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Smooth Bonus Funds

14 August 2006 Reader

Dear Ed,

Your article once again reinforces why you should not invest in smoothed bonus funds:

1.  The BSR only comes into consideration when there is a low or zero reserve when termination penalties are applied. One understands this practice.

2.  The BSR never comes into play if there have been exceptional investment years and the reserves are very strong. The reserves that are released by early terminations, there are still penalties which are applied irrespective of the BSR strength, will not profit remaining policyholders.

3.  A large percentage of released reserves will go to the shareholders, the investor's profit that would accrue to him under a non life insurance investment.

Quick Polls

QUESTION

We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?

ANSWER

An insurer is an insurer is an insurer
All are excellent: would not deal with them otherwise
There is one insurance brand that stands out for me
Tied agent: but my brand is the best out there
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