The policyholder bought a Prudential policy and paid a monthly premium of $116 for 23 years, giving a total of $32,016. On the maturity date, he expected to receive a payout of $42,000 as explained in the Benefit Summary of the policy. Instead, he received only $20,000. Details of this policy can be found in this article.
The policyholder is confused about the lower payout. This case is circulated through the social media. Many members of the public are confused also.
I wish to explain the confusion.
The annual premium of $1,392 is used as follows:
$836 goes towards the 23 year endowment policy
$501 goes to buy the three riders (crisis cover and disability cover).
The difference must be for interest charges.
The total premium paid for 23 years for the endowment policy is $18,998. The maturity benefit is $20,000. It seems that all the bonus have virtually disappeared.
The Benefit Summary said:
Living Benefit: On maturity, you will get $42,000.
I presume that this is the amount payable ONLY if the life assured suffered a dread disease during the insurance period. It is not clear to the policyholder.
I wonder if the Monetary Authority of Singapore will act on this matter? It appears that they condone the decision taken by Prudential and leave it to the poor policyholder to deal with this matter.
There are two unsatisfactory aspects of this incident:
a) Why does Prudential return back only the guaranteed benefit for 23 years? What happens to the participating bonus?
b) Why is Prudential allowed to give a misleading description of the payout on maturity?
For the sake of good orders, the regulator must step in.
-Tan Kin Lian
