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

Rohit Menon, aged 35, buys a 20-year non-participating endowment policy with a sum assured of Rs 10,00,000. He pays all premiums on time and survives the full term. Which statement correctly describes what he receives at maturity under a standard traditional non-participating endowment plan?

Rohit receives only the guaranteed sum assured of Rs 10,00,000. A non-participating endowment plan does not share in the insurer's profits, so no reversionary or terminal bonuses are paid. NAV-based fund values apply only to unit-linked policies, not to traditional non-participating plans.

  1. AOnly the guaranteed sum assured, with no bonuses since the policy is non-participatingCorrect
  2. BThe sum assured plus accrued reversionary bonuses declared by the insurer
  3. CThe sum assured plus terminal bonus linked to the insurer's annual surplus
  4. DThe fund value based on the NAV of units on the maturity date

Explanation

A non-participating policy does not share in the insurer's profits, so it pays only guaranteed benefits, namely the sum assured on survival to maturity. Reversionary and terminal bonuses belong to participating (with-profits) policies. A NAV-based fund value applies to unit-linked plans, not traditional plans.

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