SEVERAL insurers have taken the opportunity to revamp life insurance products after new rules on illustrations they can show consumers kicked in on July 1.
With interest rates still historically low, insurers may now give examples to consumers interested in buying certain whole life and endowment policies using lower rates of return than before.
Until July 1, the two rates used to illustrate possible annual rates of return paid as a variable bonus were 5.25 per cent and 3.75 per cent. The new illustrations are 4.75 per cent and 3.25 per cent.
These illustrations are examples and not guaranteed returns.
Some insurers also tweaked their policies at the same time.
NTUC Income has revised plans such as VivoLife. For example, a 25-year-old woman taking up the flexible life insurance plan VivoLife after July 1 may have to pay 6 per cent more in annual premiums.
However, this woman would now be covered until at least the age of 69 rather than only for the first 15 years, that is until she is aged 40, under the terms of the old policy.
The chief marketing officer of AIA Singapore, Ms Ho Lee Yen, said: “There was no change to the premium rates of our revised whole life and endowment plans, except for the AIA Life Plus.”
In general, annual premiums for AIA Life Plus have risen but the total premium paid is less, as the premium term is shorter.
AIA gave the example of a 30-year-old male non-smoker. Previously, he would have paid an annual premium of $1,859 for 70 years, amounting to $130,130.
Now, he pays $1,943 a year for only 40 years, a total of $77,720, but still gets whole life coverage.
Great Eastern has repriced whole life plans such as Supreme Protect and some endowment plans.
Its chief product officer Lee Swee Kiang said it had improved product benefits, including extending the terminal illness benefit to all whole life plans and some endowment plans.
Licensed financial advisory firms said product revamps often occur at the same time as major industry changes.
SingCapital’s financial advisory director Adeline Tan said it is more important for consumers to consider a policy’s features, rather than the premiums.
“Some policies may be more expensive, but the benefits or coverage may also be greater.”