Bonus is an extra amount added to sum assured . Bonus is not applicable to each and every plan. It is only applicable with participating(with profit) plans.
Types of Bonus
Reversionary Bonus : It is applicable only on participating plan. Simple Reversionary bonus and Compound Reversionary bonus are it’s two types. Simple reversionary bonus is certain percentage of SA accrued financially. It is payable at time of death or maturity of a policyholder . In compound reversionary bonus, percentage rate is applied on Base Sum assured plus previously accrued bonus. Suppose a person buys an insurance policy of Sum assured 5 lakh on 01-01-2020 . For financial year 2019-20, bonus is declared as 5%. Then amount of 25000 will get accrued. Above example is of Simple Reversionary bonus , whereas in case of Compound Reversionary bonus, an insured will receives same amount for first year, but from second year onwards he will receive (5% * 500000+25000) 26250 Rs.
Interim Bonus : Bonus are declared on end of Financial Year. This bonus comes in picture when Death or maturity comes in between financial Year. For Ex. If policy becomes mature on 05-08-2020. Then Interim bonus will be calculated on pro rata basis(no of days between 31-03-2020 to 05-08-2020)
Terminal Bonus : Insured get’s this bonus on completion of policy term. It means benefit of this bonus is given on maturity or death.
Disclaimer :
This article is not sponsored and not meant for endorsing any particular insurance company. Please Check Terms and Condition of respective organization along with inclusion and exclusion before buying insurance policy.