Monday, April 20, 2009

Bonus cut on life insurance policies

Dear Mr. Tan,
I received a letter fror my insurance company that they are cutting my bonus. I know that the global economic situation is bad, but I feel that there is no need for a big cut. After all, the insurance company made big profit last year, and they did not increase their bonus rate by much. Is it fair?

REPLY
I agree with your views. There is lack of transparency in the manner in which the bonus has been cut. Some policies have a bigger cut in bonus compared to other policies. It seems that the old plans have bigger cut compared to the newer plans, as the insurance company hopes to sell their new plans. 

It is important that insurance companies should treat all policyholders fairly and that the bonus must be distributed fairly based on the actual experience of the insurance fund. It is not fair for an insurance company to withhold profits in good years and make a big cut in bad years.

If you wish to provide feedback on the bonus cut on your policy, you can give details here. It will be kept in confidence.


8 comments:

Unknown said...

NTUC will be cutting again the bonus of the other policies including the annuities.
Why? Is it because they need more money to recoup the losses of last year?
I heard a few hundreds of the agents will be going for a week holiday in Gold Coast, Australia this week. At least $2 millions will be spent to keep these greedy agents happy. Why can't this money be used to keep the policyholders happy?
I wonder who is footing the bills?
It must come from somewhere and definitely not out of the thin air or the the management. Likelihood, the policyholders are the suckers paying for the trip. Policyholders can expect rise in cost, higher premium, low return, low protection and a cut in the bonus.

Falcon said...

How come we don't hear Lim Swee Say say something like in the DBS saga?

zhummmeng said...

We shall hear more of this in May at the
AGM on 29th May, Friday at 6.00PM at the NTUC Auditorium 7th level.
Register , if you wish to attend.
Shall grill the board and ceo on the following.
1.has bonus cut worked and is it giving policyholders better return?
2. what is the return?
3.What is the loss in 2008?
4.Why is ntuc cutting more par value policies? Why is the bonus of old policies cut so much that it is lower than the new policies?
5.What is the return of the current par value policies over 20-30 years? Can they match the return during Mr. TanKL's time?
6.Has the risk of the traditional par value products gone up?
7.Why is the operating cost going up?
8. Is ntuc following AXA to cut commission for all products by 50%
in line with the MAS's recommendation in the fair dealing guidelines?

wyf said...

Does it mean if you write to the insurance companies & the relevant authorities, your bonus will be restored? I don't think so. If you think the cut is too drastic, you may have to consider surrendering the policy althogether.

zhummmeng said...

Wai Yoke is right that we can personally take action but can one action move the management to retract.Not enough power.. It must be concerted action. Let us surrender together and make a run on the company . Before we do, let us listen to what they have to say at the AGM.

Sobri said...

So far my wife and I have surrendered more than $400k of INCOME policies and transferred back our annuities to CPF.

I asked for the formula for calculating bonuses. The reply, after several days was:

"Generally, cash values are calculated by applying our actuarial factors on the Sum Assured & Bonus; we are sorry that we are unable to reveal these factors which are confidential as they are of proprietary nature to insurance companies. Basically, these factors are determined accordingly to the age of the Life Assured, policy type, durations, etc."

Then, Ng Choon Ping Paul Zing has the cheek to say:
"........hence, we are not able to reveal which does not mean that we are not being transparent."


So how do we know if the calculations are accurate? I even have proof of their past error in calculations!

Perhaps we should fix a date or a week when all dissatisfied policy holders could surrender their policies together to drive the nmessage clearly.

Falcon said...

I believed they are not as interested in whether old policyholders surrender their policies as in getting new policyholders. I think they do not really mind people surrendering the old policies as they were structured quite fairly and gave good values. Take the foundation policies as an example, where else can we find such a good deal where for a pittance we can insure for quite a large amount for our children? The profit margins vs risks are in favour of the policyholders. So it is no wonder that they do not mind and can afford to ignore the old policyholders pleas. As long as they can get more new policyholders for their newly designed policies they can still show healthy growth in a depressed market. Until and unless a new company that gives good values comes online will NTUC Income sit up and pay attention to the existing policyholders.

zhummmeng said...

Falcon,
you will soon receive letter to inform you of the next round of bonus cut. You will sit up. What you have is from the Mr. TanKLian's time. The new Tan isn't happy because the new policies not able to achieve the old rates.They are coming for your endowment.
Annuities already cut. That is why people are surrendering their policies.

Blog Archive