Life Insurance Bonus: Is Your Policy Paying You?

Some life insurance policies pay an annual bonus on top of the sum assured. Most Indians don't know their policy earns this, or how to check if they're getting it.

Here's what happened: Kotak Life declared ₹1,398 crore as bonus for FY26, its 25th consecutive annual bonus payout to participating policyholders.. Around 7.7 lakh policyholders are eligible — only those holding 'with-profits' or participating life insurance plans qualify.. These bonuses accumulate over the policy term and are paid out at maturity or on death claim, boosting the total benefit..

What you should do: Check your policy document for the words 'participating' or 'with-profits' — only these plans receive annual bonuses from insurer surpluses.. Call your insurer or log into your policy portal to view the accumulated bonus amount added to your sum assured so far.. Compare your policy's bonus track record before renewal — insurers must declare bonus rates annually, and this affects your final maturity payout significantly..

Bonus declared on a life policy is NOT taxable at maturity under Section 10(10D) — your insurer's annual bonus quietly grows your payout, tax-free.