A retiree asked me, "Mr Tan, I took a 10 year endowment from another insurance company (ie not NTUC Income). I paid $1,200 a year. The policy originally projected a return of $14,000 on maturity. It matured recently and I received just $60 more than the $12,000 that was paid. Just $60. Is this a fair return?"
I replied "No. It is a poor return".
She asked, "Why is it so poor?"
I replied, "The insurance company paid high commission to the agent. The investment return during the past 10 years was low. After deducting expenses and the profit for their shareholders, they are only able to just return your premium back to you."
If the retiree had taken a 10 year endowment from NTUC Income, our payout would be 10% to 15% higher. We pay a modest commision to our agent, and our shareholders get only a modest rate of dividend. Most of the returns are given to our policyholders.
Advice: Insure with NTUC Income. We keep our expenses low. We distribute most of the profits to our policyholders. Our shareholders get a very small share of the profits. We are a cooperative society.
I came across a client yesterday who bought a policy while in POSB.
ReplyDeleteThe way it is sold is that premium is only $50 a month from Giro and return is guaranteed.
She happily paid and is now on 7th year.
She shown me the maturity to be $10,360 end of 15 years while total premium paid will be $9000.
Is this a good return? How many who are not so educated and older folks are being talked into buying a policy that they do not know in details?
My advice is if you or your folks have bought a policy via bancassurance without knowing much of it, please look at what you have again before it is too late, anyway it is too late if one has done so.
Know what you buy.