We thank Mr Geoffrey Kung for his feedback ("Marketing of endowment plans needs regular review"; Thursday).

The life insurance industry does indeed conduct an annual review of investment returns used in the benefit illustrations (BI) of participating (Par) products to ensure their continued appropriateness.

BI investment returns are purely for illustrative purposes and do not represent the upper and lower limits of the investment performance of insurers' participating funds.

For Par BIs, the illustrated investment returns are currently 4.75 per cent and 3.25 per cent, and these two rates have remained unchanged since July 1, 2013.

Last reviewed in November 2014 with the low-interest environment factored in, 4.75 per cent and 3.25 per cent were assessed to be appropriate, based on the long-term investment outlook.

Insurers can use illustration rates that are lower than these two rates, depending on their company's investment strategy and investment outlook.

Three factors we consider in our annual review are:

•Investment returns for each asset class and the long-term investment outlook for these.

•Benchmark asset portfolio which the Life Insurance Association (LIA) Singapore will determine for the year, taking into consideration the industry's average percentage allocation to each asset class and the future market outlook.

•Benchmark portfolio returns where the negative scenario will be used as the illustrated lower investment return in the BI, and the figure derived for the central scenario, on the other hand, will be used as the illustrated upper investment return.

For more details, visit the LIA Singapore website on www.lia.org.sg/benefit-illustration

We also encourage individuals to speak with their financial adviser to better understand a product before making a purchase.

Pauline Lim (Ms)

Executive Director

Life Insurance Association Singapore