Scoring Methodology of Short-Term Savings

Scoring Methodology of Short-Term Savings

Introduction

Short term savings insurance provides guaranteed returns to the policyholder within a few years. The savings period is usually 3 to 5 years, which is longer than bank fixed deposits but shorter than whole life savings insurance. 10Life scores the short-term savings products based on the guaranteed return at different time periods.

General Assumptions
  • Premium payment of $25,000 (USD) or equivalent in total

Overall Score
The insurance company is obligated to pay a guaranteed amount to the policyholder at maturity. While the main feature of the product is the guaranteed return at maturity, the policyholder may face liquidity risk before maturity. If the policyholder chooses to surrender before maturity, they may suffer losses as they may only get back a portion of the premium paid. 10Life calculates the guaranteed cash flow by taking into account the premium paid and guaranteed amounts received in the scenarios that the policy is terminated at 1st, 2nd, 3rd or 4th policy anniversary, or held to maturity. The Guaranteed Return Score is calculated by the weighted average return over the market benchmark at different years.

Overall ScoreWeight
1-year Guaranteed Return10%
2-year Guaranteed Return10%
3-year Guaranteed Return10%
4-year Guaranteed Return10%
5-year Guaranteed Return60%

10Life strives to offer an unbiased scoring methodology to compare insurance products through data analyses and mathematical calculations, based on public information from insurance companies. 10Life scores are for reference only, and do not constitute any insurance sales advice. As everyone has different insurance needs and affordability levels, you should seek independent advice from licensed advisors before purchasing insurance. 10Life may review the scoring methodology from time to time to improve the product comparisons. If you have any questions or suggestions on the methodology, please email us at enquiries@10Life.com.

Updated on 31 January 2020
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