tag:blogger.com,1999:blog-11702093.post1000173426742565817..comments2024-03-27T20:18:34.069+08:00Comments on Tan Kin Lian's Blog: Big cut in bonusesTan Kin Lianhttp://www.blogger.com/profile/00617069056914635271noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-11702093.post-55638470829667606412017-04-11T17:06:50.616+08:002017-04-11T17:06:50.616+08:00In the old days, those who had long-term (>15yr...In the old days, those who had long-term (>15yrs) endowments or wholelife policy that matured or surrendered before 1997 (Asian Financial Crisis) still managed to get relatively good returns of 4% to 5% p.a. Insurance companies then could sustain such payouts because of the high interest rates then, especially during the 1980s, when even investment-grade bond yields were in the high single-digits.<br /><br />After Asian Financial Crisis in 1997, everything fell apart particularly for fixed income / bonds which is the main asset for insurance companies' participating fund --- which they use to grow your endowments and wholelife cash values & annual bonus declarations. Interest rates for investment grade bonds fell below 4%. After minusing away the expenses, salaries, commissions, overseas trips, staff bonuses etc what is left for policyholders is only 2.5% or less.<br /><br />Unfortunately MAS still allows insurance companies to market their stuff using investment returns of 3.25% and 4.75%. It should be no more than 1.5% and 3.0% to give a more realistic picture to potential buyers.Unknownhttps://www.blogger.com/profile/02938450718690565242noreply@blogger.com