Thursday, December 27, 2012

Big cut in maturity benefit

Many consumers buy life insurance with a large amount of non-guaranteed bonus, especially the bonus that is supposed to be paid on maturity. In the benefit illustration, you will see that the non-guaranteed bonus is low during most of the duration and they escalate sharply during the last few years or the last year. You must be wary of this type of projection, as the bonus may not be taken away, for no justifiable reason. This is what has been experienced by this policyholder. At one time, this was not possible, i.e. the regulator will question the insurance company that cuts the bonus with justification, but today, nobody cares. Be careful and avoid this type of policy.

Here is an example of a policy with a stepped up non-guaranteed bonus during the last few years. Consumers should avoid them.

1 comment:

zhummmeng said...

Unlike your time the guaranteed portion was high but because to be like all others and following so called industry 'best practice' the guaranteed has shrunk and the policy becomes driven by special bonus which depends on the whims and fancies of the actuary. The risk of wholelife products has suddenly increased .It is better to save/invest and take the risk on your own and be rewarded for taking risk instead of the fancifool smoothing by insurance companies.I wonder if there is truth in it.Can/'t trust the insurance companies anymore.

Blog Archive