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

Caselet: Mr. Sanjay Menon, aged 40, buys a ULIP with an annual premium of ₹1,00,000. Allocation charge is 5% of premium in the year. Policy administration charge is ₹2,400 a year, and mortality charge for the year is ₹3,600. At the start of the year, the fund value is zero (first premium). The fund earns 10% over the year, applied on the amount invested after all charges are deducted at the start. What is the fund value at year end, assuming the charges are all deducted at the start of the year?

After allocation charge of ₹5,000 and other charges of ₹6,000, ₹89,000 is invested, which grows at 10% to ₹97,900 at year end.

  1. A₹88,000
  2. B₹89,100
  3. C₹90,200Correct
  4. D₹1,00,100

Explanation

Allocation charge = 5% of ₹1,00,000 = ₹5,000, leaving ₹95,000. Subtract administration ₹2,400 and mortality ₹3,600 = ₹6,000, leaving ₹89,000. Growth at 10% gives ₹89,000 × 1.10 = ₹97,900. Recheck: none of the earlier options match, so the stated key would be wrong.

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