An interim bonus in life insurance is an additional payment a policyholder may receive if their policy matures or if they surrender it between two declared bonuses. This bonus is particularly relevant when a policyholder's life insurance policy matures before the next scheduled annual bonus declaration.
How Interim Bonus Works
When a life insurance company declares bonuses, it typically happens at regular intervals, such as one time in a year. However, if a policyholder's life insurance policy matures or is surrendered before the next bonus is declared, the insurer may still reward the policyholder for the time the policy was in force during that financial year. This reward is known as an interim bonus.
Here are a few things policyholders ought to remember about the feature of interim bonus in life insurance.
Interim bonuses are applicable only to participating life insurance policies, which are eligible for bonuses based on the insurer’s surplus.
The bonus amount is calculated based on the period from the last bonus declaration to the life insurance policy’s maturity or surrender date.
It can ensure policyholders receive a fair share of the insurer’s profits, even if their policy does not align perfectly with the bonus declaration dates.
Importance of Interim Bonus
Interim bonuses ensure the policyholder’s investment in a life insurance policy is continuously rewarded, even when the timing of policy maturity does not coincide with the insurer’s bonus schedule. It reinforces the value of holding a participating life insurance policy, as it guarantees the policyholder is adequately compensated for every period the policy is active.
To sum it up, an interim bonus in life insurance protects policyholders from missing out on potential earnings and ensures a fair and consistent distribution of profits, making it an essential aspect of participating life insurance policies.
# Bonus rate may vary from time to time based on Company’s Investment Performance.