Table of Content

Long Term Savings Insurance Scoring Methodology

Long Term Savings Insurance Scoring Methodology
Evaluation by professional actuaries to help you identify long term savings insurance with high returns
Iris Lun
10Life Co-founder and Chief Actuary
1. Overview

Guaranteed Return

Based on the guaranteed cash value that the insurance company is obliged to pay.

Projected Return (Pessimistic)

Based on the projected cash value under the pessimistic scenario

Projected Return (Base)

Based on the projected cash value under the base scenario

2. Score Weighting

10Life designed three scores to represent three risk preferences for whole life savings insurance policyholders. They are “Conservative Savings Score”, “Growth Savings Score” and “Aggressive Savings Score”. 

Long Term Savings Insurance 5-Star Criteria

The top products under three common financial goals of whole life savings insurance for the policyholder:

  • Education funding 
  • Retirement planning 
  • Legacy planning 

3. Assumptions

  • Male non-smoker age 35;
  • Total premium payments USD100,000;
  • No policy loan taken and no withdrawals of cash value and/or interest throughout the policy term.


Updated on Sep 29, 2021.

 

4. Long-term Savings Score Details

Guaranteed return is one of the key differentiators between buying a mutual fund and a savings insurance product. In assessing the attractiveness of the products, 10Life compares the guaranteed return, as well as the projected return (pessimistic) and projected return (base), to reflect different risk levels at the end of the specified policy period, benchmarked against the market. The detailed methodology is as follows:

4.1. The Levels of Risk Reflected

Three levels of risk are used for assessing the savings return after the policy is in force for a certain period of time.  

 

Is this return  
guaranteed?

Includes all  
guaranteed  
benefits?

Includes  
non-guaranteed  
benefits?

Cash Values Measured

Guaranteed  
Return Score

Y

Y

N

The minimum cash values obligated by the insurer at the end of the specified policy period.

Projected  
Return (Pessimistic) Score

N

Y

Y

Cash values assumed under the “Pessimistic Scenario” by the insurer in the policy proposal.

Projected  
Return (Base) Score

N

Y

Y

Cash values assumed under the current “Base Case Scenario” by the insurer in the policy proposal.


 

4.2. Compare the Cash Values

The three return scores measure the 20-year cash values, assuming the policyholder withdraws the total cash value (including guaranteed & non-guaranteed values) as a lump sum at the end of the 20th policy year.

4.3. Benchmark Return against the Market

For each of the three return scores, the 99th percentile of cash values in the market is used as benchmark. To assess the attractiveness of the returns, the return score is calculated as the 20-year cash value vs the respective benchmark. The benchmarks may be updated from time to time to reflect changes in the market.

5. Long Term Savings Insurance 5-Star Rating

10Life Long Term Savings Insurance 5-Star Rating is awarded to the top products under three common financial goals of whole life savings insurance for the policyholder:

  • Education funding 
  • Retirement planning 
  • Legacy planning 

 

Each financial goal has its own specified target period, premium payment term and risk preference. The 5-Star Rating criteria for each category are summarised below.

 EducationRetirementLegacy*
Target Savings Period20 Years30 Years60 Years
Premium Term5-12 Years10-18 Years1-20 Years
Savings Score based on selected Risk Preference

Growth Savings Score

≥9.5

Growth Savings Score

≥9.5

Aggressive Savings Score

≥9.0

*Product must offer the option to change the policyholder and/or the insured. 

 

Since the implementation of GL16 in early 2017, insurers are required to disclose fulfillment ratios of non-guaranteed dividends/bonuses. However at this stage, the published data available in the market mainly cover the fulfillment ratios of the first few policy years, making it insufficient to determine the ability of insurers fulfilling the long term nature of these non-guaranteed returns. Moreover, products and market assumptions are constantly changing, making it difficult to predict future returns based on past returns. Therefore, 10Life does not take published fulfillment ratios into the calculation. 

 

Updated on Oct 31, 2022

Disclaimer

10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies.

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