Question

What happens once a bonus is declared by an insurer in a with-profit contract?

a.

The bonus is immediately paid out to the policyholder

b.

The bonus becomes vested to the policy as an addition to the Sum Assured

c.

The bonus is held back by the insurer for investment purposes

d.

The bonus is subject to fluctuation based on market conditions

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).The bonus becomes vested to the policy as an addition to the Sum Assured Explanation:Once a bonus is declared by an insurer in a with-profit contract, it becomes vested to the policy as an addition to the Sum Assured, serving as a guaranteed benefit for the policyholder.

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Q. What happens once a bonus is declared by an insurer in a with-profit contract?
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