Terminal bonus

Pobby

When I spoke to my endowment provider I was told that currently their terminal bonus was 45%.Could someone tell me how this works please?

EdInvestor

Hi Pobby

It could be 45% of the total guaranteed value, or of the guaranted sum assured or of the declared bonuses so far.It depends on the company.You'll have to ring and ask them,45% of what?

dunstonh

There are two types of bonus on conventional with profits plans (actually there are three but the third is not that common). Reversionary (annual) and terminal (final).

Reversionary bonuses tend to be quite low nowadays as once added, they cannot be taken away. This leaves the insurance company with a liability that many cannot afford. Final bonuses can be adjusted whenever the insurer needs to and we are finding that insurers are now using the final bonus more than they used to in the past.

As Ed says, it could be 45% of the guaranteed sum assured. 45% of the target sum or 45% of the bonuses already added. You would need to check with the insurer to see which it is.