What is a guaranteed reversionary bonus with regard to life insurance? - Raman Singh, Bhopal
What is a guaranteed reversionary bonus in life insurance?
A guaranteed reversionary bonus is declared at the time of policy inception
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Bonus in a life insurance policy is only available in case of traditional plans like endowment and moneyback. The most common form of bonus is the reversionary bonus, which adds to the sum assured that is paid when the policy matures. For instance, a 10 per cent reversionary bonus generally implies that the sum assured on maturity will increase by 10 per cent. Generally, the amount of reversionary bonus depends on the performance of the policyholder’s fund, which is managed by the insurer. A guaranteed reversionary bonus is declared at the time of policy inception and its amount does not depend on the insurer’s performance.