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mortgage protection policy table 22 & 23

mortgage protection policy

mortgage protection policy is a specializes form of group term assurance,
the policy provides for the sum assured reduced by equal amounts over the term of the policy.
loans and mortgage have become essential parts of the life of modern man. the mortgages protection policy essentially provides coverage approximately equal to the outstanding loans at any time, which is being repaid by regular installments.
it provides the debtor with the satisfying knowledge that in case of his premature death.
his creditors will not be pounding on the doors of his heirs but will simply turn to state life insurance corporation for the collection of outstanding debts.

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The following are some of the salient features of this plan

1- On single premium may be paid at the inception of the policy or annual premiums, may be paid for approximately 2/3rd of the term of the loan. however, death risk as shown within the schedule of total assured is roofed for the complete term of the policy. 2- premium are payable annually, in advance but may also be paid in half-yearly,quarterly,or monthly installments provided.installment is not less than RS.150/-.the following example give the benefit under the policy and method of calculating premium.


a man 30 years of age acquires property for which he has take a loan of RS.50,000/-repayable in 12 years.
A-the single premium for the policy will be as foll0ws:
24.05 x 50= RS.1202.50
Add policy =fee 100
total=272.50 i.e 273
he will not have to pay any further premium.
B-he can pay yearly premium amounting to:
3.45 x 50= 172.50/-
add policy fee=100
total= 272.50 i.e 273
annual premium will be payable for only 8 years .he will not have to pay any premium for remaining 4 years.
death benefits:
in case the policy holder dies in the first policy year the sum assured of RS.50,000/- would be payable .the death risk covered under the policy reducess by RS.4,000/- per anum as shown in the schedule of sum assured.
for example.
the sum assured payable in the case of death in the 2nd policy year would be RS.46,000/-in the 3rd year RS.42,000/-and so on in the last year i.e 12th year of the policy the sum assured payable on the death would be RS.6000.the contract would be terminate at the expiry of the term of the policy i.e 12 years.no amount is payable if the policyholder survive the term of the policy as it is a term assurance of policy.


premium rate are available for terms of 5,8,10,15, and 20 years.in case of 5 years term policy, premiums can be paid only by a single premium at the inception of the policy, in case of other terms the policyholder has a choice by single premiums or by annual premiums for a period. approximately equal to 2/3rd of the term of the policy. the sum assured payable on death in each policy year is given for every term of the policy.


.for individual insurance a policy fee of rs 2.50 per thousand sum assured subject to a maximum of rs 100 must be added to the premium. however, in the case of group insurance, the policy fee should not be added.

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