1.1.2 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.
1.1.3 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.
2. Conservative / Growth / Aggressive Savings Scores
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”.
Risk preference is a main consideration in financial management. Guaranteed return reflects guaranteed benefits only, whereas projected return (pessimistic) and projected return (base) reflect both guaranteed and non-guaranteed benefits. The actual amounts payable for the non-guaranteed benefits may be higher or lower than those projected, and may even be zero under some extreme circumstances. As such, out of the three savings components, guaranteed return is the least risky followed by projected return (pessimistic), while the projected return (base) is the riskiest.
Similarly, different savings insurance products have different focuses also. Some are more conservative and focused more on guaranteed return while some are more aggressive and focused more on projected return, and some are in between.
To cater for readers with different risk preferences, 10Life built the three savings scores by assigning different weightings to the Guaranteed Return Score, Projected Return (Pessimistic) Score and Projected Return (Base) Score. Below are the weightings used: