Understanding Bonuses and Your Insurance Policy
What are bonuses?
How are bonuses declared?
What types of policies participate in the profits of Prudential and are entitled to bonuses?
Does my insurance policy qualify for bonus payouts?
I own a PruLink policy. Does it qualify for bonuses?
What are the different types of bonuses given out by Prudential?
Are bonuses guaranteed?
Do bonuses affect the benefits in my policy?
How would a revision in bonus rate affect the benefits in my policy?
Bonuses are the surpluses/profits added by Prudential to your 'with-profits' policies. 'With-profits' policies are insurance policies that are eligible to participate in the profits of the Life Fund.
The main aims of Prudential's bonus policy are:
- To provide each with-profits policyowner with a return on his/her premiums that reflects the earnings of the underlying investments, whilst smoothing out the peaks and the troughs of investment performance; and
- To ensure that with-profits policyowners receive a fair share of the profits distributed from the Life Fund by way of bonus additions to their policies.
The Life Fund, simply put, is the insurance fund comprising all the premiums of the 'with-profits' insurance policies. The premiums are invested in a mix of equities, fixed-interest securities (such as bonds) and properties. The wide mix of investments is designed to provide the best returns over the long term but with a lower level of risk than you would obtain by investing directly.
Prudential's investment strategy is aimed at securing on behalf of its policyowners, the highest combination of income and growth in capital value whilst meeting the regulatory investment guidelines and minimum solvency requirements.
Investment performance is the key contributor to the surpluses/profits of the Life Fund and it enables Prudential to consistently declare bonuses, which add to the guaranteed benefits over the life of the policy.
Bonuses are declared annually and are largely dependent on the investment return on the Life Fund. Every year in April, Prudential Singapore notifies its 'with-profits' policyowners of the bonus amount being added to their policies.
Prudential's 'with-profits' policyowners currently receive 90 per cent of the profits from the Life Fund as bonus additions to their policies. Shareholders of Prudential receive the remaining 10 per cent as dividend payments.
Policyowners can find out their latest policy values by logging into our PruAccess policyowner information service at our website - www.prudential.com.sg
The types of 'with-profits' policies include endowment and whole life policies.
Endowment policies run for a fixed term of years, chosen at the outset by the policyowner. These policies pay out at the end of the fixed term, on the 'maturity date', or earlier if the Life Assured (the person whose life is insured by the policy) dies or becomes totally and permanently disabled during the term of the policy. Some of Prudential's endowment products include PruSave and PruFlexiCash.
Whole of Life policies pay out only on the death of the Life Assured. Prudential's whole of life plan is Prulife.
Term policies are usually "non-participating", ie they do not participate in the profits of Prudential and hence, no bonuses are declared for such policies. Some of Prudential's term products include PruTerm Renewable.
To find out if your insurance policy is a 'with-profits' policy, you can check your policy document or contact your insurance adviser. Alternatively you can call one of our Customer Relations Officers through our PruCustomer hotline at 1800-333 0333ˆ.
The PruLink policy is an investment-linked product and functions differently from traditional 'with-profits' insurance products, such as endowment and whole of life policies. No bonuses are declared for such policies.
Regular Premium 'with-profits' policies are entitled to Reversionary, Performance and Maturity bonuses.
Reversionary bonus is an annual bonus that increases the guaranteed benefits of the policy. Once added, a reversionary bonus cannot be reduced or removed unless you surrender the policy before it matures.
Performance bonus is paid upon the death or disability of the life assured or when the policy matures. Maturity bonus is an extra amount that we pay when the policy matures.
Single Premium 'with-profits' policies enjoy Income and Growth bonuses.
Income bonus is a monthly amount that increases the guaranteed benefits of the policy. Growth bonus is an additional amount that we pay on the maturity of the policy or on the death of the life assured.
Once bonuses are declared, they are guaranteed. However, the bonus rates of all life insurers, including Prudential, are not guaranteed.
The amount of bonuses declared annually depends on the amount of surpluses in the Life Fund. This, in turn, depends on economic conditions and equity markets. If Prudential experiences good surpluses year on year, it could pay a high level of bonuses.
If, however, economic conditions are poor and less surpluses are expected, Prudential could reduce the bonus rate to reflect the actual investment returns in the Life Fund. Such a bonus strategy would ensure that we continue to meet our obligations to our policyowners and the guaranteed benefits they are entitled to.
Yes. Bonuses, once declared, will increase the value of your policy.
A revision in bonus rates will not affect the guaranteed portion of your policy benefits. Only the non-guaranteed portion of the benefits will change to reflect the extent of the bonus revision.