Question

An insurance agent gets commission of 20% on first year premium, 6% on second and third year‘s premium and 4% on subsequent years premium on an insurance policy of Rs. 40,000. Annual rate of premium being Rs. 30 per thousand. Find the total earning of the agent for which 5 annual premiums have been paid.

• A. Rs. $680$
• B. Rs. $580$
• C. Rs. $480$
• D. Rs. $380$

Answer 1

Answer: (C)

Rs. $480$

$\Rightarrow$ The rate of annual premium is $Rs.30$ per thousand.

$\Rightarrow$ Annual premium $=\frac{30}{1000}\times 40000=Rs.1200$

$\therefore$ Commission for first year$=\frac{20}{100}\times 1200=Rs.240$

$\Rightarrow$ Commission for second and third year $=2(\frac{6}{100}\times 1200)=2\times 72=Rs.144$

$\Rightarrow$ Commission for fourth and fifth year $=2(\frac{4}{100}\times 1200)=2\times 48=Rs.96$

$\Rightarrow$ Total Earning $=240+144+96=480$

$\therefore$ Total Earnings =Rs. $480$