1. Am I right in thinking there cannot be any regular nor special reversionary bonus on surrender? 2. Am I right in thinking that the only possible bonus on surrender that there can be is terminal bonus? The reason why I ask is that on section 1 under chapter 20 (Surplus distribution) it says under regular reversionary bonus and special reversionary bonus the following: " is guaranteed once added to benefits (other than surrender)."
If we are considering Additions to Benefits: For CWP, companies are unlikely to guarantee any sum assured or/and bonuses on surrender as this will expose them to selective withdrawal risk where policyholders withdraw where their guarantees are greater than the asset share. Instead companies would make sure they have the discretion to determine specific surrender values, abiding by the principles of surrender (as covered in SP2). However, for AWP business the benefits are more transparent and the policyholder is more likely tracking its fund value (including guarantees). The company therefore often includes, in its design, the right to impose an MVR on surrender which aims to being the fund value (incl g'tees) down to the asset share. Hope this helps. Thanks Em
