Life Insurance 134 views July 28, 2021

Life insurance plans are best known as a tool to secure the future of your loved ones in your absence. But a very few know that these plans come in handy even when you are alive. Yes, you get payouts at different stages of your life insurance plan. Except for term plans, other life insurance plans come with such features. Of the payouts, people often seek bonuses from these plans. However, not all plans yield you the bonus. Also, bonuses can be either guaranteed or non-guaranteed.

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Only those plans that participate in the profits of the company offer bonuses to the life assured. You can identify these plans by checking their presentation in the brochure. If it is presented as a ‘Participating Plan’, you will get bonuses from the same. In case you die during the policy term, your family will receive the accrued bonuses.

In this post, we will explain these bonuses as well as show the bonus-yielding plans to help you choose from the same. Let’s begin!

Types of Life Insurance Bonuses

Life insurance companies pay several bonuses to policyholders at different points of time. These include simple reversionary bonus, compound reversionary bonus, interim bonus, terminal bonus, etc. Let’s talk about each of them below.

Simple Reversionary Bonus – The bonus accrues on the sum assured of the life insurance plan and is declared every year by the life insurer.

Compound Reversionary Bonus – Here, the bonus of the previous year gets added to the sum assured first, and then on the overall sum, the bonus is calculated. The calculation is made at a certain percentage of the sum assured and the accrued bonus. It is payable either upon the death of the policyholder or at the time of policy maturity.

Terminal Bonus – Life insurers pay a one-time bonus to policyholders for keeping their policy for a specific period. This bonus is available only at the time of policy maturity or the death of the life assured. Whether you will get this bonus or not will depend on the performance of the policy over the years as well as its declaration by the insurance company. However, this bonus is not for surrendered policies or those which have attained a paid-up status.

Interim Bonus – Insurance companies generally declare bonuses at the end of the financial year. However, in case the life assured dies or policy maturity happens before the date of bonus declaration, the insurance company declares an interim bonus and offers the same on a pro-rata basis at specified rates.

Cash Bonus – The insurance company might decide to offer the accrued bonus to its policyholders in cash at the end of the year. It distributes a certain percentage of the annual premium as a cash bonus to its policyholders.

Let’s Understand Participating Plans That Offer Bonuses to Policyholders

As told earlier, participating life insurance plans offer bonuses to policyholders. But if you’re new to the world of insurance, you might want to know about participating plans. Well, these plans participate in the profits of the insurance company it earns. So when an insurance company declares a dividend, policyholders get a bonus out of the same. These plans can be Unit-linked Insurance Plans (ULIPs), endowment or money back plans.

Let’s Check the Bonus Offers of Top Life Insurance Plans

Below is a list of life insurance plans that offer lucrative bonuses to its policyholders. Take a look!

Life Insurance PlansBonus Offers
HDFC Life Sanchay Par AdvantageSurvival Benefit - Cash Bonus payable at the end of each policy year from the first policy year onward till death of the policyholder or the end of the policy term

Maturity Benefit - Accrued Cash Bonuses, Terminal Bonus (If Declared), along with other payouts

Death Benefit - Accrued Cash Bonuses (if not paid before), Terminal Bonus (If Declared), along with other payouts
ICICI Pru Cash Advantage PlanSurvival Benefit - Vested Reversionary Bonus, Terminal Bonus (if any), along with other Guaranteed Maturity Benefit

Death Benefit - Sum Assured on Death Plus Bonuses, Guaranteed Maturity Benefit Plus Bonuses, along with other payouts
Maturity Benefit - Maximum of Guaranteed Maturity Benefit + Reversionary Bonus (If Any) + Terminal Bonus (If Any)

or

100.10% of Total Premiums Paid (Not including extra mortality premium, GST and other cesses, if any
ICICI Pru Savings Suraksha PlanMaturity Benefit - Vested Reversionary Bonus (if any), Terminal Bonus (if any) plus other payouts

Death Benefit - Highest of

Sum assured on death + Accrued Guaranteed Additions and Bonuses

Guaranteed Maturity Benefit + Accrued Guaranteed Additions and Bonuses

Minimum Death Benefit
Aegon Regular Money Back Insurance PlanSurvival Benefit - Guaranteed Money Back Payouts from 10th to 19th Policy Year

Maturity Benefit - Accrued Simple Reversionary Bonus + Terminal Bonus (if any)

Death Benefit - Accrued Simple Reversionary Bonus + Terminal Bonus (if any) + Sum Assured on Death
Bharti AXA Aajeevan Samptatti+Survival Benefit - Cash Bonus (as a certain percentage of the sum assured on maturity) starting from the 6th policy year onward

Note – All these death, survival and maturity benefits are payable basis a spotless premium payment record and are for an in-force policy.

The Bottom Line

With bonus payouts at different stages, participating life insurance plans add a lot of interest among customers. These bonuses supplement the other benefits of these plans. However, look to pick the best alternative by comparing plans based on bonus offers besides the sum assured on death and the premium amount payable. Go for a plan having a high bonus payout and impressive sum assured in your absence. And if all that comes at an affordable premium, apply for the same at the earliest and secure yourself financially.

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