Glossary: Reversionary bonus

The annual bonus paid by a life company and added to a with-profits endowment or pension plan or savings bond, and paid as a percentage of the basic sum assured (see endowment policy). Once added, these cannot be taken away and are added to the basic sum assured so this grows over the life of the policy and each subsequent bonus has a compounding effect which increases the value of the policy.

Relevant to: Managing your pension

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