NTUC Income gives a better return than other insurers

A policyholder was unhappy that his return was lower than the illustration made at the time that the policy was sold 15 years ago.

My manager gave her explanation (reply 1). I followed up with a further explanation (reply 2).

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REPLY 1 (FROM MANAGER)

You have bought our endowment policy in 1990. The illustrated maturity figure was based on the bonus rates at that time, and on the high return from our investments.

However, for years 1997, 2001 and 2002, we were forced to cut our bonus due to difficult market conditions. For 2003 and 2004, we have done better and have reflected this by restoring partially the bonus cuts in the earlier years. The bonus rates for Year 2004 is about 83% higher than for 2002.

Your policy matured this year. The average yield works out to be 5.91% per annum. This is considered very good. If you have set aside the same yearly amount with a bank over the same period, you would have received much lesser.

Our terminal bonus of 25% is a generous amount. Even in our bad years, we have dipped into our reserves to maintain this. We do so because we do not want policyholders with matured policies to forfeit this due to a few years of poor results.

We have given you a good and fair return on your insurance policy. You cannot compare this with equities. They are totally different classes of products.

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REPLY 2 (FROM CEO)

I confirm that you have obtained a fairly attractive return. If you have insured with another insurance company, your return would have been much lower.

My manager will send you a letter written by another policyholder, printed in the Straits Times, where she complained about the poor return from another insurance company. She said that the return from NTUC Income was much better.

I hope that you will, after reading this letter, send us your appreciation for the good return that we have given to you, during the past years, when the investment climate has been quite difficult.