Advertising and impact on policy bonus

When a business spends a lot of money to advertise its products or improve its corporate image, the money comes from the shareholders. They hope to attract more customers and earn the profit to cover the advertising cost.

The situation is different when it comes to large advertising by life insurance companies. The marketing expenses comes from the existing policyholders. The large amount that is spent will have a big impact on the bonuses that the policyholders can expect to receive on their savings. The more that is spent, the lower is the bonus.

In recent years, many life insurance companies have reduced their bonus rates significantly, but they continue to spend a lot of money on their advertisements. If the insurance company is truly looking after the interest of its policyholders, they should be increasing the bonus rates, rather than spending money on advertisements and marketing that do not benefit the existing policyholders.

If you find that you insurance company has big advertisements, you should ask this question. Are they spending my money? Is this affecting my policy bonus? Can I continue to trust this insurance company to look after my interest?

I have decided to terminate most of my life insurance policies, as I do not like the large sums that are being spent on advertising, marketing and image building (at the expense of existing policyholders) and the lower rates of bonuses that are now being given to the policyholders.

Tan Kin Lian