What is bonus

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While talking about any of the traditional insurance policies be it endowment or money back one is tend to hear the word bonus.

So what is bonus in the insurance policy?

Bonus is the amount that is credited to one’s policy account every year and at the end of policy term it is paid along with the Sum Assured.

Most of the insurers calculate bonus based on the Sum Assured.

For Eg. 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.

How bonus are declared.

Based on the profit of the insurers they declared bonuses for each policy.

However bonus 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.

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