CAP is an investment-linked policy, which is available in five (5), plans 12 year; 15 year; 18 year; 21 year and 24 year.  The term plan denotes the duration of the policy. AIICO pays the face amount (the sum insured) in three installments.

• The first installment of 25% of face amount is paid at 1/3 term of the policy.
• The second installment of 25% of amount insured is paid at 2/3 term of the policy.
• The third installment which is 100% of the sum assured plus bonuses and interests on investments is payable at maturity of the plan.

For instance, if the sum assured is N1m and the plan is of 24 years duration:

                                                                                                                        N

§         At 1/3 of 24 years term (8^th year), 25% of N1m      =                      250, 000

§         At 2/3 of 24 year term (16^th year), 25% of N1m     =                      250, 000

§         At maturity (24^th year), 100% of N1m                    =                   1, 000,000

                                                                                                                   1,500, 000                                                                                               

There is a reversionary bonus of 3% of the amount insured, added annually. This is the same thing as N30 to every N1000 insured. Therefore, the bonus on N 1millon insured for a 24-year term in our examples above is:

3% of N1million multiplied by number of years (24) =   N720, 000.00.

The total payable at maturity is calculated as follows (provided the investment options are excluded):                                

                                    1/3 term (8^th year)        =               N    250,000

                                    2/3 term (16^th year)      =               N 250,000

                                    Maturity (24^th year)      =               N1, 000,000

                                    Bonuses (24^th years)     =               N    720,000

                                                                        =               N 2,220, 000=    (N2. 22 Million)

With the investment options, the returns could be staggering. This is because when the installments are re-invested with AIICO, they are compounded with interest annually.  The rate of interest is usually 2% above the prevailing banks saving rate. That is, if the current banks rate is 8%, the rate to be used by AIICO will invariably be 10%.  Using the example above, we can arrive at the final payments by employing the compound interest formula [A=P (1+ r) ^n]

             100

Where A is the amount, P represents the principal, r is the rate of interest and n represents the number of years.

• N 250,000 (8^th year installment) would be compounded with interest for the next 16years to yield N1, 148,743.00 at maturity.

                                    A=250, 000 (1 + 10) ¹⁶ = 1,148743.00

                                                              100

• N 250, 000 (16th year installment) would be compounded with interest for the next 8years to yield N 535,897.20 at maturity.

A=250, 000 (1 + 10) ⁸ = 535,897.20

                          100

Graphically, the amount payable at maturity is shown below:

                                                                                          N                                      

1st installment + compound interests                        1,148, 743.00

2^nd installment + compound interests                            535,897.20

100% of amount insured (N1m) 1,000,000.00

Bonuses on N1million (24 years)                          720,000.00

                 Total Payable                                          N 3,404, 640. 20  

Remember, the greatest advantage of CAP is not only financial, but the life cover with attendant benefits it offers.