I gave a talk on financial planning on Saturday.
During the question time, a customer asked for my advice. She has been paying premium for many years to an insurance company (not NTUC Income) that provide a poor return. What can she do now?
My reply is that there is nothing much that can be done now. The poor return is due to:
* high commission paid to the agent
* profit to the shareholders
It is quite sad that she has been locked into a long term insurance contract with a poor return.
My advice for the future:
* buy a decreasing term insurance to provide the coverage
* invest in a large, well diversified, low-cost fund
How about the market interest rate?
ReplyDeleteDoes it that mean that NTUC, being a co-op, will pay a higher return?
Still many people never learn.
ReplyDeleteIf one check and compare any similar policy that Income has and other insurer has, over a period of time, check out the values.
I have a Prudential wholelife taken in 1985 and an Income Protection Policy taken in 1992, Income policy offer better value and higher protection over my Prudential Policy being longer term on.
Up to today, people still do not believe that Ntuc Income offers better values.
Values were projected very high by commercial insurers, and today, most cut their bonuses and is far off the mark.
NTUC Income has always given a better return in past years.
ReplyDeleteOn the maturity of a 20 year policy, the return from NTUC Income is 10% to 20% higher than a similar policy taken with another insurance company.
This has been proven over tens of thousand of cases of maturity over the past years.
The reason why NTUC Income give a better return:
* lower expenses
* lower payout to shareholders