Tan Kin Lian's Blog: Reduced bonus under Income policies

Monday, October 06, 2008

Reduced bonus under Income policies

Dear Mr. Tan,

With the fall in the global stockmarket, should I cancel my NTUC policies and take out the cash value. The bonus was cut this year. Can I ask NTUC to keep its promise and pay the higher bonus before the cut?

REPLY
If you decide to surrender the Income policy, you will get the cash value that is not less than the cash value before the bonus cut. Income has promised that they will declare a higher rate of special bonus for the current year that will compensate for the cut in the annual bonus. This guarantee is valid for the current one or two years only (I am not sure about the duration).

In the future years, there is no such guarantee. If the special bonus is cut, you will suffer a reduction in cash value, due to the lower rate of annual bonus. If you do not need the life insurance protection, it is better to surrender the policies now, and take out the cash value.

I am likely (but have not made a final decision) to surrender my existing policies, so that it wil lnot be affected by the lower rates of bonus in the future.

8 comments:

Anonymous said...: A higher special bonus even there is a loss in the life fund? Isn't it unfair to the others who do not surrender and who have to bear 'paper loss'? I am sure the life fund is in the 'loss shape' now after the reshape. The cut in annual bonus means more to be lost in the special bonus. I foresee in the next couple of years it will continue to lose and this time lose more because it has more to lose.; October 07, 2008 12:10 AM
Anonymous said...: You should discuss with your adviser and review your portfolio..If you find they are poor instruments of saving maybe you should surrender.
Perhaps, you like to consider investing regularly and take charge.; October 07, 2008 1:08 AM
Falcon said...: I have been trying to find out what is the best timing to cancel my policies. So far, I have found out that it is in April of every year that is the best time to cancel as they declare bonuses then. So since it is now October, should I wait until April next year?; October 07, 2008 1:09 AM
Anonymous said...: I too has this idea of terminating my protection policy which I had since 1993. The cash value is a couple of k above what I paid out so far. The sticky point is:

i) I will lose my bonus of $27k in the event I died.
ii) I am only paying 1.1k per year and as I get older, any new policy will cost me more. It is like saving all over again.
iv) My thought was to replace with a term and that will cost $500 a year without return for another 20 yrs.

Still not decided yet. I have 2 AIA, 2 GE [including 1 term] all with critical illness.; October 07, 2008 9:07 AM
Anonymous said...: Is the policy Revosave? If it is revosave ,you better cancel it to cut losses . It is a bad product which shouldn't have been allowed for sale in the first place.
Don't be locked in for life and suffer losses.It is a guaranteed loss.
However, if you have been represented or mis-sold you can demand a full refund of the premium, otherwise lodge a complaint with FIDREC.
I heard of many customers regretted buying it because they didn't know the product gives miserable return.Although there are options to reinvest but the options give very inferior return compared to investing directly into a regular investment and even worse than into a regular endowment plan. Policyholders are fooled and were not told the truth about better alternatives.
Some old people were fooled that revosave is some kind of annuity.They were asked to use their accumulated retirement fund to pay regularly for revosave.This is inappropriate and ridiculous and misrepresentation. The agents also didn't tell the truth that they earned a very high commission from revosave compared to if they were sold a real single premium annuity.. You may be of these victims.
If you have been misrepresented or mis-sold you have every right for refund, if not complain to MAS or sue both agent and company.
The agent had breached the FAA.

Concerned Singaporean; October 07, 2008 9:34 AM
Anonymous said...: Please write to sueechieh@income.com.sg to get an answer from the current CEO.; October 07, 2008 3:37 PM
Anonymous said...: Give the company some negative publicity and see how it react.; October 07, 2008 8:01 PM
Anonymous said...: The rule of the game now is DO NOT buy life insurance, education insurance, endowment, etc. anymore. Instead you should just buy TERM insurance only. Don't be conned again next again!; October 07, 2008 11:13 PM