Compound reversionary bonus

 

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Compound reversionary bonus

A with profits life assurance bonus, normally added annually to the policy, which is based on the profits of the life company's investments.The compound reversionary bonus is normally calculated on the sum assured (or basic sum assured) plus bonuses to date and is payable at the maturity of the policy or prior death. Once declared, reversionary bonuses are guaranteed.



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Reversionary interest

Reversionary interest

The right to receive the property held in a trust at some future date. For instance, a person might establish a trust containing £200,000 of shares which pays all income to his spouse until her death, and then when the spouse dies splits the capital equally between their children. In such a case, the children have a reversionary interest in the share portfolio.


Reversionary bonus

Reversionary bonus

A bonus added to the sum assured (or basic sum assured) of a with profits life assurance policy out of a life company's surplus profits usually on an annual basis. These bonuses are payable at the end of the term of the policy (that is, at maturity), or on prior death of the life assured. Once allocated, their values are guaranteed provided premiums are paid up to maturity or death.The values of such bonuses are usually related to the sum assured and can be either simple reversionary bonuses (related to the sum assured only) or compound reversionary bonuses (related to the sum assured plus bonuses to date). Reversionary bonuses may sometimes be taken in cash at the time they are declared but the values will be significantly lower compared with leaving them until maturity.


Simple reversionary bonus

Simple reversionary bonus

A with profits life assurance bonus, normally declared annually, which is based on the profits of the life company's investments. The simple reversionary bonus is calculated on the sum assured (or basic sum assured) only and is payable at the maturity of the policy or prior death. Once reversionary bonuses are declared, they cannot be withdrawn by the life company provided the policy conditions are fulfilled until a claim is made (that is, at maturity or previous death).




 
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