Higher bonuses for policyholders

Dear Mr. Tan
I bought several life insurance policies from X. In recent years, it started to spend a lot of money in advertising and in paying high commission and incentives to its insurance agents. I heard that it will be reducing its yearly bonuses, to be compensated by higher bonuses in the later years. I am not sure if I can trust X to pay a high return on these policies. Should I continue these policies or cancel them?

REPLY
The investment gain for 2007 is high. Life insurance companies should be paying higher bonuses for this year, rather than reducing the bonuses. If your insurance company reduces the bonuses for 2007, you can lodge a complaint to the Monetary Authority of Singapore. It is not correct for the company to manipulate its bonuses and deny a fair return to its policyholders.

Most life insurance companies in Singapore give a poor return to their policyholders, due to high marketing expenses. It is best to avoid buying these life insurance policies in the first place. You should consider cancelling your policies and take a loss, if you find that the company cannot be trusted to take care of the long term interest of its policyholders.

Lesson: Do not buy any life insurance policy that has high upfront charges. Do not keep your policy with a company that does not take care of the long term interest of its policyholders.