Loyalty Matters, And Here’s How Your ULIP Can Reward You for It


As they say, loyalty is always important in every sphere of life. Sometimes, you are even eligible to get rewards for your loyalty. Sounds interesting? ULIPs  have mechanisms for rewarding loyal customers, and the term for this provision is loyalty additions. They are additional amounts given to customers by the insurance company for staying invested in the policy for a sizable tenure. Of course, these loyalty additions are welcome bonuses for investors, and why not? 

Extra funds help take care of diverse needs. These additions can be integrated easily into various investment cum insurance policies. This article takes a brief look at loyalty additions in ULIPs and how you stand to benefit. 

ULIP Loyalty Additions- Learning More About Them 

While investing in a ULIP, you will naturally do your homework on the coverage amount, premium, policy tenure, reputation of the insurance company, the type of funds available, switching provisions, and many other aspects. 

You may also use a ULIP calculator online to calculate your approximate returns. Loyalty additions are like the icing on the cake for investors; they are additional bonuses that you will not calculate at the beginning and add to the value of your investment. Here are some aspects that you should know about loyalty additions:  

  • Loyalty additions are known by several terms, including extra allocation, additional allocation, and premium booster. They have similar functional aspects. 
  • The key motive behind the loyalty addition is to encourage a customer to keep paying premiums promptly while remaining invested throughout the ULIP
  • This is why they are offered towards the later stages of the policy tenure 
  • Some insurers do have slightly varying regulations to provide loyalty additions as well
  • Some give them after the conclusion of the lock-in period, while some companies offer them post-maturity. A few plans even ensure loyalty additions from the start of the policy. 
  • These additions add an extra amount to the corpus for investors
  • These additions usually apply as a percentage of the fund value or the premium amount
  • They are also called a percentage of the sum assured in case of any traditional policy
  • Their value depends on policy tenure, premium amount, tenure of premium payment, and the guaranteed addition period. Yet, the loyalty additions paid towards the end of the policy period are relatively higher. 

The calculation method may vary across insurers as far as loyalty additions are concerned. Some calculate it as the difference between the guaranteed additions and the insurer’s performance. The additional benefits may accumulate throughout the year and are paid at maturity. Some have rules where the policy should be held for a certain tenure, like 5, 7, or 10 years to be eligible for the loyalty addition in question. 

What You Should Do 

While loyalty additions in ULIPs come with various modalities, how do they influence your investment strategy or actions? Here are some aspects that you should also note: 

  • Loyalty additions will undoubtedly ensure additional funds from the insurance company in return for continuing usage of their plan or service
  • They may seem like a main benefit for keeping the policy active and bypassing early termination of the same
  • Understand that the loyalty addition is not based on the portfolio’s performance concerning insurance and investments. The asset performance has no impact on the same; it is only a fixed percentage stipulated by the insurance company. 
  • The insurer works out this amount based on various aspects like the premium payment duration, frequency, policy tenure, size, and intervals between guaranteed loyalty bonuses. 
  • Loyalty additions may benefit you if you have owned the ULIP for several years and are approaching maturity
  • They should not be the sole criterion for staying invested in any ULIP. You should periodically assess the returns and performance from the same and see whether it suits your future financial goals.

If you can continue to combat market volatility or maximize returns through ULIP fund-switching and the investment is giving you good returns over the long haul, then you can stay invested to reap the benefits of these loyalty additions, which may swell your kitty handsomely in the future. 



Please enter your comment!
Please enter your name here