Prefer higher annual bonus

POSTED IN MY BLOG
Mr Tan,

My family, relatives & I bought many policies of NTUC Income. I am disppointed by the change in bonus structure too

We bought policies from NTUC Income because it is a co-operative hence it will be policyholder-focus insead of shareholder-focus. It is also a low-cost operator. All these means that it can introduce good value products, and return more benefits to policyholders.

Moreover, insurance companies are investing in the same kind of assets, largely in bonds, due to regulatory requirements. Hence I believe their investment performance should be largely the same over in the long term. Hence low-cost and policyholder-centric factors are real differentiators to higher higher bonus payouts.

I read that the new bonus structure is more in line with industry practice. It is also industry practice to cut terminal bonus drastically during major financial crisis in the past such as SARS, 911, Asia Financial Crisis, to remain their financial solvency. I have been investing directly in the equity market for the past 10 years, so I am quite certain major financial crisis will occur again in future. Hence I favour higher annual bonus declaration than a significantly higher but uncertain terminal bonus.

I applaud and support your effort to advocate NTUC Income to reverse their position on this matter.