New Benefit Illustration

Life insurance companies are now required to use a new format of Benefit Illustration, based on the projected investment yield of 3.75% and 5.25% per annum. The lower yield of 3.75% reflect the current investment environment, with low yields on bond investments.

Policyholders should be aware that the charges imposed on a life insurance policy to pay for the marketing expenses (e.g. agent commission and sales incentives), administrative expenses and mortality charges (for the life insurance cover) remains to be quite high.

I estimate that the charges can reduce the yield by about 2.5% for an endowment policy and 3.5% by a whole life or critical illness policy.

If the gross yield is 3.75%, the net yield after the charges can be less than 1.5% or 0.5% for a saving over 20 years or longer. If the policy is terminated earlier, the yield will be negative (i.e. the cash value is less than the premiums paid). Read this FAQ:
http://www.tankinlian.com/faq/expense.html

I hope that life insurance companies will reduce their charges and expenses and give a better value to their policyholders under their endowment, whole life or critical illness policies. If you are considering to buy any of these policies, you should ask the insurance adviser to give you the answers to the following questions:
http://www.tankinlian.com/faq/right.html

You should also avoid high cost investment linked policies (ILP), as explained here:
http://www.tankinlian.com/faq/ilp.html

Due to the high charges and low return from a life insurance policy, it is better to buy a low cost term insurance policy and invest your savings in a low cost investment fund, as explained here:
http://www.tankinlian.com/faq/savings.html