Ali got a life insurance policy of Rs. 500,000. Rate of annual premium at 4.5% of the total amount of the policy whereas the policy fee is at the rate of 0.25%. Find the annual premium of the policy?
Answer: Rs. 23750
Explanation
To find the annual premium for Ali's life insurance policy, we need to calculate both the premium amount and the policy fee, then add them together.
Calculate the premium amount:
The premium is 4.5% of the total policy amount.
Premium = 4.5/100 × 500,000 = 0.045 × 500,000 Rs.
Calculate the policy fee:
The policy fee is 0.25% of the total policy amount.
Policy Fee = 0.25/100 × 500,000 = 0.0025 × 500,000 =1,250 Rs.
Add the premium amount and the policy fee to get the total annual premium:
Total Annual Premium = 22,500 + 1,250 = 23,750 Rs.
So, the annual premium for Ali's life insurance policy is Rs. 23,750.
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