There was a letter by Tan Aik Meng in the ST Forum yesterday on how bonus statements by certain insurance companies are misleading.
Insurer’s bonus statement misleading
The gist of the letter is that the death value and cash values given in the policy statement are not the current ones, but of a value sometime in the distant future. This might lead to confusion.
Have a look at this example:
Most people when they see this, might think that the death benefit is $172,500 and the surrender value is $98,500. They will not look further to find out the meaning of the * that appears.
Let’s take a look at what the * really means.
- If you are below 45 years old, the illustrated values are based on the time that you turn 65.
- If you are between 45-79, the illustrated values are based on the year 2034 (20 years) later.
- If you are above 79, the illustrated values are based on the time that you turn 99.
I agree with the writer that the statement is misleading. If you die or surrender the policy today, the amount that you are going to receive is going to be significantly less than that so-called illustrated benefit/value.
To make matters worse, there is a word “current” that appears which really means the “current projected values”.
Instead of using “illustrated values”, I feel that the statement should use the word “projected values”. The insurance company should also include 1 more column for “current values”.
Do you actually see your insurance statements, or do you usually chuck them aside? Are they clear in illustrating their current death benefit and surrender value unlike the example that I gave above?
Share your findings below by leaving a comment.