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Anonymous
What does the life insurance policy bonus rate mean?
I have just received the bonus declaration from Aviva. It states that the bonus rates still remain the same as last year. It's my first year into the policy, I have no idea what rates are they referring to. The bonus rate of $5/$1000 of sum assured is mentioned. Does it mean that the returns is only 0.5% instead of 4.75% as illustrated in the policy? I'm on MyWholeLife plan 3.
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Elijah Lee
05 May 2020
Senior Financial Services Manager at Phillip Securities (Jurong East)
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Hariz Arthur Maloy
05 May 2020
Independent Financial Advisor at Promiseland Independent
Hi Anon, this means your Reversionary Bonus for the year is paid in full. If an insurer keeps paying...
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Hi anon,
No, it just means that your reversionary bonus was credited according to the rate stated ($5 for every $1K sum assured) and becomes a guaranteed amount in your policy, to be paid out along with the terminal bonus in event of a claim. Your effective return over time would not be 4.75% however, it will be slightly lower by around 1%-1.5%.
The clearly surely article linked by Alan explains it very well, so please take a look. (There's 2 parts)