Many people who have their life insurance policy get notice that their plan is may be "With Profit" or "Without Profit". Some time they thought why certain plans are categorized like this. And wiling to ask their agent. Here are the answer.
An Insurance Policy can be "With" or "Without" profit. Life insurance companies from time to time declare bonus (profit share) on their plans.
An insurance plans in which this bonus/profit share is passed on to the policy holders is called a "with profit" plan. Bonus are allotted after certain periodical valuations to the policy and are payable with the maturity amount.
But in a "without profit" plan this bonus is not passed on to the policy holders. Therefore, the premium rate charged for a "with profit" plan is little higher than that for a "without profit" plan.
The percentage of bonus may vary from one policy to another depending on the type, term and the premium of the respective policy, amount other considerations.
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