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WAEC Commerce 2013 Question 19

Question 19

Insurance

Mr. Biu has been paying the premium of a straight Life Assurance policy for several years. The surrender value of the policy is the amount that

  1. A.would be paid to Mr. Biu if he should discontinue with the policy.
  2. B.would be paid to Mr. Biu's beneficiaries if he dies.
  3. C.is paid annually by Mr. Biu to the insurance company.
  4. D.the amount Mr. Biu has paid plus interest.
Show the answer and explanation

Answer: A (would be paid to Mr. Biu if he should discontinue with the policy.)

Explanation

The surrender value is what the insurer pays if the policy is cashed in before it matures.