Changes to the caps of illustrated investment rates of return

Our Singapore-dollar (SGD) denominated Participating (Par) policies purchased from 1 July 2021 will reflect the latest set of illustrative investment returns in accordance with the LIA Guidelines on Policy Illustrations 2021.

The LIA has made a downward revision on the caps for illustrative investment returns for Par policies in consideration of the sustained low interest rate environment.

The new caps for the upper and lower Illustration Rates are now 4.25% p.a. and 3.00% p.a with effect from 1 July 2021. This is a reduction from the 4.75% p.a. and 3.25% p.a., which were in use before. The new illustration rates provide a more realistic range of projected investment returns.

These upper and lower illustration rates are for illustrative purposes only. These rates will not affect the actual returns of existing and future Par policies. They also do not represent upper and lower limits of the investment performance of the Participating (Par) Fund. The actual returns you can receive from your policy will depend on the actual experience of the Par Fund.

Commonly asked Questions

When will this change take effect?

This change will take effect from 1 July 2021.

What policies will be affected by this change?

All new SGD denominated Par policies submitted from 1 July 2021 will have the upper and lower illustrative investment return rates capped at 4.25% p.a. and 3.00% p.a. respectively.

According to the Guidelines, life insurers’ illustration rates should not be higher than the insurer’s view of the investment returns achievable over the lifetime of the par policies. The upper illustration rate should also not exceed the 4.25% p.a. cap set by the LIA. Life insurers are still able to illustrate at various illustrative investment returns that are below the caps.

How does this change affect my existing policies with Prudential?

Existing policies will not be affected by the new caps. The policy illustration rates are for illustration purposes only and will not affect the actual returns, and thus bonuses, of existing and future Par policies.

Will this illustration change affect the performance of my existing Participating fund policies?

The rates are used for illustration purposes only. The actual returns received from a Par policy will depend on the actual experience, including investment performance, of the Par Fund that will develop over the lifetime of the Par policy. Eventual actual returns received by policyholders may be higher or lower than those reflected within the Policy Illustrations.

You will receive an annual bonus statement declaring the Participating funds performance as well as the bonus declared.

Does this change only apply to Prudential?

No, this is an industry-wide change which applies to all insurers in Singapore.

How can I find out more about this?

You can contact us via our Online contact form or call our PRUCustomer Care at 1800 333 0333. Alternatively, your Financial Consultant can also assist you via a phone call or chat.