Yield on life insurance policies

Dear Mr. Tan,

Your wrote in your blog that whole life policy gives terribly low return of 1%. My family has 2 living policies with NTUC and 2 with Great Eastern. What is the return for living policies? In your opinion what type of insurance policy commands the highest returns?

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REPLY:

The yield on a living policy is lower than a whole life policy, as it provides a much wider cover.

Generally, the yield from NTUC Income is quite satisfactory. You can read about the return in my FAQs.

For a person who has already committed to a life insurance policy and incurred the sales charge, it is usually better to keep the policy.

The yield over the next 10 years, in the case of NTUC Income, is about 3% to 4% p.a. The return from other insurance companies is usually lower, due to their higher charges.