Par Policy: These are the policies through which the customer gets a share in the profits from the ‘Participating Fund’ of the insurance company.
Par Policy: Recently a major insurance company has announced a bonus of about Rs 1150 crore, which will benefit about 12 lakh policy holders. Now you may think that which is such a policy in which the insurance company gives you a bonus?
Understand ‘Par policy’
These policies are called ‘Par policies’. The benefit of this bonus will be available to only those policyholders who have ‘Par Products’. ‘Par’ means ‘participation’.
These are policies through which the customer gets a share in the profits from the ‘Participating Fund’ of the insurance company. These policy holders get benefits like bonus and cash dividend.
Sum Assured is guaranteed in Par Policy but benefits like Bonus and Cash Dividend are not guaranteed. Sum Assured is available on maturity of the policy or on any disability during the term of the policy.
Often these bonuses are given on an annual basis. Often people opt for this policy for insurance as well as additional benefits. However, keep in mind that the bonus will not be guaranteed or not, it is based on the profits of the insurance company.
Many Unit Linked Insurance Plans (ULIPs) are participating policies in which bonuses and dividends can also be available. However, term insurance and life insurance are non-participating policies.
It is worth noting that the premium of a non-participating policy is lower than that of a par policy.
Announcement of Bajaj Allianz Life
Par Policy: Bajaj Allianz Life has said, “These bonuses are being given through the profits earned by the company’s participating policyholders’ funds till the financial year 2020-21. This move will benefit around 12 lakh (11,99,612) policyholders who have been invested in the company for a long time and have reposed faith in the company.”
The company has said, “Bajaj Allianz Life has announced a bonus of Rs 1,156 crore to the policyholders. This includes regular bonus as well as a one-time special bonus of Rs 315 crore.
This is the 20th year in a row that this insurance company has announced a bonus.