Men's Articles

Making Sense Of Your Insurance Policies

Life insurance can be used to achieve financial goals such as income protection, building a retirement fund or saving for children's education. But how much do you really know about your policy?

What Are Participating Life Insurance Policies?

Participating life insurance policies are policies where you share in the profits of losses of an insurance fund through the distribution of bonuses. Examples of participating policies include participating whole life policies and endowment policies. Non-participating policies such as term insurance and investment-linked policies are not entitled to bonuses.

What Are Reversionary Bonuses?

Reversionary bonus is a type of non-guaranteed benefit of a participating life insurance policy. However, once declared by the insurance company, reversionary bonus becomes a guaranteed benefit. Reversionary bonus is paid over and above the guaranteed benefits of a participating policy, and increases the cash value (or surrender value) of a policy.

Reversionary bonuses are designed to be paid in full upon death or maturity. If you surrender your participating policy prematurely, the cash value of the reversionary bonus you would receive is lower than the amount of reversionary bonus that has been declared. This is to discourage policyholders from terminating their insurance policies early as insurance policies are meant to be long-term products. The cash values of the projected non-guaranteed benefits are shown in the Benefit Illustration.

Tips For Consumers

Study The Benefit Illustration And Accompanying Product Summary

Before you purchase an insurance policy, study the Benefit Illustration and the accompanying product summary carefully to have a good understanding of the policy. If there is anything in these documents that you do not understand, seek clarification from your life insurance adviser.

Black And White

Read your contract terms and conditions carefully, including the fine print. Ask your life insurance advise` to explain all calculations to you in writing. As the terms and conditions may not be exactly the same for every life insurance product, you should check the details your policy with your adviser.

Do Your Part

Do your homework, and not just rely on what your life insurance adviser has told you. Do not buy anything you do not understand or which does not meet your needs.

Free-Look Period

When your application for a policy is approved, you will receive the policy contract. Once the policy contract is sent to you, there is a 14-day free-look period from the day you receive the policy contract for you to reconsider your purchase.

Statements

Always check the statements sent to you by your insurance company. If there is anything that you do not understand, ask your life insurance adviser immediately.

Terminate Your Insurance Policy

Consider carefully before you terminate or surrender your policy as you would normally suffer a loss for doing so. In the case of a whole-life policy, the cash value is typically zero in the first three years.
 

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