Can You Write Short Note On The Following? (1) Surrender Value (2) Paid Up Policies (3) Loan On Life Policies

1. Surrender value. The surrender value is the amount which the insurance company is prepared to pay to insured person if he finds it impossible to continue the payment of further premium on a policy. A policy will be acquired surrender value only after it has been run for at least three years. This value is based on the total premium paid by the policy holder up to date. Not all the premium paid by the insured is returned by the company while calculating the surrender value. So it is generally expressed as a percentage of the premium paid.

2. Paid up policies. If policy holder of life assurance is not in a position to continue paying premium he may convert his policy into paid up policy. It means the amount to which the sum insured would be reduced at any time on the requisition of the assured. This choice is given to policyholder who have paid premium for at least two or three years.

3. Loan of life policies. The loan value of a policy represents the amount which the insurance company has lent on the security of the policy. This amount is usually 95% of the surrender value. This is the best source of investment for insurance company as there is no risk of money being lost.

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