Cash value and bonuses: reversionary bonus, terminal bonus, the surrender value table, reduced paid-up and policy loans

What cash value is made of: three layers

Cash value (现金价值) is the amount a policy would pay out if surrendered at a given point in time. For participating whole life, the surrender amount is usually three layers added together, less any amounts owed: the guaranteed surrender value, plus the surrender value of vested reversionary bonuses, plus the terminal bonus (if any), less any outstanding amounts owed to the insurer. Etiqa's product summary describes the surrender benefit in exactly this way, as the sum of these three items less indebtedness, with the terminal-bonus-type item called a performance bonus (Etiqa Version 2.25). MoneySense notes that the cash value of whole life builds up only after a minimum period, and that early termination results in a loss (updated 28 September 2026).

Why it is low in the early years: Great Eastern's education page notes that a large part of early premiums goes to the cost of insurance, distribution costs and administration, so surrendering early may return less than premiums paid (30 July 2026). MAS Notice 320 requires the product summary of a participating policy to state that early termination usually involves high costs and that the surrender value may be less than total premiums paid, and to point to the relevant figures in the policy illustration.

Three kinds of bonus: when and how they are paid

The table is based on YGTPP (May 2020). Reversionary bonuses are often expressed as so many dollars per S$1,000 of sum assured, so when reading a bonus rate also check the base it is multiplied by. In one Etiqa product summary, the illustrative reversionary bonus rate under the 4.25% illustration rate is S$4.50 per S$1,000 of basic sum assured a year, applied equally to accumulated reversionary bonuses, with a lower projected rate under the 3.00% tier (Etiqa Version 2.25). Doing the arithmetic on that example, a policy with a basic sum assured of S$100,000 would receive about S$450 of new reversionary bonus in the year (100 × 4.50, excluding the bonus on accumulated bonuses), and in later years the new bonus would also be calculated on the accumulated bonuses. This is an example from a single product summary, not a market-wide figure; actual bonuses are whatever the insurer declares each year.

Whether bonuses can be withdrawn early, and how a withdrawal is valued, also varies by company. Great Eastern states that reversionary bonuses can generally be withdrawn only after the policy has been in force for 3 years or the period stated in the policy, that withdrawals are valued at surrender value only, and that this is not a good deal for the policyholder (2026).

How to read the surrender value table

The policy illustration lists the death benefit and surrender value year by year, each with a guaranteed column and then the non-guaranteed portion and total under each of the two illustration rates (under the LIA's 2018 guidelines, every year for the first ten policy years and every five years thereafter; under the current 2024 edition, the layout follows the documents the insurer issues). The table below is a worked example for practising how to read one; the figures are made up and are not a quotation or illustration for any product.

Illustrative Policy A: S$10,000 a year for 10 years, lower illustration rate scenario.

Look at three things at least. First, the guaranteed column alone: in this example the guaranteed surrender value at year 20 is still below cumulative premiums. Second, the share of the non-guaranteed column: it rests on the bonus assumptions in the illustration and will move with the bonuses declared each year. Third, the early shortfall: the gap is widest at year 5, which means surrendering in that stretch costs the most. The year in which the total column turns positive is an illustrated outcome, not a guarantee.

What happens if premiums stop

The outcome depends on the contract. Great Eastern's education page summarises three possibilities: the policy lapses, it converts to a reduced paid-up policy, or the cash value is drawn on temporarily (30 July 2026).

MoneySense, in What to ask before buying life insurance, suggests asking what the options are if you cannot keep paying and what happens to your cover once premiums stop (28 September 2026). Using Illustrative Policy A above: the cash value at the end of year 5 is S$22,500; if the S$10,000 premium for year 6 is advanced by an automatic premium loan, the debt is S$10,000 plus interest accruing daily, deducted on surrender or claim; if premiums are advanced year after year, the debt and interest move ever closer to the cash value, and once they exceed it the policy terminates. This is illustrative arithmetic and includes no interest figures.

Policy loans and partial surrenders

A policy loan (保单贷款) is a loan from the insurer up to a limit set by the cash value. MoneySense points out that the loan must be repaid with interest and may slow the build-up of wealth. Etiqa's summary further states that outstanding amounts are deducted from claim payouts, and that the policy terminates when loan indebtedness exceeds the surrender value.

Checklist for the holding period

1. Obtain the latest surrender value table and record the guaranteed and non-guaranteed columns separately.
2. Each year, when the annual bonus update arrives, check whether bonus rates have changed and look at the revised surrender values.
3. Before borrowing, confirm the interest rate, how interest is charged and the ceiling on indebtedness.
4. Before stopping premiums, ask exactly how the grace period, automatic premium loan and reduced paid-up are calculated.
5. Before a partial withdrawal, confirm the effect on the sum assured, the multiplier and riders.
6. Before considering surrender, check the effect-of-deductions table in the policy illustration and weigh it together with the cover you still need.

More questions and answers are in the FAQ. Where the fund and bonuses come from is covered in How participating whole life works, and how to read illustrated figures in Costs and the policy illustration. If you need help interpreting a particular policy against your own circumstances, you can register your request through the contact details on this site.