Bonus :
The insurance company periodically values its assets and liabilities. The premium payments that it receives from you are used for three purposes: to settle claims, to make investments, and to pay expenses. If the insurance company makes profits, it declares a bonus for a certain period for its policyholders. It can disburse this bonus to you in three ways: the bonus is added to the value of the policy;the bonus is distributed to you physically; or your future premium payments are reduced. In India, generally the first method is adopted for with profit policies, and is paid to you upon maturity of the policy.
The insurance company periodically values its assets and liabilities. The premium payments that it receives from you are used for three purposes: to settle claims, to make investments, and to pay expenses. If the insurance company makes profits, it declares a bonus for a certain period for its policyholders. It can disburse this bonus to you in three ways: the bonus is added to the value of the policy;the bonus is distributed to you physically; or your future premium payments are reduced. In India, generally the first method is adopted for with profit policies, and is paid to you upon maturity of the policy.
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