Annuity Commodity
Case: PRUDENTIAL INSURANCE
( PRUDENTIAL VIETNAM )
MA3N0217
Annuities are designed to help meet a number of long-range financial
goals. They are contracts between an insured party (usually an
individual) and an insurance company. In exchange for premiums
paid, annuity contracts traditionally provide a guaranteed distribution
of income over time, until the death of the person or persons named
in the contract or until a final date, whichever comes first.
Here's how an annuity works: you make an investment in the annuity,
and it then makes payments to you on a future date or series of
dates. The income you receive from an annuity can be doled out
monthly, quarterly, annually or even in a lump sum payment.
The size of your payments are determined by a variety of factors,
including the length of your payment period.
Three types of annuities
Fixed annuity:
Example: You use $50,000 in cash to buy a
fixed annuity. In return, the insurance company
agrees to:
Hold your money for 10 years, during which
time you have to pay a penalty to access it (this
10-year period is known as a surrender period)
Pay you a rate of interest on the money, say
five percent.
After 10 years, begin making payments to you
of $500 per month.
Make these payments to you for a certain
number of years, or for as long as you live,
depending on which option you bought.
Indexed Annuities:
Example: You use $50,000 in cash to buy an
indexed annuity. In return, the insurance
company agrees to:
Hold your money for 10 years, during which
time you have to pay a penalty to access it. This
10-year period is known as a surrender period.
Pay you a rate of interest on the money, say
five percent – or more, depending on the index
used.
After 10 years, begin making payments to you
of $500 per month – or more, depending on the
performance of the index.
Make these payments to you for a certain
number of years, or for as long as you live,
depending on which option you bought.
Three types of annuities
Variable Annuities:
Example: You use $50,000 in cash to buy a variable annuity. In
return, the insurance company agrees to:
Hold your money for 10 years, during which time you have to pay
a penalty to access it. This 10-year period is known as a surrender
period.
Pay you a rate of interest on the money, based on the performance
of the company’s investments in the stock market.
After 10 years, begin making payments to you of $500 per month –
or more or less, depending on the performance of company’s
investments in the stock market.
Annuities in VIET NAM
Annuities are sold by insurance companies
Providers (sellers) pool the mortality risk of similar individuals to achieve a predictable
cash flow.
TYPES OF ANNUITIES INSURANCE PRODUCTS
Vietnam’s Law on Insurance Business generally divides insurance business into three
categories: (i) life insurance, (ii) non-life insurance and (iii) health insurance. An insurer
is not permitted to simultaneously carry out life and non-life insurance business.
However, a life insurer may concurrently provide personal accident and health care
insurance as a supplement to its life insurance operations. In addition, an insurance
company is required to operate within the scope of activities set out in its
establishment and operation licence as granted by the MoF.
About Prudential Viet Nam
1995:
Arrived in Vietnam & established the first
Prudential Representative Office in Hanoi, the
capital of Vietnam
1997 :Established a 2nd Representative office
in Ho Chi Minh City
1999: Prudential Vietnam Assurance was
created with a total investment capital of
US$15 million
About Prudential Viet Nam
Prudential Vietnamhas the largest market
share in the life insurance market with a wide
range of products.
In addition to our achievements in the life
insurance sector, Eastspring Investments Fund
Management Company - established in June
2005- and Prudential Vietnam Finance Company
(PRU-Finance) - established on Oct 9th 2007are privileged to provide a variety of financial
solutions to serve the various needs of our
Vietnamese customers.
Insurance Award - Prudential Vietnam
“Top 100 best products for children and family”
2002-2013:"Golden Dragon Award" in 12 constant years
2012:“Certificate of Merit" by MoET
2011:“Labor Medal Award (third grade)"
2007-2010:“Top Trade Service”
2002-2011:"Most-Liked Services"
16/10/2009"Friendship Medals of the Vietnamese State"
27/06/2009:"The Great Honor Award" by Prime Minister and HCMC
People Committee
2007-2009:“Top 10 Corporate Taxpayer”
2008:"Famous Brands 2008"
2008:“Enterprises of Sustainable Growth 2008”
2008:“Saigon Times Top 40”
25/06/2007:"Vietnam The Best"
2007:“The Golden Bell award ”
All Products- Prudential Vietnam
Wealth insurance: Wealth insurance ensures
that you receive a lump sum amount of
money at the maturity of the Policy. In the
unfortunate event of death during the term
of the policy, your family receives lumpsum
amount, called the Sum Assured. Thus it
combines the benefits of protection and
saving in a single instrument.
Child insurance: Education solutions ensures
comprehensive financial planning for your
child’s education/ developmental needs.. It
offers financial protection to your child’s
future in the unfortunate event of your
death.
Term life insurance: Term Insurance Plans
are designed to ensure that in the event of
the policyholder’s death, the family gets the
sum assured (the cover amount).
Benefit Illustration
Example:
Mr. Nguyen Van A, 40 years old purchased Enhance PruSave
with Sum Assured (SA) of VND 100 mil and premium term is 20
years. Mr. A‘s requirements are illustrated as the following
Age of maturity: 69 years old
Policy term: 29 years
Premium term: 20 years (till 60 years old)
Age of receiving retirement benefit: 60 years
old
♦ The total and permanent dismemberment (TPD) benefit illustration
If Mr. A unfortunately suffers TPD at the age of 64, Prudential will pay the full
SA and RB accumulated up to that time. The total amount will be paid in 10
annual installments and the previously paid retirement benefit will not be
deducted.
Benefit
♦ Retirement benefit
The customer will be paid 10% of the Sum Assured (SA) and 10% of
Reversionary Bonus (RB) annually on the policy anniversary date for 10
years, from the chosen retirement age of 50, 55, 60 or 65.
♦ Totally and Permanent Dismemberment (TPD) Benefit if the
life assured is affected before or on the anniversary date after
attaining at the age 65.
The customer will be paid full SA and RB in 10 annual installments,
from the date of TPD. In case the Life Assured (LA) dies, the unpaid
benefit will be paid as a lump sum.
References
http://www.prudential.com/view/page/public
http://www.annuityinsurers.org/Resources/History/Historyof-annuities.aspx