addition to benefit Vs revalorisation method

[Nishkarsh Shrivastava]

In revalorisation method,we distinguish between insurance profit and saving profit before distribution of the profit.but why do we not distinguish between the two type of profit when distributing profit through addition to the benefit approach?

 

[Robert Chadburn]

It is simply the custom in the countries in which the systems developed. The additions-to-benefits approach is very much "let's share the profitability of the company with the policyholders" - which therefore includes all sources of profit. But then the company retains lots of discretion about how much (total) profit they pay out from year to year.
The revalorisation method is much more prescriptive - eg in the policy document the precise entitlement of the policyholder will be laid out, such as "90% of savings profits will be distributed to policyholders each year". But then there will be no discretion in the amount paid out each year, it will just be as it says on the tin.
A "scientific" reason for only having savings profit under revalorisation might be that the profit is distributed in proportion to reserves: savings - or investment - profit is likely to be earned as a percentage of reserves, so the method lends itself well to this source of profit (but not to others).
And sometimes the revalorisation method does include other sources of profit! - it again depends on the local custom and history of what's been done in that particular country.
Robert