Terminal bonus is not guaranteed

Dear Mr. Tan
I always thought that Terminal Bonus is like Annual Bonus which is guaranteed once declared. Hence if my policy year crosses the year that terminal bonus is payable and is declared as per projected, such terminal bonus will be locked in to my policy.

REPLY
The terminal bonus is not guaranteed. The terminal bonus is payable based the rate that applies at the time of maturity, or surrender or death claim. It is possible for the terminal bonus to be withdrawn at the last minute, just before it becomes payable. I do not like a high rate of terminal bonus, due to its uncertainty.

Life insurance company use this "gimmick" to entice customers to buy their products. Many policyholders have been disappointed with the reduction in the terminal bonus after waiting for many, many years. By that time, it was too late for them to change their mind.