| Money paid by life insurance companies to policyholders based on endowment policies and with-profit bonds. The amount of the bonus is calculated by actuaries based on the insurance company's investments in the past and future, and the insurer's overall financial strength. Reversionary bonuses are normally paid annually and could typically be in the region of 2% to 5%. Terminal bonuses (payable at maturity or prior death) tend to vary much more from, say, 10% to 100% at maturity depending on the term of the policy, for example 10 and 25-year terms. The bonus is declared each year and at the end of the policy's life. As a policyholder you have no way of knowing what the bonus is going to be until it is declared, and no real way of knowing how it has been calculated.
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