Bonus in life insurance FAQs: How is it calculated, types and other questions answered

Some life insurance policies allocate a share of their profits as a bonus and pay to the insured person when they reach certain milestones. Put simply, just like employees receive bonus as extra amount or reward over and above their base salary, a similar concept exists in the realm of life insurance companies. Firms make bonus payments to their policyholders on a yearly basis beyond the basic sum assured they are entitled to.

Here's an FAQ on bonus payments:

When is the bonus paid?