Frequently Asked Questions on Bonus Adjustment for Financial Year Ending 2025

BM | CHI

If you have received notice regarding an adjustment to the bonus mix together with your Annual Bonus Statement 2025, the information and resources below are to help you understand these changes and how it may affect you. For further assistance, please contact your Prudential Wealth Planner, Bank Representative and/or Financial Adviser. Alternatively, you may visit our nearest Customer Engagement Centre or call Customer Service at +603-2771 2450 (Monday-Friday, 8.30am - 5.15pm, excluding Public Holidays). 

FAQs

Bonus mix refers to the composition of different types of bonuses for your policy. There are two types of bonuses for your policy, i.e. Reversionary Bonus (RB) and Terminal Bonus (TB).

This is a non-guaranteed bonus which is added to the sum assured of a participating policy, usually on an annual basis. Once declared and added (allocated) to your policy, RB is guaranteed and are payable in full upon death, total and permanent disability or maturity, provided you continue to pay the premiums as stated in your policy contract.

However, if you choose to surrender your policy, you may not receive the full amount of the allocated bonuses. The amount of the bonuses payable upon surrender may be significantly lower compared to those payable if you keep your policy until maturity, or on earlier death/ total and permanent disability.

This is a non-guaranteed bonus which may be payable when your policy ends - upon death, total and permanent disability, maturity or if you choose to surrender your policy. The terminal bonus is usually designed to give policy owners a fair share of the profits earned by the Participating Life Fund. However, there is a possibility that you may not be eligible in full for terminal bonus if you surrender your policy earlier. It is declared regularly for each time period (e.g. annual) and the amount can vary at each declaration depending on the Participating Life Fund’s investment and operating performance.

The adjustment is to ensure fair and equitable payments to all policyholders over the long run and to ensure sustainability of the bonus based on current economics. Reversionary Bonus rates are adjusted to align with the lower returns from fixed income market. To give you an overview:

  1. Over the past decade, the 10-year Malaysian Government Securities (MGS) yield has fluctuated around 4% with a sharp drop during the COVID-19 pandemic, followed by a rebound, and a decline to approximately 3.5% by January 2026.
  2. Continued credit spreads tightening which further reduced the corporate bond return. For instance, the credit spread for 10-year AA-rated bond has decreased by around 0.5% to 1% over the last 10 to 15 years.

Despite the adjustment in RB, a higher TB will be applied and the projected maturity value of your policy is expected to remain unchanged, ensuring that you receive your fair share of the Participating Life Fund.

The revised bonus rates declared for Financial Year Ending 2025 will be effective from 1 April 2026.

There will be no change to the accumulated Reversionary Bonuses which have been previously declared to you up to Financial Year Ending 2024, i.e. the Reversionary Bonuses added to your policy up to policy anniversary in calendar year 2025.

The revised bonus rates will impact the Reversionary Bonus declared for Financial Year 2025 and beyond. These bonuses are part of the benefits you may receive under your participating policy. However, it will not affect the guaranteed benefits and accumulated Reversionary Bonus declared to you up to Financial Year Ending 2024. Overall, the projected maturity value of your policy is expected to remain unchanged, i.e. based on your fair share of Participating Life Fund during maturity. Your terminal bonus will reflect accordingly to ensure your benefits continue to reflect your fair share of the Participating Life Fund, as per regulation. It may vary from time to time depending on the Participating Life Fund’s investment and operating performance.

The key factors affecting the operating performance of the Participating Life Fund are the insurance claims (e.g. death or total and permanent disability, payouts on surrenders and maturities) and expenses (e.g. administrative expenses, distribution costs and tax).

The key factors affecting the investment performance of the Participating Life Fund are mainly the bond yield (as mentioned above) and equity performance.

Please refer to your Prudential Representative/Wealth Planner/Bank Representative or Customer Service for information on the adjustment.

This Reversionary Bonus adjustment exercise only applies to certain products. If you have multiple policies, you will receive similar notification for each affected policy.

Bonuses may vary by products due to several factors, including but not limited to different product features, economic environment and outlook during product setup and timing of policy inception which has impact on the investment period.

Future bonus rates will depend on future investment and operating performance of the Participating Life Fund. We review the bonus rates annually, based on the investment performance of the Participating Life Fund, with the objective of ensuring we continue to make fair and equitable bonus payments to all our policyholders over the long run.

There is no impact to policy under APL. The surrender value available for loan remain to be based on your fair share of the Participating Life Fund. You may repay the loan in whole or in part at any time while the policy is in force. Any early repayment will reduce the debt on your policy as well as the interest charged on the policy.

Note: In the event there is any inconsistency between the English, Bahasa Malaysia and Mandarin version of the FAQ, the English version shall prevail to the extent of such inconsistency.