The bonus declared is the highest ever by the Company till date and is also 10 per cent higher than the bonus announced in the last fiscal.
For those who are holding traditional life insurance policies of ICICI Prudential Life, there is a piece of good news. ICICI Prudential Life Insurance has announced an annual bonus of Rs. 867 crore for all eligible participating policyholders for FY2021. As per the company, the bonus declared is the highest ever by the Company till date and is also 10 per cent higher than the bonus announced in the last fiscal.
All participating policies in-force as of March 31, 2021 are eligible to receive this bonus and will be added to 9.8 lakh participating policyholders policyholders’ benefits.
Bonus is not payable to every policyholder but depends on the kind of policy one holds. Unit-linked insurance plans are not eligible to get bonus as they are market-linked plans and are non-participatory in insurer’s profits.
Although bonus is paid only to traditional policyholders, not all of them may qualify. Traditional insurance plans, such as endowment or money-back plans, can either be ‘participatory’ (or ‘with-profit’) plans, thereby qualifying for bonus, or ‘non-participatory’ (or ‘without-profit’) plans that do not qualify for bonus.
The returns in some ‘with-profit’ policies may not entirely depend on bonuses. Instead, in such policies, there is a ‘guaranteed addition’ (GA) to the policy. Bonus is unknown and depends on the insurer’s profit while GA is an assured addition to the policy and is disclosed to the policyholder upfront while buying the policy.
You may check your policy document to see if you as a policyholder are eligible for the bonus announced. It will clearly mention that the policy participates in profit or is a non-participatory policy.
This is the 15th consecutive year the Company has declared a bonus, underscoring its customer-centricity and long-term investment approach to deliver superior risk-adjusted returns to policyholders. The stringent investment philosophy of the Company has ensured zero defaults in its portfolio since inception and across market cycles. As of March 31, 2021, 96.8% of the fixed income portfolio is invested in sovereign or AAA rated paper.
N S Kannan, Managing Director & CEO, ICICI Prudential Life Insurance, said, “We are delighted to announce that the annual bonus for FY2021 is the highest ever in the history of the Company. What gives us special satisfaction is the fact that it coincides with the 20th anniversary of our operations. It demonstrates our customer focus, resilience and ability to navigate through the unprecedented challenges posed by the pandemic. What drives us in this challenging environment is the commitment to our vision of building an enduring institution that serves the protection and long-term saving needs of our customers with sensitivity.”
Bonus is declared either as a certain amount per Rs 1,000 sum assured or as a percentage of the sum assured. For example, bonus may be Rs 50 for every Rs 1,000 of the sum assured. So, for a policy with the sum assured of Rs 1 lakh, the bonus amount will be Rs 5,000. In the above example, if the term of the policy is ten years, the total bonus accumulated on maturity will be Rs 50,000.
Bonus is the share of profits generated by the Company’s participating policyholder’s funds which are added to their guaranteed maturity benefits, thus enhancing the corpus. When a life insurance company makes profit (surplus), it is supposed to distribute a part of that profit to its policyholders, in the form of bonus payments. The surplus in a life insurance company may arise after valuation of the insurer’s assets and liabilities and so, any excess of assets over liabilities is the surplus amount. This surplus gets distributed among the policyholders at the end of each financial year in the form of bonus.