assured = ₹12,00,000; 105% of premiums paid = 1.05 × ₹3,00,000 = ₹3,15,000. The highest is ₹12,00,000. ₹10,00,000 ignores the sum assured, and ₹3,15,000 is only the smallest floor.

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