‘Bonus’ people feel happy listening to this term. Lets go through the bonus in the insurance policies..
Lot of people in the country show interest in the traditional policies. safety to the invested money, guarantee on the income is been showed interest. Lot of people take life insurance based on this. people think of insurance safety along with some bonus. But they dont know how bonuses are applied.
Is bonus applied for all policies???
Bonus is not provided to all the life insurance policies..Those who go for traditional participating insurance policies are given bonuses. Normally it is given for endowment, whole life, money back policies. The amount of bonus depends on the time period of policy. there are 2 types of insurance. Participating, non participating insurance.
* This policies have share in the amount earned by the insurance companies. Bonuses depends on the profits of the companies.
* Participating policy premiums are more than of non participating.
How do they decide??????
Insurance company decide bonuses on the calculation of remaining money in life insurance fund. This depends on economic condition and equity markets.. If economic condition and equity markets are good the bonus will be increased and vice versa. Companies also count future expenses before sanctioning the bonus.
There are 5 types of bonus provided by the insurance companies.
* Annual statement: This is called simple reversionary bonus. This is given annually. This is given after the policy time period or policy is claimed.
* Added with the policy total: Adding the bonus to the total policy is called compound reversenery bonus. Next year bonus will be calculated in this total. This will be continued till the tie period or till we claim the policy.
* Work: bonus given according to the participating policy work is called terminal policy. This is completely depended on the company. this will be given after policy time period or when the policy holder is dead.
* Before the given date: If the policy time period is finished before bonus period or the policy holder die before the bonus time then interim bonus is given.
* By cash: All the bonus in the year is given in the same year by cash. this is called cash bonus.