1. In endowment insurance plan, the insurance company declares a bonus every year, which is a certain
percentage of the amount for which the person is covered.
2. On maturity, the policyholder gets the accumulated bonuses as well as the corpus of the policy.
3. Agents use this feature of endowment plans as a marketing gimmick.
4. Customers are told that they get a maturity value as well as a bonus which is higher than the premium they pay.
5. What they do not tell the policyholder is that the bonus, unlike a stock dividend, is not paid out immediately but on maturity.
6. The bonus amount does not compound over the years.
percentage of the amount for which the person is covered.
2. On maturity, the policyholder gets the accumulated bonuses as well as the corpus of the policy.
3. Agents use this feature of endowment plans as a marketing gimmick.
4. Customers are told that they get a maturity value as well as a bonus which is higher than the premium they pay.
5. What they do not tell the policyholder is that the bonus, unlike a stock dividend, is not paid out immediately but on maturity.
6. The bonus amount does not compound over the years.