Choose an insurer based on its actual return to policyholders

Editor
Forum Page
Straits Times

I refer to the letter from Ms Ong Hwee Leng entitled "Poor bonuses - time insurers revise premiums" (St Times, 11 Oct 2006).

Ms Ong said that the bonuses declared on her policies have been at least 30 percent below the projections at the time of her purchase. She probably bought her policies from another insurer, not NTUC Income.

If she had bought a 20 year endowment policy from NTUC Income in 1996, the actual reduction in bonuses is about 10%. This is largely contributed by a decline in the yield on fixed income investments, which account for a large proportion of the investments of the life insurance fund.

Our policyholders see a smaller reduction in bonuses for the following reasons:

- our initial projection was more realistic
- they were based on a rate of bonus that could be supported by the prevailing investment yield

We were able to offer a fairly attractive return to our policyholders due to our low expense ratio. We pay commission to agents that are much lower than the market and distribute a modest rate of dividend to shareholders. We are able to give more of the investment gains to our policyholders.

For maturing policies, we have consistently given a much better payout to our policyholders, averaging about 15% for a 20 year endowment policy. This is largely contributed by our low expense ratio.

My advice to consumers is to choose your insurer based on its track record of giving a actual better return to its policyholders, rather than on projected values or the sales presentation by its agents.

The actual returns from NTUC Income are posted in our website, www.income.coop.


Tan Kin Lian
Chief Executive Officer
NTUC Income