Loyalty additions

Loyalty additions incentivise a policyholder to stick to the policy throughout the term. Essentially, they are additional benefits offered to the policyholder for paying premium throughout the policy term. This benefit is mostly offered on unit linked insurance policies (ULIPs) and some endowment life insurance plans. The rates of loyalty additions are defined as a percentage of sum assured or premium amount (or fund value in case of ULIPs). The rates and payment of loyalty additions vary with each insurance company.

Normally, insurance companies would pay loyalty addition to policyholders if he/she pays premium continuously for specified number of years. Consider Bajaj Allianz’s Goal Assure plan. Loyalty additions are added to the fund value from the sixth year of policy, provided the policy has been in force until then. Only policies with an annual premium of ₹5 lakh or more and policy term of ten years and above, are eligible for loyalty additions.

While loyalty additions may get added to the fund value every year, they are paid only at the time of maturity of the policy along with other maturity benefits. Some insurers also pay loyalty additions to beneficiaries upon death of the policyholder.

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