A survey by 104 Job Bank showed that this year around 80% of companies will issue an annual bonus that will equal 1.7 months salary on average.
A survey by 104 Job Bank showed that this year around 80% of companies will issue an annual bonus that will equal 1.7 months salary on average.
This money will be used for overseas travel, presenting red envelopes, buying a new car, paying loan instalments and, if you have school age children, paying their school fees etc. What can you do if it’s not enough? Around 20% of people in work won’t be getting any bonus at all!
First Aviva would like to remind people when they check their policies at the end of the year to look and see if they have any policies that can be used to take out a policy loan. Policy loans can be applied for quickly and easily and can be an extra “year-end bonus” to meet your short term capital requirements over the Chinese New Year period.
First Aviva managing director Lin Yuan-hui pointed out that there are many channels for loans in the market, including credit card cash advance loans, bank credit loans and policy loans. Of these methods, the interest on ordinary credit card loans is 15-20%, while the rate for credit loans ranges from 3% to 17%, depending on the job and income of the applicant.
Policy loan interest is generally 2.3-7%. It has the advantages of low interest and fast payment; there is also no need to ask for help from others, no need for collateral, no administration charge and there is no pressure to repay, making a policy loan a suitable method for people to supplement their year-end bonus and meet their short term capital needs.
Policy loan interest rate and amount are also affected by the type of insurance, and rules differ from bank to bank. Lin Yuan-hui said that policy loan interest rate is set in accordance with policy cost, the nature of the product, capital use, market situation and other factors.
Taking First Aviva as an example, its policy loan interest rate for January is 2.3-5% depending on insurance type, with the rate for traditional life insurance policies 4.5%; the rate for Wanneng (“all-purpose”) life insurance and Interest Sensitive Annuity policies is the announced interest rate plus 1%; and the investment type policy loan interest rate is 5%. The interest changes monthly.
In addition, the loan amount for each insurance type differs. Taking a First Aviva traditional life insurance policy as an example, the maximum loan amount is 90% of the surrender value, while it is 50% of the surrender value for Anjia (“happy home, happy family”) term life insurance and 70% of surrender value or policy account value for investment type policies.
Lin Yuan-hui explained that applying for a policy loan is quick and easy. All that is needed is that an insurance policy loan agreement and important information for applicants are downloaded or obtained from a financial adviser in a bank. The completed agreement should then be submitted together with a copy of the applicant’s ID card. The loan will be issued within three days. He reminded people of some points for attention relating to policy loans:
- Only policies with accumulated policy value reserve (policy account value investment type) can be used to apply for this kind of policy loan.
- If the insurance type is medical, accident or cancer insurance etc., because the policy value reserve is small or there is no policy value reserve, the policy cannot be used for a loan.
- A loan can only be issued during the policy’s period of validity. Pension insurance must be in the accumulation period. If it is in the pension payment period then a policy loan cannot be taken.
- Policy loans cannot be taken out on policies when the premium is being paid by automatic premium loan.
First Aviva reminds people who are thinking of taking out a policy loan that if the loan is not repaid the insurance company will deduct the loan principle and interest when insurance money, annuities and surrender value are paid or the policy value reserve is returned.
When a policy holder applies for Reduced Paid-Up Insurance or Extended Term Insurance, if there is an unpaid policy loan, the loan principle and interest will first be deducted before the application is handled. If the unpaid loan principle and interest exceed the policy value reserve, the policy will cease to be effective, affecting the validity of protection. People need to pay attention to their interests during the period of the policy loan.
Table of policy loan interest rates for various life insurance companies (see the Life Insurance Association ROC website)
Comparison of loan channels
| Channel | Policy loan | Credit card (cash advance) | Credit loan |
| Interest rate range | 2.3%-7% | 15%-20% | 3%-17% |
| Highest amount | 90% of policy value reserve | Card credit limit | According to customer’s job or income |
| Application qualifications | Policy held must have policy value reserve | Has to be a card holder. If a new card is applied for, income and past credit record have to be checked and approved. | Income and past credit record have to be checked and approved |
| Start up cost | None | None | 3-5% |
| Repayment flexibility | Great flexibility, no set repayment time and amount | Little flexibility, breach of contract penalty payable if repayment overdue | Little flexibility, principle and interest must be repaid on time. |
| Points for attention | If loan principle and interest exceed the policy value reserve, the policy ceases to be effective | Card use needs to reach a certain amount before the card is annual fee exempt | May be bound by contract |
(* The information in this table is from the website)
-ends-
Media contact person:
Lu Hong-yi, Aviva
Telephone: (02) 8758 1169
E-mail: johnson_lu@first-aviva.com.tw
Zhang Hui-fang, Aviva
Telephone: (02) 8758-1067
E-mail: anna_chang@first-aviva.com.tw
Notes to editors:
About First-Aviva
It is an insurance company jointly established by First Financial Holding Co, Ltd and the Aviva group.
First Aviva’s initial paid-in capital was NT$2.25 billion. First Financial Holding Co, Ltd holds a 51% share and the Aviva group 49%.
First Aviva has signed an exclusive bank insurance agreement with First Financial Holding Co, Ltd’s flagship subsidiary First Commercial Bank, offering life insurance, retirement planning and other insurance products through First Commercial Bank’s 190 branches in Taiwan, giving customers innovative products and services.
About the Aviva group
- The Aviva Group is the fifth largest insurance group in the world (calculated according to total global premiums on 31 December 2008). It is the top provider of life insurance and retirement protection products in Europe and it also has an important position in other markets.
- The Aviva Group’s main areas of business are long-term savings planning (including life insurance protection, savings planning and pension planning), fund management and property insurance. As of December 31 2008, total sales were £51.4 billion and more than £381.1 billion worth of assets were under its management (as of 31 December 2008)
- Aviva’s global media centre www.aviva.com/media has image, company and product information and press release databanks.
- In Asia, Aviva promotes its products and services through various marketing channels (including its own sales team, brokers and bank insurance). It has branches in Singapore, Hong Kong, China, India, Sri Lanka, Malaysia, Taiwan, and South Korea.
About First Financial Holding Co, Ltd and First Commercial Bank
First Financial Holding Co, Ltd was established by stock right exchange with First Commercial Bank as the subject on January 2, 2003
As of the end of 2008, First Financial Holding Co, Ltd（Taiwan Stock Exchange stock code: 2892）had total assets worth over NT$ 1.6 trillion, making it the seventh largest financial group in Taiwan, providing comprehensive financial services to more than five million individuals and enterprises.
First Commercial Bank was established in 1899 and it is the main source of the group’s profits.
First Commercial Bank has a leading position in the deposit and loans business, home loans, SME loans and fund sales markets etc. It has 190 service outlets in Taiwan (including branches and offices) providing services to customers.