Mr. Vikram Singh takes an endowment policy of 25 years term on 28/3/1985 for sum assured of Rs. 1 lakh and has paid all the premiums upto till 28/3/2004 i.e. for 20 years. Now, he would want to know how much loan he can get?

To get the Loan Value, one should know the Surrender Value, which is dependent on Paid up Value of the policy. Hence, they can be obtained by using the following formula in a step-by-step method as shown below:
Part A -
No of years premium paid / Policy term * Sum Assured

Part B -
Bonus / 1000 * Sum Assured

1. Paid-Up Value =
Now, substituting for formula 1 ‘PART A’, we get 20/25 x 1,00,000=80,000
Substituting for Formula 1 “PART B’, we get Rs. 1321/1000x1, 00,000=1,32,100
Adding PART A and PART B of Formula 1, we get Rs. 2,12,100 (Rs 80,000+1,32,100)

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