Estimated yield for next 10 years

Dear Mr Tan,

I saw your posting about the yield on your and your wife's life insurance policies for the next 10 years. How do you calculate the figures? How can I do the same calculation for my own policies?

Another question, why do the yields vary so much between 2% and 8%? Are they from the same insurance company?

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MY REPLY

All my policies are with NTUC Income.

I ask them to give me the following figures for my life insurance policies:

* what is the current cash value (if I terminate my policy now)
* what is the annual premium
* what is the projected cash value in 10 years time (including projected future bonus)

With these 3 figures, I can compute the yield.

These are the projected yield for the next 10 years. They are not the actual yield over the entire duration of the contract.

The difference in yield is due to the method used to calculate the cash value and distribute the bonus for different types of contracts. Sometimes, the methods are not consistent.

You can ask your insurer to give you the same 3 sets of figures. If you send the figures to me, I will be able to compute the yield for you, using my financial calcuator. It is quite easy.