Several visitors to my blog have criticised the Revosave plan introduced by NTUC Income. Their criticisms are:
* It offers a low return
* It is similar to another plan actively successfully by another insurer
* It is a way to give high commission to the agent
We have to recognise the following facts:
* Some people like this type of plan, that offers several features put together. This is why the other insurer was able to sell the product very successfully. Their customers appear to be willing to accept a lower return.
* The product from NTUC Income probably offer a better return compared to the competitor's product
Lesson:
1. If the customer likes this type of product feature, let them buy it from NTUC Income (instead of the other insurer).
2. If the customer wants a better return, they can buy an plain endowment or ILP.
At a time when the market is buzzing with concerns like the CPF, annuity, and retirement, it is a wonder why Income launched this reconstituted anticipated endowment which promotes spending.It has no retirement funding value as its main feature is to encourage spending, a revived cash back endowment thought to be history.However it seems its appeal to the feminine community is still very much alive.
ReplyDeleteUnder close scrutiny the product is inferior in terms of coverage, return and expensive as compared to a conventional endowment.Just wonder which customer would fall for the cash back which is actually part of the premium.Make or break of this product falls heavily on this feature. Maybe also through the clever argument of the agents under the guise of concept selling that customers would be 'convinced" or confused into buying. Sophistry works similarly and it leads to no real value.The truth is
twisted ; black becomes white.
I was presented by an Income agent
at one of the roadshows. If I wasn't preconcieved mentally I would been sold by the idea cleverly presented. But like the froths of teh tarik slowly clearing away the truth was soon revealed.
Revosave offer liquidity to those who are not sure of their financial position in the long term. They can choose to save their coupon in the policy, invest them into a low cost fund at zero charges or use it if they need the money that year.
ReplyDeleteThe rate of returns are lower compared to normal endowment plan but if investment option is chosen, it potentially gives higher returns.
However, if one is able to invest the full amount himself, he should get a better returns compared to revosave or even a typical endowment plan.
Mr. Tan, Revosave by Income is like a structured product. It has so many features that i got confused by the presentation from an Income agents.Luckily i remembered your advice that if you don't understand the product don't buy. If i had bought it i would probably regret it because i have no idea what the product can do for me. The agents told me it can do this and that and i already have insurance that can do all those things.
ReplyDeleteGetting my own cash back after a year is a silly idea. I must as well save in a bank and I can reach for it when ever i need it. The return is also miserable.I can get 2.8% from the bank . The presentation on the whole is misleading and confusing and at the end of it you will still be blur. The worst is the bank saving rate is being used for comparison. It is unfair comparison. I remember the posting by somebody about endowment.I asked for comparison
with endowment and she was finding ways to avoid the question, kept telling that the revosave is special and so forth. I realised that it was not a good product and i told her to end the presentation.
From this i learned that never to get into something that you don't understand and when it is complicated there is a catch. The catch is somewhere just like I asked for comparison with an endowment, there was hesitation.
Be careful.
Mr.Tan, I noted your comment that revosave is probably offerred a better return comapred to competitor's product. Have you done sum properly or you are been biased because of your past association with Income? This time you didn't complain Revosave offers not good value becuase of its rather high commission offered to its agents. I feel that you need to be more indepedence in your view because many people look up to you for your expert and independent view.
ReplyDeleteReply to Anonymous 10:13 pm
ReplyDeleteYou are right. I have not yet done the comparison between the Revosave plan and the similar plan from the competitor. This is why I used the word "probably".
I know that NTUC Income offers a better return than similar plans from the competitors in the past. I believe that this would be the case here. If anyone has figures to compare the two plans, I shall be happy to carry out an analysis.
I did say that the Revosave plan offer a lower return compared to an ordinary endowment plan.
Based on 30 year-old Male $30,000 Sum Assured (Coupons Accumulated with Company)
ReplyDelete1. Monthly Premium
Revosave - $190
PruCash - $202
2. Total Projected Return
Revosave - $87,125
PruCash - $88,857
3. Projected Yield at Maturity
Revosave - 3.41%
PruCash - 2.98%
Other competitive products are Asia Biennial Choice, Smart Saver, Annual CashBack Endowment, MoneyBack and AIA Cash Rewards Plan 21.
Dear Anoymous,
ReplyDeleteLeave e final decision to those who are willing to take up e revosave plan, it is an affordable one unlike some in e market currently.Everybody has a choice & comparisons can always be done @ one's expense & time. Its even easier with internet connectivity.
Jus my 2 cents worth...
As advisers their job is to give advice and opinion or recommendation and not to give information and to leave it to the customers to make a choice.
ReplyDeleteCustomers are in no position to understand and this is recognised in the court of law. Adviser is accountable for all recommendations; customer makes the decision to accept or not to accept.Adviser has to give his opinion whether the product is good or not and to give reasons. He is bound by what he says.And if a client declines adviser's recommendation it also needs to be recorded with reasons. It is not that simple to say let the customer
choose which is good. It is unfair to leave it to customers to make the choice.If customers can understand and make choice why buy from agent and pay huge commission?If this is also the case adviser can absolve himself of all blames if things go awry.
Let me make this statement; "Customers are in no position to understand complex insurance products and to know what is good for their needs and therefore to make a choice." If they can ,then go the websites and gather all information and to make the buy directly and save all the expenses paid to agents. Because the agents perform a form filling function and why pay them huge commission?
Besides whether the plan is good or not, there is another aspect which I think is important in insurance investment. It took me nearly twenty years to find out. And that is the level of service one gets and should continue to get after the sale is done. Recently I emailed and called the Income agent who is servicing my account to enquire about the yield of all my policies after learning from this website that the yield matters as a matter of review to see which policies can be kept and which to give up.
ReplyDeleteshe has the nerve to tell me that her management has asked her not to respond to my enquiries, without giving me any explanation why. Then a few weeks later I saw her outside a shopping mall promoting this renosave thing. She approached me and then stopped short when she recognises me and turned away. No matter how good a plan is, if the after sales service is lousy, one is better off doing his own investment rather than risk the frustrations he and his family have to face decades down the road.
My advice to Mr. Anonymous 3.32am is to hire an adviser and not a salesman.You know insurance agents nowadays disguised under all sorts of names from consultant to planners. It is not difficult to sort them out. Any of them doing roadshows or doing some kind of promotion or approach you with products THEY ARE ALL SALESMEN.
ReplyDeleteThey will push the products to you and you be assured they tell you all the nice things you want to hear. They are not interested in your needs because they won't ask you. They are not interested in you; they are interested to sell you something and make money. That is why you never get any thing after that. It is wasting their time doing not profitable servicing and if there is any servicing you can expect them pushing a product to you.
Mr., get a qualified adviser and don't hire an insurance salesman.
So how does one know who is an adviser and who is a salesman? They all tell you that they are advisers as you said.My point is that one does not know until much later when you require their service.
ReplyDeleteCheck their credentials;they must have financial planning degrees or designations like CFP, MFP, CFA, just name a few.Ask them what kind of services they are providing. You can tell them what you want, your concerns and areas you wish to be advised.If they start telling you about products without examination, end the engagement.They are not qualified.
ReplyDeleteIf we chose to deposit the coupons till maturity, it seems that the total mature amount including projected interest is less then the total premium paid. If this is so, then its not practical.
ReplyDelete