Hi, Mr. Tan,
This is a true story from my personal experience. I like to share with everyone visiting your blog.
My motivation of buying insurance came from a friend from X who told me how important insurance is. Since X's charge is quite high, I did not consider it at that time.
Later, I approached company Y. The advisor introduced to me the Limited Premium Living Policy and also the Life policy. He gave me a printed copy showing the cash value and sum assured. The Limited Premium policy gave me the option to stop paying premium after 20 years and enjoy whole life protection.
A friend mentioned Term insurance to me. I asked the advisor. He recommend against it, saying that coverage would only be up to 65 years and that I needed protection most after that. If I bought Term insurance and changed to a Life policy later, I would have to pay a higher cost. He made a calculation showing that term insurance was sunk cost, while Limited premium have a cash value and will breakeven after a few years. I almost decided to buy the Limited Premium policy.
One day I read WoBao, and learned about Mr. Tan's blog. Mr. Tan recommended the concept of "Buy term, invest the rest". It was really a new concept for me.
I emailed Mr. Tan and showed him the calculation made by the advisor. He replied within a few minutes. (Even a customer service officer would not be able to reply so fast to customer's enquiry. I did not expect the ex-CEO would be replying my email so fast.)
Mr. Tan told me the sum assured recommended by the advisor was too high and took away too much of my savings. I read his FAQ and learned how much more I could get by investing in an investment fund. Most importantly, I would have the flexiblity in investing my money.
Mr. Tan suggested that I should contact a few more agents to gain more insight. Considering this is a long term commitment, I started to call back some agents introduced by my friends, think that they would be more trustful.
The agents were only interested to sell Investment linked or Life policy. None of them talked about Term unless I asked about it. They all recommend against Term. If I had not read Mr. Tan's blog, I would have lose interest in Term.
I should thank Mr. Tan for your great blog. Later, I decided to go straight into Term. After this experience, I learnt that:
1> Do your comparison between different companies based on the same product. (e.g. it is easy to compare Term). Ask the agents lots of question since this is the money you will be locked for long time.
2> Once you have made up your mind, go to that product immediately. Do not waste your time listening to unrelated stuff.
3> Learn to search online. Read the forum to read comments from other people. Many comments showed that insurance product do not give their projected cash value after 20 years, and the customer's money has been locked up and depreciated.
I hope that this is useful to visitors of Mr. Tan's blog.
Every year insurance salesmen vie and aspire for some kind of recognition and awards. Only plans with cash value like wholelife and limited premium carry high commission. The awards are based on earnings and the awards depend on how many and how much they have "sold"
ReplyDeleteThe first level is the MDRT aka Million Dollars Robbing Technique, is awarded to agents who demonstrated this prowess.
The second,COT, a higher award, is a certification which testifies the awardee has attained another level
of skill, Certified Oral Technique.
The pinacle of certification is the TOT. The master of this technique
is certified as Thief Of Thief. The highest award and this earns him or her an emeritus tittle.
So you see why you should choose someone who is not only honest but competent, someone who has your interest at heart and not theirs.
So how do you distinguish the qualified from the rogues? Referrals from your friends; Check the credentials, the most qualified has 3 alphabets after their names. Those with more doesn't mean they are more qualified, it means they are non accredited or not globally recognised.
The safest is to seek the help of the association that licenses them.
In the association's website there is a register. Check their names for confirmation of their credentials.
I have been hearing this again and again from insurance salesmen that the protection is most needed when one is over 65. THIS IS ERRONEOUS . You are most vulnerable, yes, at this age. You are old and vulnerable to death, yes. But protection need is at the lowest that you can self insure. The highest is when you are bringing up your family; when you are earning you need to protect your income. You need a CI and an income protector. The best way is to buy term or decreasing term which gives a huge cover for a small premium. This gives the insured a peace of mind knowing a huge sum is available to the dependants.
ReplyDeleteThe limited premium and the whole life plans give the insurance agents their peace of mind in term of high commission and deprive the buyer of adequate coverage.
Greenhorn say:
ReplyDeleteVery interesting read from the above comments.Thanks and it has indepth in choosing the right policy when you are still young and vulnerable.
I will return to read this blog more often,thanks,once again for your kind sharing and experience,I'm more confidence in choosing what to buy now...