When an assured is unable to honor his obligation in an insurance contract thereby terminating it before maturity he could only receive

Answer Details

When an assured is unable to honor his obligation in an insurance contract, thereby terminating it before maturity, he could only receive the surrender value. The surrender value is the amount of money that the policyholder will receive if they choose to surrender the policy before its maturity date. It is the amount that the insurance company will pay to the policyholder after deducting any outstanding premiums, fees, and other expenses. When the assured terminates the insurance contract before its maturity date, they forfeit the right to receive the sum insured, which is the full amount of money that the insurance company would have paid if the policy had remained in force until its maturity date. Instead, the assured receives the surrender value, which is usually lower than the sum insured, as it takes into account the time value of money and other factors. Therefore, if the assured is unable to honor their obligation in an insurance contract and decides to terminate it before maturity, they can only receive the surrender value of the policy.