Monday, November 26, 2007

Reduction in Yield

Hi Mr. Tan,

I have been reducing the policy illustration given to me by the insurance agent. It contain many pages of confusing figures.

I saw an item called "reduction in yield" of 1.5% plus. Is this acceptable?

REPLY

The reduction in yield shows the impact of the various charges that you have to bear, for the commission, life insurance cover and other expenses.

A reduction of 1.5% is high. In most cases, the reduction should be around 1%, The impact of a higher reduction can be quite significant for a policy that is taken for 20 to 30 years.

Read this FAQ:
http://www.tankinlian.com/faq/yield.html
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1 comment:

Anonymous said...

If the projection is based on 5.25% and reduction is 1.5% the yield of the product can go no further than 3.75% over at least 20 years. Is this a decent return? It barely beats inflation which is about 3.5% over the same term. And this is assuming that the products deliver according to projection. Most endowments fall under this. Again nothing beats the regular ILP saving plan.

November 26, 2007 9:34 PM

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