Bonus Systems

With-profit endowments apply a bonus system when adding their profits to the lump sum payment that the policy holder receives when the endowment matures:

> Reversionary or Attaching Bonuses

Calculated every year, reversionary or attaching bonuses are based on a percentage of the basic sum assured. This kind of bonus is added permanently to the policy holder’s account and cannot be taken back whatever the condition of the market for the rest of the year.

> Terminal Bonuses

Once an endowment matures, a terminal bonus is paid to the policy holder. This is offered as an incentive for buyers to hold on to their policies for the full duration. The amount of the terminal bonus varies depending on the health of the market and can be potentially profitable if economic conditions allow for it by the time the endowment reaches maturity. However, keep in mind that a policy with this type of bonus is not practical to sell because you lose your entire terminal bonus if you do.

> Other Bonuses

Companies may also offer other special bonuses to buyers. It’s best to find out from your provider what’s available so you can compare and make sure you’re getting the best deal possible.