Final answer:
Arjun will receive the cash surrender value of $75,000 from the insurance company upon cancellation of his whole life policy. Additionally, he may be entitled to a pro-rated premium refund for the unused portion of his annual premium if his policy agreement includes such refunds. The amount could be an additional $3,000, depending on the policy terms.
Step-by-step explanation:
Arjun owns a whole life insurance policy with a Cash Surrender Value (CSV) of $75,000 and an Adjusted Cost Basis (ACB) of $25,000. He has paid an annual premium of $3,600 two months ago; hence, he has used the coverage for two months of the policy year. Because Arjun is cancelling his policy today and his cancellation documents have been accepted, he is entitled to received the cash surrender value of the policy. This amount, however, may be subject to pro-rated premium refund for the unused part of the premium, if such refunds are part of the policy terms.
Without specific details about the provisions for premium refunds upon cancellation in Arjun's insurance policy, we can only confirm that he will receive the CSV, which is $75,000. If his insurance policy allows for a refund of the premium for the unused portion of the year, then he may also receive a pro-rated refund of the premium, which would be calculated as the premium amount ($3,600) divided by the number of months in the year (12) and then multiplied by the number of months not used (10), which equals $3,000.
Therefore, if the policy includes refunds on cancelled policies, Arjun would receive a total of $75,000 + $3,000 = $78,000. If not, he would only receive the CSV of $75,000.