In the surrender process, the cash value is an important calculation indicator, which represents the amount that the insured will be able to receive when the policy is surrendered. This article will explain in detail how cash value is calculated, including the calculation of traditional life insurance and participating life insurance, and introduce the relevant factors of surrender amount to help you better understand the calculation of the amount during the surrender process.
Insurance surrender refers to the act of the insured choosing to terminate the insurance contract and obtain the cash value during the validity period of the insurance contract. In the surrender process, the cash value is the amount that the insured is able to receive, and it is determined according to the provisions of the insurance contract and certain calculation methods. The following is a detailed explanation of how the cash value is calculated and the factors related to the surrender amount.
1. Calculation method of cash value.
1.Cash Value Calculation of Traditional Life Insurance: Traditional life insurance generally uses the premium accumulation method to calculate cash value. It is calculated as follows:
Cash Value = (Accumulated premiums for insurance contracts - Fees and expense reserves deducted) 1 - Surrender fee rate) - Remaining unpaid premiums.
Among them, the cumulative amount of insurance premiums refers to the total amount of insurance premiums that have been paid by the insured, the expenses that have been deducted and the expense reserve are the amounts deducted from the insurance premiums in advance by the insurance company to pay the expenses incurred by the insurance contract, the surrender fee rate is the proportion of the surrender fee stipulated by the insurance company, and the remaining unpaid insurance premiums refer to the insurance premiums that have not been paid by the insured at the time of surrender.
2.Calculation of the cash value of participating life insurance: The calculation of the cash value of participating life insurance is relatively complex, and it is generally divided into two parts: the basic sum insured and the bonus account. It is calculated as follows:
Cash Value = Basic Sum Insured 1 - Surrender Fee Rate) + Bonus Account Balance.
The basic sum insured refers to the amount of insurance agreed in the insurance contract, the surrender fee rate is the proportion of the surrender fee stipulated by the insurance company, and the bonus account balance is the bonus account balance held by the insured at the time of surrender.
2. Factors related to the surrender amount.
1.Types of insurance contracts: Different types of insurance contracts have different methods of calculating the cash value and surrender amount at the time of surrender. The calculation of the surrender amount for traditional life insurance and participating life insurance has been described in the above section.
2.Duration of the insurance contract: The longer the term of the insurance contract, the higher the cumulative amount of insurance premiums, and the corresponding cash value and surrender amount will also increase accordingly.
3.Payment term and payment method: The payment period and payment method of the insurance contract will affect the payment of insurance premiums, which in turn will affect the calculation of cash value and surrender amount.
4.Surrender Fee Rate: The surrender fee is a portion of the cash value that the insurance company deducts from the cash value to cover the costs incurred in surrendering the policy. Different insurance companies have different surrender fee rates, which will affect the surrender amount.
5.Deducted Fees and Expense Reserve: The deducted expenses and expense reserve specified in the insurance contract are the amounts deducted in advance from the insurance premium by the insurance company to cover the expenses incurred by the insurance contract. This amount will be taken into account in the calculation of the cash value and the surrender amount will be reduced.
6.Remaining Unpaid Premiums: Premiums that are not paid by the insured at the time of surrender will be deducted from the cash value calculation, which will affect the surrender amount.
Summary: Cash value is an important indicator in the surrender process of insurance, representing the amount that the insured can receive when surrendering the policy. For traditional life insurance and participating life insurance, the cash value is calculated differently. When calculating the cash value, factors such as the cumulative amount of insurance premiums, deducted fees and expense reserves, surrender fee rates, and remaining unpaid premiums need to be considered. The surrender amount is affected by many factors, such as the type of insurance contract, the length of the insurance contract, the payment period and method, the surrender fee rate, the fees deducted and the expense reserve, and the remaining unpaid insurance premiums.
This article provides a detailed analysis of the calculation method of cash value and the relevant factors of the surrender amount, hoping to help you understand the calculation of the amount during the insurance surrender process.
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