Glossary

Cash value / Surrender value

The amount of money the policyholder receives upon surrendering the policy.

Persistency

A measure of how long policyholders keep their policies in effect.

Underwriting

The process of analysing the risk of an insurance application to determine whether to accept the application and how to set out the policy terms.

Internal rate of return (IRR)

A method for calculating future cash flow at an annualised rate, where a higher IRR indicates a better return.

Fulfillment ratio

The fulfilment ratio is calculated as the ratio of actual non-guaranteed value against the illustrated amount at the point of sale.

Reversionary bonus

A non-guaranteed bonus of which the face value is a permanent addition to the policy and is payable upon payment of claims (e.g. death or critical illness). The cash value is paid at a discount upon policy termination that did not result from the death or critical illness of the life assured.

Special bonuses

A non-guaranteed, one-off entitlement which is payable upon policy termination (e.g. policy surrender or maturity) or payment of claims (e.g. death or critical illness). The amount may change for each declaration. The actual amount is determined only when it is payable.

Terminal bonuses / Terminal dividends

Total cash value ratio

The total cash value ratio is calculated as the ratio of actual total cash value, which includes guaranteed cash value and corresponding non-guaranteed elements of the product, against the illustrated amount at the point of sale.

Grace period

The period during which a policy  remains in force after a premium is due, without affecting coverage if the premium is paid during this period.

Notional amount

The notional amount is used to calculate policy premiums and values, not representing the amount of death benefit. Any change to the notional amount will lead to a corresponding change in the future premiums, death benefit, guaranteed cash value and other related policy values of the policy.

Sum assured

The amount paid by the insurer if the relevant conditions under the policy have been fulfilled. For example, the sum assured for a life insurance policy is normally the amount of death benefits or critical illness benefits.

Premium deposit account

The excess amount of premiums paid by the customer will be deposited into the premium deposit account. Any future outstanding premiums and/or levy (if applicable) on insurance premiums for the policy will be deducted from the premium deposit account. The premium deposit account will earn a non-guaranteed interest rate which compounds on an annual basis. The prevailing interest rate for the premium deposit account can be found on the Frequently Asked Questions page available at https://www.prudential.com.hk/en/macau/claims-support/policy-payment/pulse-macau/index.html

Total modal premium

The total premiums paid by the policyholder for the insurance plan based on the payment mode of the policy, such as annually, half-yearly, quarterly or monthly.

Participating plan

This is commonly featured in long-term insurance products, such as whole life insurance or critical illness insurance products that have a savings element. It provides policyholders with life protection, as well as non-guaranteed benefits by distributing dividends or bonuses, which allow policyholders to share the product profits. In Prudential, there are 2 types of participating plan, i.e. With-Profit Plans and Shareholder-backed Participating Plans.

Basic Plan

A basic plan gives you the choice to take out the plan as a standalone policy without needing to enrol in other type(s) of insurance products at the same time.

Rider / Supplementary Benefit

Rider or supplementary benefit can provide additional coverage to your basic coverage. When the plan is a rider or supplementary benefit, it needs to be attached to a basic plan.