NTUC Income has given me the two scales of terminal bonuses (for surrender and maturity/death claims) payable on each of my policy for each year in the future. In total, I have four complicated scales for two policies.
The scales appear to be calculated to give terminal bonus that is slightly more than the cut in the annual bonus. They may suit these policies at the present time, but it is unclear how the scales will be changed in the future to reflect changing cirumstances.
I have asked NTUC Income to clarify the following questions:
1) Will the same scales of terminal bonus apply to all policies in the same series, or will they differ according to year of entry as well?
2) How will the scales of special bonuses be changed in the future, to reflect changes in the investment yield?
3) What are the principles that will be followed to maintain fairness between the policyholders with different entry years and different policy types?
4) To what extent is the higher rate of special bonus guaranteed, as it is intended to compensate for the cut in the annual bonus?
5) Will NTUC Income be prepared to lay out these principles in a transparent manner to be disclosed to all affected policyholders?
6) For policyholders who have suffered a reduction in annual bonuses for a few years since 2003, does NTUC Income intend to use some of the exceptional
surplus in 2007 to pay additional bonuses to policyholders to make good their shortfall (as compared to the projected bonuses at the time that they bought the policies)?
7) Will NTUC Income give an option for policyholders to remain on the old bonus structure, if they do not accept the change to the new bonus structure?
My personal preference is to stay with the "old" bonus structure, as it is more transparent and a higher proportion of the bonus is vested each year.
I do not like the "new" bonus structure as it can be subject to arbitrary adjustments and the terminal bonus can be withdrawn in the future. I am also less confident of getting a higher payout, if the investment yield improves.
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