Some insurance agents, who made comments in my blog, think that low cost products refer only to term insurance and Incomeshield. How can an agent make a living by selling low cost products?
My definition of low cost products include traditional products and investment funds, with a modest commission rate, e.g.
* 30% commission (instead of 100%) to sell a 20 year regular premium policy. (Note: 30% works out to 1.5% per year)
* 1.5% (instead of 5%) to sell a single premium policy.
Under a "low cost" product, the agent can earn $100 to $300 (not $1,000) to sell a life insurance policy. These low cost product offer better value to their customers. The agent can increase the volume of sales, and make a good income.
Several of the products from NTUC Income (eg Ideal, Flexi-link and annuity plans) are already on the low cost model. They offer good value to the customers. I am happy to recommend them.
30% commission and you call it low cost? Wow! I mean, banks offer this service for free!
ReplyDelete30% for a 20 year policy (payable by regular premium) works out to 1.5% per year. It is quite modest.
ReplyDeleteIt is much lower than the commission of 100% (or more) that is payable for similar plans in the market.
Compared to the industry, Income is a lesser evil. But, it's still an evil.
ReplyDeleteWhy pay 1.5% when you can pay 0%.
Dear Lucy,
ReplyDeleteYou cannot get a product with 0% margin. Most of the products in the market have a high margin to pay the commission to the agent or the distributing bank.
Even if the product is sold directly, there is still a margin to pay for the salary of the marketing officer.
Go for a low cost product with a modest margin. It is fair.
Giro is free, monthly deduction by my broker is also free. That way, I only pay for the load and management fee and not the 30% charges.
ReplyDeleteCompound over 20 years, 30% can mean a few thousand dollars.
You emphasize to "buy term and invest the best".
ReplyDeleteThe point is: if the Income agents think in the best interest of clients, then they should sell a reducing term instead of a whole life, isn't it? Is a $1,000,000 reducing term enough for 30 yrs?
I agree with Lucy: that there are many UTs that almost 0% sales charge, why does the agent need to sell a 1.5% sales charge single premium policy? Why?!
Now, you recommended people to buy traditional plan and ILPs ... what good are they? According to you, low returns, low coverage. You are the one who stands for de-coupling insurance and investment, in the first place!
Sometimes you make contradicting remarks. I wonder if you stand for consumers or insurance co.
Regards.
How will a plan benefit a client?
ReplyDeleteWhatever plan you take, you assume you will not die tomorrow or sooner, but when it happened, one will not think how much premium he has paid compared to how much the payout is.
There is no one size fit all.
Different milestone in life needs different planning.
A client came to see me to plan for Education Policy, I asked if he is covered well, he told me positive, but when I pressed him for the figure, he has a $30k coverage.
I told him that I should not be planning an Education policy for him, I will do a Wholelife with Term Rider and invest some of his CPF in an insurance coverage, so that the protection for the family can meet the needs of his family should unfortunate situation happens.
2 and half year down the road, he contracted nasal cancer, premium for riders were waived, critical illness policy pays out.
When he finally dies, rest of sums assured were paid.
His widow told me one thing, "Thomas, now I know why you refused to sell us Education Policy then. I will keep you in business".
I am consoled for what I have planned for them.
But I am not too sure if she can keep me in business.
Insurance agent takes a day at a time and we hope what we do, will be remembered by the family when things happen.
- Thomas Phua
Take the advice of Mr. Tan by recommending term plans and invest the rest. This is the way to ensure your clients are adequately covered.
ReplyDeleteWhole life plan deprives your client of adequate protection.This is what is happening in Singapore. Many deceaseds" family are in financial difficulties because their bread winners didn't leave enough.They left their money with insurance agents.Check with the single parent society and they will you the stories. The insurance agents have a role to play but their interest often comes first. They are greedy, incompetent, dishonest and unethical; this results in many not properly and adequately covered.That is why AXA, the world's largest insurer, decided to sell ONLY term plans and investment products. That is their belief that it is the only way to address under coverage and also to remove the conflict of interest.
Mr Anonymous, you need to respect others in your comment "They are greedy, incompetent, dishonest and unethical"
ReplyDeleteWhat right have you to belittle the insurance profession.
Do you dare take an advert in the newspaper and repeat this in the open?
I will pay for the advertisement for you.
Just stick out your head to repeat this in the open.
If you cannot respect others, do not hide your identity a coward like this.
Sad it like a man in the open.
I know a coward like u would not dare show yourself.
How about becoming an enthical, honest, competent, compassionate agent and stand out to be counted as one and proof yourself as the "robinhood" of the industry agent giving good value as you perceived to the public.
I believe you will be most successful or successfool?
- Thomas Phua
Thomas phua, i think the hat fits you. wear it istead of rattling like
ReplyDeletea successfool.
So ethical, honesty competence and compassion are the marks of a good agent and also of Robinhood.If you not then you are "rob in hood" agents.
ReplyDeleteWhich one you want to be? Since you challenged me to be the good one. I am sure you are the honest and competent one, right? Why are you feeling so tizzy?