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

Mr. Rohan Mehta, aged 35, buys a ULIP with annual premium of Rs 1,00,000. After deducting premium allocation charge of 5%, the amount invested is credited to the fund. The fund then earns 10% during the year, with no other charges. What is the fund value at year end?

The fund value is Rs 1,04,500. The 5% allocation charge removes Rs 5,000, leaving Rs 95,000 invested, and a 10% return on that amount makes it Rs 1,04,500 at year end, assuming no other charges apply.

  1. ARs 1,04,500Correct
  2. BRs 1,05,000
  3. CRs 95,000
  4. DRs 1,10,000

Explanation

Allocation charge = 5% of 1,00,000 = 5,000, so the invested amount is 95,000. Growth at 10% gives 95,000 x 1.10 = 1,04,500. Rs 1,10,000 ignores the charge; Rs 1,05,000 deducts the charge after growth wrongly; Rs 95,000 ignores growth.

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