Tan Kin Lian's Blog: Make a lump sum investment

Tuesday, January 01, 2008

Make a lump sum investment

Hello Mr. Tan,

You have mentioned in your blog that up to 21 months of savings can be taken away to pay the agent to sell a monthly sum investment-linked policy. Does it mean it will be more worthwhile to buy a lump sum unit trust instead? I'm looking for long term investment actually.

My insurance agent has been asking me to buy monthly sum investment-linked policy and recommends that I treat it like a savings plan. I am not too sure whether I should take his advice.

REPLY
You should invest in a single premium ILP, such as the Flexi Link from NTUC Income. It has low charges, compared to a monthly plan.

You can see a comparison of the charges here:
http://www.askdrmoney.com/Ins_ILP_RP.htm

Read these FAQs to make your decision:
http://www.tankinlian.com/faq/savings.html

http://www.tankinlian.com/faq/ilp.html

15 comments:

Anonymous said...: I suggest that you invest the lump sum that you have and don't listen to the insurance salesman.
I have a similar experience with an NTUC agent.She proposed that I used my lump sum to invest regularly. She explained that this way risk could be lowered. But from another friend he advised that I should not split my lumpsum into regular because the return would be much lower. A lumpsum gives much higher return.
It is alright that I listened to alternative views but what was shocking was that the NTUC insurance agent would earn more commission if I had invested in NTUC ideal plan. I had to pay 45% for ideal instead of 3% when I invested a lumpsum. This is a world of difference.
I think it is unethical to ask your client who has a lumpsum to break up into small regular monthly and incur high charges for the agent to earn high commission. If i had not consulted a friend who explained to me I would have been caught. This is unscrupulous. This is not the way to earn high commission at the expense of the client.; December 25, 2007 8:52 PM
Anonymous said...: I have similar experince. They explain that how ppl losing thousands of dollar just because not using DCA. Maybe it makes sense, god knows.; December 25, 2007 10:19 PM
Anonymous said...: I am a NtUC agent. For many years i was troubled by some agents' malpractice very similar to the above cases.
To squeeze more commission out of customers, agents would bluff customers to invest their CPF balance into a limited regular endowment(Harvest) instead of a lumpsum into a single premium endowment( Growth policy).Clients would get more return for Growth than investing into Harvest for same amount of money.The difference was in return was huge and customers had no idea. I found it very unscrupulous. The agents fooled them by convincing that they would get insurance coverage, which was true but at a great price(loss of return).That isn't right becuase clients could buy at very low premium for same term and coverage if the customers' concern was insurance. You don't fool with clients' CPF to buy insurance. CPF was never intended for buying insurance but for retirement.
I highlight the case here
because I don't want it to become another Ntuc's "best kept secret"; December 26, 2007 5:23 PM
Anonymous said...: I think the above statements are unfair.

Mr. Tan already stressed that Income agents earn modest income. So do you expect people to work for free?

Can anyone justify the 3 or 4 months bonuses that you are getting for working 9 to 5 only?; December 26, 2007 6:24 PM
Anonymous said...: You earn your keep legitimately and not by deceit.They were earned at the expense of the customers and without disclosure and proper advice.; December 26, 2007 9:12 PM
Anonymous said...: We are seeing more skeletons falling out from NTUC cupboard. Indeed well kept skeletons from public view.
Hope NTUC is not trying to achieve #1 over more "dead" skeletons.; December 26, 2007 11:01 PM
Anonymous said...: That is not giving your best to your client.Obviously a lumpsum invested in Growth Plan is better than splitting up to invest in Harvest plan. No reason can justify the recommendation.It is clearly that the agent was working in her own interest. This is despicable and should be stopped.; December 27, 2007 11:39 AM
Priyadi said...: to anonymous agent above: less commissions does not necessarily translate into less income. with less commissions, you can more easily sell more policies than your higher priced competitors, while at the same time you are better positioned to provide more value to your customers.

fast food restaurants generally get less profit per food served. but that doesn't mean they get less income than full-service restaurants.; December 27, 2007 12:12 PM
Anonymous said...: if ntuc achieve number one there is nothing to be proud of because their agents bring in low quality business, business at the expense of the customers.It is ashame that it has to use such unethical tactics in order to be number one. it is ashame it close eyes on the way the agents sell and bluff the puiblic. it is ashame that the agents have to confuse ans use trick s to sell.; December 27, 2007 11:12 PM
Anonymous said...: The compliance in NTUC must be lax otherwise there won't be so many that escaped the notice of supervisors.
Having said that, everyone is desperate for business , from agents to supervisors to the company. Anything will do, however and whatever the agents do, all eyes are close. Who gets trampled? the customers, always at losing end.; December 28, 2007 10:35 AM
Anonymous said...: I wonder why so many keep writing about Income agent.

Why are so many of you pointing fingers at Income agents when all other insurers are having same products and selling as well?

I am apprehensive that some of these people are infact competitor agents trying to discredit competitor agents.; January 01, 2008 6:59 PM
Khiat Han Hwee Adrian said...: It is because the blog owner is Ex-NTUC Income CEO. If the blog owner is Ex-Prudential CEO, then people will point fingers at Prudential agents.

This is quite normal.; January 02, 2008 1:07 AM
Anonymous said...: What happens if the blog owner is both ex-prudential and ex-ntuc income? Very soon that will happen...; January 02, 2008 11:00 PM
Anonymous said...: The pot calls the kettle black.
Have you heard of this?
Once a upon a time NTUC agents condemned Prudential's Prucash as rip off, low return and useless .
Now NTUC has the same product but with a different name, REvosave, but it is very much extolled as a revolutionary product with rubbish features. Now the agents think it is good.All you need is money to change it.
The bottom line is where does the commission go to. If it is not in NTUC agents' pocket it is bad. If it is in theirs' it is Very good product.
This is how the world works.
In my opinion they are both rubbish and useless. Don't fall into their traps set up every where.; January 03, 2008 9:29 AM
Anonymous said...: Why are there so many traps in first Prudential and then now NTUC Income. What is the common factor?; January 06, 2008 3:08 AM