POLICY HOLDER’S

SERVICING
PAID UP VALUE, SURRENDER VALUE,
LOAN VALUE
M. M. MONIRUL ALAM
CEO, GUARDIAN LIFE INSURANCE LIMITED
PAID UP VALUE

A paid up policy( PUP) sometimes called a free policy-is a policy free from future
premiums.
• As on Insurance Act 2010, under Section 91 and subsections
(1) An insurer shall, within 30 (thirty) days from receipt of an application in writing by
the holder of the concerned policy which has been in force for not less than 2 (two)
consecutive years, pay out the payment due under the policy.
(3) A policy which is paid-up shall have a paid-up value, which shall, subject to sub-
section(5)
(a) include all bonuses that have already been earned by the policy; and
(b) where the policy is one on which the maximum number of premiums payable is fixed
and the premiums are of uniform amount and paid at uniform intervals, be, before the
inclusion of such bonuses, not less that such amount as is prescribed earlier.
PAID UP VALUE (CONT…..)

Conditions:
• Policy should continue at least 2 years

Benefits:
• After 2 years of policy continuation, the policyholder may paid up the policy.
• The policyholder/nominee can have the maturity benefit at maturity or death
benefit during the term if death occurred on the basis of the Paid up Sum
Assured including bonuses if applicable.
PAID UP VALUE (CONT…..)
Formula:

t= Number of Premiums Paid,

n= Number of Premiums Payable (term)
• In case of anticipated Policy
Where, a= % of Survival Benefit paid

Example:
For any Endowment Policy, if SA is 100000 TK. and the term is 10 years, premiums payable
monthly. After 2 years
PUP=
t= 24 (in month), n= 120 (in month), Sum Assured=100000
Paid Up Value=
SURRENDER VALUE

After paying two consecutive annual or equivalent premiums

policyholder has the option to surrender or discontinue the policy
with the insurer.

• As on Insurance Act 2010, under Section 88 and subsection

(1) A relevant policy which has been in force for not less than 2
(two) years shall have a surrender value which shall be calculated
in accordance with such method as may be prescribed by
regulations by the actuary appointed by the insurer.
SURRENDER VALUE (CONT…..)

Conditions:
• Policy should continue at least 2 years
• The policyholder must apply for surrender the policy.

Benefits:
• A lump sum amount will be returned to the policyholder according to the
Paid Up Sum Assured using surrender value factor certified by Actuary.
• No Death benefit or Maturity Benefit shall be applicable after surrender of
policy.
SURRENDER VALUE (CONT…..)
Formula:

•t= Number of Premiums Paid

•n= Number of Premiums Payable (term)

Example:
For any Endowment Policy, if SA is 100000 TK. and the term is 10 years, premiums payable monthly.
If Bonus 5%, SV Factor = 0.42
After 2 years
PUP=
t= 24 (in month), n= 120 (in month), Sum Assured=100000
Paid Up Value=
(20000*.05*2))x0.42 = 22000x0.42=9240 Tk. (Approx.)
LOAN VALUE

After paying two consecutive annual or equivalent premiums, the policyholder has the
option to acquire Loan from the policy.

Conditions:
• Policy should continue at least 2 years
• The policyholder must apply for loan against the policy.
• The loan amount will be 90% of the Surrender Value.
• The policyholder will repay the loan with certain interest rate to the insurer
within the policy term.
• If any loan re payment is due till the maturity or death then this amount will be
deducted at the time of death benefit or maturity benefit payment of the policy
LOAN VALUE (CONT…..)
Formula:

•t= Number of Premiums Paid

•n= Number of Premiums Payable (term)

Example:
For any Endowment Policy, if SA is 100000 TK. and the term is 10 years, premiums payable monthly.
Bonus 5%, SV Factor = 0.42
After 2 years
PUP=
t= 24 (in month), n= 120 (in month), Sum Assured=100000
Paid Up Value=
(20000*2*.05))x0.42 = 22000x0.42= 9240 Tk. (Approx.)
Loan Value= 90% x 9240= 8316 Tk.