- 40 -
5. Dr. Desai’s Commonwealth C-Group Term Policy
Effective October 31, 1991, Commonwealth issued a $150,000
C-group term policy (certificate No. 6000973) on the life of Dr.
Desai, age 46. The first-year premium was $2,836.50, and the
cost of insuring Dr. Desai for that year was $565.11. The
Lakewood Plan paid the first-year premium, and, at the end of
that year, the conversion credit balance was $2,373.60 ($2,836.50
- $565.11 + $102.21); the $102.21 is the interest of 4.5 percent
earned on the conversion credit balance (($2,373.60 - $102.21) x
4.5% = $102.21)). None of the conversion credit balance could
have been transferred at this time to the C-group conversion UL
policy, upon conversion thereto, because the C-group term policy
was in its first year.
The second-year premium, before any experience refund, was
$2,890.50. The policy was credited with an experience refund of
$44.06, and the Lakewood Plan paid the net premium of $2,846.44
($2,890.50 - $44.06). The cost of insuring Dr. Desai for the
second year was $607.89, and, at the end of that year, the
conversion credit balance was $4,865.74 ($2,373.60 + $2,890.50 -
$607.89 + $209.53); the $209.53 is the interest of 4.5 percent
earned on the conversion credit balance (($4,865.74 - $209.53) x
4.5% = $209.53)). Of the conversion credit balance, $2,311.23
could have been transferred at this time to the C-group
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