Article on 18-year Golden Lion Endowment in The Straits Times (16 October 2006)

An article in The Straits Times on 16 Oct 2006 made reference to an old couple who bought Great Eastern's 18-Year Golden Lion Endowment policy in 1988 when they were in their 60s. Written by Lorna Tan, it is entitled, "Endowment plans give old couple 'negative returns'". This paper gives more background on the product and addresses any concerns you may have arising from the article.

Our 80th Anniversary Product
The 18-year Golden Lion Endowment was a policy that was specially packaged to celebrate our 80th anniversary in 1988. It was made available exclusively to existing Great Eastern policyholders. It was a simple insurance product that required little underwriting. The policyholder was guaranteed an immediate coverage of $8,000 in the event of death, no matter how old he was at policy inception. In addition, the policyholder would have enjoyed an increase in coverage through compound reversionary bonuses added year after year.

Reason for 'negative returns' for a few policyholders
The reason for "negative returns" in this case highlighted in the article was because these two policyholders took up their policies at advanced ages of over 60 years.  As such, a larger portion of premiums was used to cover the cost of insurance protection, which in turn affected the maturity return.  A large majority of our Golden Lion Endowment policyholders were much younger at policy inception.  The maturity returns of their policies have therefore not been affected by high mortality cost.

Are endowment policies suitable for the elderly?
Whether or not endowment policies (or any other life insurance policies) are suitable for the elderly depends on their needs and preferences.  Older customers above 60 years old who bought our Golden Lion Endowment policy could have bought a term or whole life plan.  However, they could have been more attracted to the benefits of our endowment plan.  With a term plan, they would not have enjoyed any survival or maturity benefits.  And if they had bought a whole life plan, they would have had to pay premiums until they are 87 years old.

With the 18-year Golden Lion Endowment, the elderly couple in the case cited in the article enjoyed an immediate coverage of $8,000 in the event of death, which increased with each year's bonus declaration.   And as the journalist pointed out, they (or rather their estate) would have benefited if they had passed away "during the earlier life of the policy". 

As the Golden Lion Endowment policy was an anniversary product, the company decided to also accept older customers.  The journalist highlighted this in her article and added that "This was despite the fact that it would expose the firm to the higher risks of paying out claims to them."

This case was first brought up when a Mr Tan Khin Pang wrote to The Sunday Times Inbox on 1 October 2006.  Great Eastern's response to his letter was published in The Sunday Times Inbox on 8 October 2006. 

Call your life planner
Please be reminded that while an endowment policy is basically a savings plan, it also provides coverage against death and total and permanent disability. The older the policyholder at policy inception, the larger is the portion of premiums that is used to cover insurance cost. The relatively high cost of insurance can adversely affect the returns provided by the endowment policy.

Our life planners are trained and constantly reminded that when providing financial advice to the elderly, they must conduct a proper needs analysis and assess their need for insurance protection.

If you have any queries, please call your life planner to for a better understanding of your policy. Alternatively, you may wish to e-mail to wecare@lifeisgreat.com.sg (Customer Service Department) or marketing@lifeisgreat.com.sg (Marketing Department).