Many insurance products are too complicated. The agent does not spend time to explain the product to the policyholder. They are trained to sell the products to the customer, using emotive reasons.
As a result, many policyholders, including those that are well educated, do not understand the product that they have bought.
This is an unsatisfactory state of affairs. It has been the case for many decades.
I personally share some of the blame for this state of affairs, as I had been involved in running an insurance company for 30 years. At least, I tried to offer simple products at low cost that give better value to the customers. And I did try to give simple explanatory leaflets.
I hope that, in the future, the insurance industry will put more effort in the following:
1. simplify the product
2. educate the customers
3. empower customers to select the product that best suit their needs.
4. reduce the upfront and operating costs, and disclose them to the customers.
The popular approach by insurance salesmen is similar to those 'koyok salesman" you find at Waterloo Street.
ReplyDeleteThe salesman pitches his products and make all sorts of claims about the products. Usually, the koyok man will claim that they can cure all "illnesses".
It is a numbers game, and if any member of the audience is 'hit' and feels that his or her needs fit the products they buy.
No difference the way NTUC revosave is sold. Multiple features, flexibility, those who want to save or those who want to spend , the product has.The presentation is emotive and you are brought round and round a maze until you get dizzy when your emotion is exploited and manipulated. It is not straight forward presentation.It is not like financial planning where the product is not even mentioned until your needs are uncovered or until your illness is diagnosed. Then the prescription and the products recommended.
Well, I hope the "Waterloo" will come sooner for this kind of insurance salesmen.
Customers must understand that insurance products are solutions to their needs. Therefore, unless needs are known ,no way to know which product is appropriate.
ReplyDeleteBut often insurance products are also sold like other products. Other products can be tested immediately for what it claims it can do but not insurance. It is only known many years down the road.
The need to have a good adviser who is honest and competent becomes more important when recommending a right solution or product. Only a good adviser will have the desire and honesty to execute it objectively. Salesman won't do it. Salesman's priority is to make quick sale and high commission; customers' needs is subordinate to his or her interest.
Mr. Tan, i must salute you for the
ReplyDeletehumility and yet the boldness to admit your responsibility for perpetrating a wrong approach to selling life insurance.
Over the years that evolved many methods that came in different names but basically the same. One goal common to all these approaches is to get the customers to buy products that they don't need..The approaches range from from consultative, relationship to manipulative selling. I like to add a few more approaches; illusionary selling, hypnotic selling, fear and greed selling, deceptive selling, and all these new approaches are even more damaging.There are a lot more if you are observant enough.
So Mr. Tan, don't worry , you are not to blame. At least I can see you are trying your best to change them. Your "buy term and invest the rest" and "low cost products" campaign is bearing fruits and i am sure with persistence the buying customers will be converted to this idea.
In this blog many now understand more about insurance. They now know
they were taken a ride by the insurance agents all these years.
The insurance agents' wares and their motives have been exposed.
Wholelife and endowment policies are supposed to be part protection and part saving.Unaware to customers there is a trap that can burden them for a long time.
ReplyDeleteThis is a common story.In one's life there will come a time when you are in difficulty and the insurance premium becomes a burden and secondary.First thing to do is borrowing against your policy. Then you stop paying the premium and of course also cannot repay the loan. As long loan is not repaid interest keeps compounding and starts to erode the cash value.All that you had painstakingly set aside each month is suddenly wiped out.Then policy abandoned and allowed to take its course till the policy expires.It is a waste.It is like working and earning for the insurance company without pay.The original purpose of taking up the plan is lost.It is back to square one. This is what has happened to many policyholders.
Education is much needed about financial planning. I hope this blog will help customers to see the foolishness of jumping in to buy traditional policies without considering the long term implications.