Realistic projections by insurers is crucial to building trust

Singapore

A COMMON thread noticed about policyholders who bemoan that the actual payouts after their 20 or 30-year policies mature are far below what was projected is that they somehow carried the perception that all the illustrations seemed guaranteed when in fact they were not. Following articles on projected bonus rates published last December, it emerged that many were unclear about the projected guaranteed and non-guaranteed benefits, particularly the difference in the latter, between reversionary and terminal bonuses.

Others brought up the issue of how insurers have lowered the reversionary bonus, which cannot be taken back once declared, and how they have increased the proportion of terminal bonus - paid at the discretion of the insurer. These raise questions as to how policies were sold back then and what was said during sales, which gave consumers the idea that the illustrations are binding. They are not.