Insurance Industry to Reduce Par Policies Illustrative Rates of Return


According to The Business Times: 3 Jun 21, insurance industry to reduce par policies illustrative rates of return. The Life Insurance Association (LIA) said on Wednesday that the upper bound for par policies’ projected rate of return will be reduced from 4.75 to 4.25 per cent; the lower bound will be revised from 3.25 to 3 per cent.

These rates, which kick in on July 1, are used in benefit illustrations for par policies at point of sale. The last time these illustrative rates were reduced was in 2013.
The LIA stressed that the lowering of the illustrative rates does not have bearing on the actual return of an insurer’s par fund nor on the return of existing and future par policies.
There is a possibility, however, that insurers may reprice or redesign their product line-up.

Said the LIA: “Some life insurers may take the opportunity to review and redesign the product features of their offering, since they have to make changes to policy illustrations and, accordingly, policy benefits and premiums may be changed for new products going forward.”
It said consumers should not feel pressured to buy a new par policy before July 1, since the revisions to the illustrative rates have no impact on actual par policies’ returns.
LIA president Khor Hock Seng said in a statement that the revision is “primarily in consideration of the sustained low interest rate environment”. Read the full news acritical below.


Full acritical from LIA will be here 

One Last Thing

Having suitable and sufficient life and income protection insurance are important as it create and provide you and/or family members, with financial support which was not there in the first place. Continue your insurance and financial planning knowledge by reading my other articles, for life insurance comparison on Term Life and Whole Life Insurance Comparison, and Income & Disability Protection Insurance Planning. If you are ready to know more about retirement planning knowledge you may visit my other articles on; What is CPF Life & 5 facts of CPF LifeRetirement Planning and Infographics on What is Retirement Planning and Examples. Hope all these articles helps you have better knowledge on you insurance and financial planning. Do contact your friendly financial consultant if you require further help, or contact me as my objective is to make insurance easy to understand and financial planning a happy process, in Singapore.


Note: Opinions expressed are solely in Mr. Chan Kong Meng’s personal capacity and neither express the views or opinions of Prudential nor represent any professional advice in Mr. Chan Kong Meng’s capacity as a PACS representative.


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