Calculating your allocation charge is straightforward once you know the Premium Allocation Charge formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Premium Allocation Charge Calculator.
What is Premium Allocation Charge?
The Premium Allocation Charge calculation tells you your allocation charge from a few simple inputs. The figure you are solving for here is the allocation charge, expressed in INR.
The Premium Allocation Charge formula
The core formula is:
Allocation charge = Premium paid × Allocation charge rate ÷ 100Here is what each input means:
- Premium paid — a money amount. Example: ₹1,00,000.
- Allocation charge rate — a percentage, such as an annual rate. Example: 5%.
How to calculate it step by step
- Write down the premium paid (for example, ₹1,00,000).
- Write down the allocation charge rate (for example, 5%).
- Apply the formula above to get your allocation charge.
- Double-check the result with the Premium Allocation Charge Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Premium paid | ₹1,00,000 |
| Allocation charge rate | 5% |
| Allocation charge | ₹5,000.00 |
| Amount invested | ₹95,000.00 |
With premium paid of ₹1,00,000 and allocation charge rate of 5%, the allocation charge works out to ₹5,000.00.
Example 2
With premium paid of ₹2,00,000 and allocation charge rate of 5%, the allocation charge works out to ₹10,000.00.
| Result | Value |
|---|---|
| Allocation charge | ₹10,000.00 |
| Amount invested | ₹1,90,000.00 |
Example 3
With premium paid of ₹50,000 and allocation charge rate of 5%, the allocation charge works out to ₹2,500.00.
| Result | Value |
|---|---|
| Allocation charge | ₹2,500.00 |
| Amount invested | ₹47,500.00 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Premium Allocation Charge Calculator does it instantly, for free, with the formula and a worked example built in.
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