What are ‘with profit’ and ‘without profit’ insurance plans?
Rakesh Garg, Chandigarh
Policies that participate in the profit of an insurance company are called ‘with profit’ policies, while the policies on which the amount of bonus is fixed at the time of issue itself are called ‘without profit’ policies. This means that irrespective of the profit earned by the insurers, the policyholders of without-profit policies will get fixed returns on the amount they have invested. However, in the case of with-profit policies the amount of bonus payable is based on the net surplus earned by the insurers. Therefore, returns on these vary from year to year and can be more or less than the returns on without-profit policies.
