A client bought a policy from another insurer sold through a bank. She pays a premium of $50 a month through GIRO. The return is guaranteed to be $10,360 on the maturity date at the end of 15 years.
Is this a good return?
No. The return is 1.85% per annum.
Many people are not well educated. The older folks are being talked into buying a policy that they do not know in details.
My advice. If you are approached to buy a policy through a bank, and you do not know much about it, please ask before you get committed.
Know what you buy.
A friend's mother bought a policy that will give her money every 3 years and premium is $4000 plus a year. She was then age 53 when she steps into a bank to draw money and was presented such a plan.
ReplyDeleteThis is a 21 years endowment plan. For a $30,000 policy, one will be given say $3000 every 3 years, put $4000 plus a year and take $3000 every three years, this is better than bank interest.
But wait, if you understand and know what this policy is. Not that this is a bad policy but is this approriate?
This lady is 53 and has to pay premiums annually for $4000 plus for 21 years, she will be 74 then.
Most working class people will then have problem with this.
If your parents go to the bank to realise their fixed deposit, please go with them and decide for them.
If she retires by age 60 even so, this few years the premium to pay is quite a burden.
Many simple folks have been buying insurance unkowingly via bancassurance without knowing the long term impact.