What is a Bonus?
Bonus is a amount given to the policy holders apart from their maturity or death benefits. Bonuses are credited to the account of the policyholder and paid at the time of maturity. Bonus is declared as a certain amount per thousand of sum assured. As per IRDA, 90% of the surplus amount got from the profit should be returned to the policy holders in the form of bonus.
What is an ‘interim bonus’?
A bonus paid between two successive annual declarations of bonus. It is paid on ‘with profit’ policies that mature or result into claim during the currency of a financial year. Final bonus is declared only at the end of the financial year when the final accounts of Life Insurer are made up. Therefore, the policies maturing during the year are paid proportionate interim bonus for the period from the immediately preceding March 31 till the date of maturity or claim of the policy.
How bonus is declared?
Based on the profit of the insurers they declared bonuses for each policy. However bonus also depends on type of the policy you have taken. There are many policies which has a guaranteed bonus and they are eligible to receive fixed amount every year irrespective of the profit of the insurers. Most of the insurers calculate bonus based on the Sum Assured. Example – If they say bonus is declared as Rs. 60 per thousand Sum Assured, it means that for a policy of 1 Lac S.A bonus is Rs. 6000.
Only With profit policies are eligible for bonuses.
When is bonus paid?
Bonus is paid only on maturity or on death of life assured (Whichever is early).
Example – For a term of 25 year bonus is paid only at the end of 25th year along with Sum Assured. However if person dies at 5th year; five years bonus which is accumulated is paid to nominee along with SA.