Asked by Dionysius Ang

Is the 3-4 percent of the whole life plan guaranteed?

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  • Loh Tat Tian
    Loh Tat Tian
    Level 6. Master
    Answered on 06 Dec 2018

    I stumbled upon something which may also be of good use. I could have shown it but due to time and also complexity, best to read it as a article.

    https://www.clearlysurely.com/blog/technical-smechnical/decoding-the-table-of-deductions-one-piece-of-info-we-would-like-to-see/

    The article explains why you do not see the 3-4% in the initial years.

    To answer your question on the 3-4%, it is the expected amount (since the inception of endowment policies), that this would not be cut (case in point, AIG did cut 100% Terminal Bonus during the crisis).

    It also depends on the policies (the gauranteed column).

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  • Jason Sin
    Jason Sin
    Level 5. Genius
    Answered on 06 Dec 2018

    No. It is not guaranteed. The 3-4% pa is merely to entice you to buy the policy. Only the reversionary bonuses declared every year is guaranteed. Do note the reversionary bonuses declared is less than 3-4% because of insurance companies' practice of smoothing the bonuses. That being said, I am not saying insurance is not important. Insurance is in fact very important. But you need to buy the right type of insurance. Just my humble opinion.

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 05 Dec 2018

    No, but due to smoothing of bonuses and Reversionary bonuses being guaranteed once declared yearly, plus the fact that when insurers cut bonuses it would usually affect Terminal bonuses or the policies maturing during that year, that 3-4% is expected.

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