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Chap 6: Participating Policies - Coggle Diagram
Chap 6: Participating Policies
To provide middle to long-term
returns to policyholders
Benefits
Non-guaranteed
benefits
Factors
Investment performance
usually expressed as
addition to SA
Bonus Distribution
Reversionary Bonus
Only guaranteed when
declared
Simple
Annual
bonus based on SA
Compound
Annual bonus based on SA plus existing bonus
Higher RB :arrow_right: Lower TB
Terminal / Maturity Bonus
Bonuses allocated to terminating policies
due to maturity, death or surrender
Set equal to value of
fund assets backing policies
Determination of Bonuses
90:10
90% of surplus goes to policyholders
10% goes to insurer
Reserving
Set aside for both
annual
and
terminal bonus
Risk-Based Capital Framework
Interim Bonus
Given to policies that terminate
before bonus declaration
Determined by
Appointed Actuary
at year-end
Cash Dividends
Option to convert payouts to
additional sum assureds
(paid-up addition)
Death Benefit
Guaranteed Death Benefit + Bonuses
Surrender Value (SV)
Guaranteed SV + SV of bonuses
Internal Governance Policy
Not required to be disclosed
Composed of
Bonus Determination
Risk Management
Investment of participating
fund assets
Shareholder's profits and
responsibilities
Charges & expenses
Disclosure Requirements
Product summary
Sharing of risks
Smoothing of bonuses
Investment of assets
Benefits under plan
Fees and charges
Impact of early surrender
Free look period
Policy Illustration
Illustrates clearly premiums
and benefits every year
Client and rep both required to
sign on every page of illustration
PHS
Your Guide to Life Insurance
Industry publication issued
under MoneySENSE
Not compulsory
Annual Bonus Update
required by MAS to provide
post-sales information
Information
Purpose of update
past performance and
future outlook
Bonus allocation