Projected investment returns used in insurance quotation

The life insurance industry in Singapore is revising the investment returns assumed for benefit illustration in insurance sales quotations with effect from 1 July 2013, the Life Insurance Association of Singapore announced. 

All the life insurance companies will adopt a set of lower investment returns - 4.75% p.a. and 3.25% p.a. - for use in the benefit illustrations for Singapore-dollar denominated Participating (“Par”) insurance policies. This is a reduction from the 5.25% p.a. and 3.75% p.a. used before 1 July 2013. Participating policies are those that have a share of the allocations of the Participating (“Par”) Fund.

The benefit illustration is meant to illustrate the level of policy benefits assuming the Par Fund earns a certain level of investment returns.

This new set of lower rates used in the benefit illustration reflects the current low interest rate environment.

These two rates are used purely for illustrative purposes and do not represent upper and lower limits of the investment performance of the Par Fund.

Actual investment returns in the future may vary from the illustrated rates, depending on the economic conditions, asset class returns and asset allocation of the Par Fund.

As an industry, we encourage consumers to be proactive and responsive when the Financial Adviser representative is conducting the “fact-find”, as this will help them to make an informed choice for a product that is aligned to their individual need and risk profile.

The life insurance industry regularly reviews the benefit illustration rates across its range of products.

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