In this article we shall be looking at how policy holders can calculate their premium payments and bonus accruable to them under the Children Education Endowment Policy.
Annual Premium = Sum
Assured X Rate + PF
...........................
1000
Where PF= Policy Fee (Fixed at 500)
Rate computed using the Annual Premium Table
For Instance, if Chief Okoro picks a children plan of N5, 000,000 for a period of 10 years. Calculate his annual premium payment given that Okoro was born on the 3rd November, 1980.
Annual
Premium= 5000000 X 88.40 + 500
...............
1000
Annual Premium= 442000+500
Annual Premium= N442, 500
This becomes the amount that the policy holder pays to the insurance annually for a ten year children education endowment plan of 5 million Naira Sum Assured.
Monthly Premium: If the policy holder decides to pay the premium monthly instead of yearly, the
Monthly Premium= AP X 0.0875 (Where AP=Annual Premium)
Monthly Premium= N442,500 x 0.0875
Monthly Premium= N 38, 718.75
Quarterly Premium: The policy holder may decide to pay his premium quarterly instead of monthly or annually.
Quarterly Premium= AP X 0.26
Quarterly Premium= N442,500 X 0.26
Quarterly Premium= N 115,050
Half Yearly Premium= If the policy holder decides to pay the premium half yearly, then premium becomes AP X 0.51
Half Yearly Premium= N442,500 x 0.51
Half Yearly Premium= N 225,675
Sum Assured Calculations:
The policy holder may also wish to calculate his sum assured after paying annual, monthly, quarterly or half yearly premiums. These formulae will suffix
SA= AP 500
........... - ........... X 1000
1 1
Rate
SA= MP 500
........... - ........... X 1000
0.0875 1
Rate
SA= QP 500
........... - ........... X 1000
0.26 1
Rate
SA= HP 500
........... - ........... X 1000
0.51 1
Rate
Where:
AP= Annual Premium
MP=Monthly Premium
QP=Quarterly Premium
HP=Half Yearly Premium
Bonus Calculations
The Children Educational Endowment Plan comes with a lot of benefits to the policy holder and the beneficiaries. In addition to the lump sum accruable to the insured at the end of the policy, the policy holder also earns a bonus of 2.5% of SA X Duration.
From our earlier example,
Bonus= 2.5% of SA X Duration
Bonus= 2.5% of 5,000,000 X 10
Bonus= 2.5 x 5,000,000 X 10
...............................
100
Bonus= N1,250,000
Hope You find his piece useful. Watch out for more.
Michael Onjewu is a Risk Advisor with Union Assurance PLC. 07032879723, Twitter @MikoOnjewu
Bonus= N1,250,000
Hope You find his piece useful. Watch out for more.
Michael Onjewu is a Risk Advisor with Union Assurance PLC. 07032879723, Twitter @MikoOnjewu
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