facebookWhy are my insures (both Great Eastern and Aviva) not showing the non guaranteed bonus or seem to declare any of it? They do declare annually bonus of 1%. ? - Seedly

Takingstock @

29 Jun 2019

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Insurance

Why are my insures (both Great Eastern and Aviva) not showing the non guaranteed bonus or seem to declare any of it? They do declare annually bonus of 1%. ?

I have been collating the statements for more than 10 years. On average, they always say the participating return is 4+%, but the declared bonus is only 1%. There is no mention of the non guaranteed return. The sum assured doesnt change, and I guess it means the non guaranteed bonus is not accrued / alloted at all.

So if I die, does that mean they pocket the difference between 4% compounded (vs the 1% guaranteed to me)? Over 20+ years, its a lot. What are the rights of my beneficiaries?

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Hariz Arthur Maloy

29 Jun 2019

Independent Financial Advisor at Promiseland Independent

1) What policies are you holding on to?

2) Get an updated BI from the insurer and see if the current surrender value matches the projected surrender value at time of signing.

3) You should have received this letter from Aviva.

Check the red circles I highlighted to see the total bonuses declared.

Guaranteed portions of a policy are not bonuses, they are guaranteed. So these bonuses are Reversionary Bonuses that is the non-guaranteed one you are asking about.

4) The insurer's participating fund performance doesn't belong to you. Only the projected bonuses owed. Each insurer will have a spread. Also, due to smoothing of bonuses, even when they make negative 20% returns, they are still able to provide you with your non guaranteed bonus like what happened in 2008.
5) It's impossible that you haven't been receiving bonuses. Insurers declare bonuses every year, and once declared, it is now guaranteed. They cannot u-turn and take back what they have given you.
6) Investing in a par fund means passing control of your monies to an insurer to invest on your behalf in a 30% Equity 70% Bond Portfolio that MAS believes is capable to generate 4.75% p.a returns (over a long term). They provide a floor of guaranteed returns, plus upside if the par fund does well.
"If we make X, you get Y. If we make more than X we may give you more than Y. If i lose money on X, you can still get Y because there were years we made more money than X and I've kept it for today. If not, we'll give you less then Y but not less than the guaranteed amount. The year your policy mature, or you surrender, or you claim from the policy, we will give you Z based on the amount of Y we have given you so far."

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