Understanding Insurance Quotations is a very important process before you make a purchase. This will enable you to see what are you getting and the values of the policy. Thanks to the MAS regulations, all companies are required to show most of the “Good(s)” and “Bad(s)” of the policy in the Benefit illustrations (BI).
There are a few common tables in the BI which are: Death/protection Benefit, Surrender Value, Deductions and Distribution Cost table.
Death/Protection Benefit Table explains the claim upon Death inline with the years. As policy with Cash Value will accumulate bonuses as declared by company yearly, they will also have Bonus Sum Assured. This will add up to the total Death Benefits. Do note that the Bonuses are not guaranteed, therefore the Bonus Sum Assured which depended on it will not be guaranteed too.
Surrender Value Table shows the values you will be getting back if you terminate the plan. This will also have guaranteed and non-guaranteed portion which when added up together will show the total surrender value. If you can see the highlighted rows, break-even will always take more than 10years.
Table of Deduction shows the total cost of the plan. These costs includes the agent’s commission, overriding commission to managers, advertising expenses, overhead expenses of the company and the profits for shareholders. This does not add on to the premium but already included in. As highlighted in the image above, these values are the same with the surrender value table above too.
Total Distribution Cost table shows the commission payout. This will normally be paid in couple of years depending on the plan type and the duration of the plan. This table shows the total commission payable from your premium over 6 years is $1876.
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