On Thursday, PNB MetLife, an insurance company, announced a bonus of Rs 930 crore for eligible participating policyholders. This move is expected to benefit 582,000 customers. The company stated that this year’s bonus represents a significant 21% increase from the previous year. An additional Rs 161.4 crore has been added, bringing the total bonus declared this year to Rs 930 crore. The number of eligible beneficiaries has also increased by 30,000 policyholders, showing a growth rate of 5.43% compared to last year.
Commitment to Customers’ Financial Security and Long-term Prosperity
Sanjay Kumar, the Chief Investment Officer of PNB MetLife, commented on the bonus declaration, stating that it reinforces their commitment to generating the best possible outcomes for their customers’ financial security and long-term prosperity.
How Bonuses are Determined
The premiums paid by policyholders contribute to PNB MetLife’s asset pool, which is used to pay future claims. A significant portion of these funds is invested in government-secured debt instruments, with a smaller allocation to equities. The profit is determined by the insurer’s claim experience and investment returns. At the end of the financial year, this profit is distributed as bonus payments. Additionally, any excess assets after evaluating the company’s assets and liabilities may also contribute to the bonus.
Calculation and Payment of Bonuses
- Yearly Bonus: The yearly bonus is calculated on the sum assured and declared annually. It accrues to the policy each year until it matures or a claim is filed. This bonus is paid out in cash at the end of the year, calculated as a percentage of the annual premium. This allows policyholders to receive their bonus annually rather than waiting until maturity.
- Consolidated Bonus: This bonus is calculated on the consolidated amount of the sum assured and previous years’ bonuses. It is based on compound interest and is payable upon maturity or the policyholder’s death.
- Interim Bonus: Interim bonus is declared when the insured dies or the policy matures before the end of the financial year. It ensures that the policyholder or beneficiaries receive a pro-rata bonus, covering the short duration between bonus declaration dates.
- Persistency Bonus: Also known as a persistency bonus, this one-time payment is made when the policy matures or upon the policyholder’s death. It rewards policyholders for maintaining the policy for a specified period, subject to the insurer’s declaration based on the policy’s performance.