Donate SIGN UP

Terminal Bonus

Avatar Image
SteveSxx | 09:16 Wed 02nd Aug 2006 | Business & Finance
4 Answers
What exactly is a terminal bonus when talking about Endowment policys ?
I have two policys (due to pay out in 5 years) - both have been compensated financially - yet, both are "with profits" - which one would assume would "still" pay out the expected money with profits - and the paperwork (recently supplied) mentions 50% terminal bonuses - 50% of what ?
Gravatar

Answers

1 to 4 of 4rss feed

Best Answer

No best answer has yet been selected by SteveSxx. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.
Probably 50% of the basic sum assured. You'd have to check the policy - if you are lucky it might be 50% of existing bonuses as well.

An endowment policy typically adds a small bonus each year, calculated very conservatively. An amount they feel confident of paying even if the stock market goes pear shaped.

The terminal bonus is paid out if the stock market has done well and have more money to pay out.

Usually there's a time lag - if the stock market slumps they will delay cutting bonuses a bit and pay out of reserves. When it recovers they will build up reserves before increasing the bonuses again.

That's an oversimplification but you get the idea
on a really long policy 25 years say, the terminal bonus could be 100% of the whole sum , including reversionery bonus. But some companies have fallen off a bit lately!
It depends on how long th epolicy was for.
It is not usually worth ending a long policy so near its end date.
Question Author
my policys are both 2 years
Question Author
I meant 25 years - sorry

1 to 4 of 4rss feed

Do you know the answer?

Terminal Bonus

Answer Question >>