We are pleased to announce our Seventh Successive Reversionary Bonus for the year from 1 April 2006 to 31 March 2007. This bonus declaration will benefit all 'With Profits' customers who have paid all premiums in full when due.

We have experienced substantial growth over the last year and today cover over 5,23,000 Policy Holders. As a result of an improved performance and a growing business, we now have a nationwide footprint of over 276 branches.

Over the term of your policy, we invest the premiums that we receive from you and from other similar 'With Profits' policyholders in a 'With Profits' fund. We invest in a variety of assets to achieve an investment return on your policy. Benefits and expenses of your policy are paid out of this fund.

We use bonuses to give you a maturity value, which fairly reflects the performance of the fund (investment or otherwise) over the term of the policy. The level of bonuses we allocate aims to deliver a fair share of the fund when the policy matures or on a death claim. Note: Additional benefits taken by you such as critical illness or accidental death benefits, offer protection for different circumstances and have no investment-related benefits. Hence they do not attract bonuses.

Reversionary Bonus:
We declare Reversionary Bonus annually as a percentage of the Sum Assured (Plus attaching bonuses in case of HDFC Single Premium Whole of Life policies).

The following table illustrates how bonus is calculated for a policy that was bought on 1st April 2006 by a person aged 30:

Once added to your policy, this Bonus is guaranteed to be payable at maturity. For Single Premium Whole of Life policies, which do not have a maturity date, this bonus is guaranteed to be paid on selected future policy anniversaries.

For all our 'With Profits' plans, the influence of our reversionary bonus declaration on the death benefit is governed by the policy wording under each plan.

We calculate this bonus keeping in mind a long-term view of investment returns, expenses, mortality and other experience elements.

Interim Bonus:
If a maturity claim or death claim is made before the next planned reversionary bonus declaration, we will add an Interim Bonus to your policy.

All policies where such claims have occurred do not participate in the next reversionary bonus declaration. Therefore, we add an Interim Bonus to give you or your nominee a fair share of bonus earned over the next financial year i.e. from 1 April 2007 to the date of claim.

For all our 'With Profits' plans, the influence of our interim bonus declaration on the death benefit is governed by the policy wording under each plan.

Terminal Bonus:
This bonus is sometimes added to a policy on maturity and allows us to pay the fair share of the 'With Profits' fund based on the experience over the policy term.