Plan with different charges

FIRST POSTED IN DECEMBER 2007.

Dear Mr. Tan,

NTUC Income has several plans, such as IB1, IB2, IB4 and Flexi-cash with different policy charges? I was angry that the adviser from the business center did not tell me about IB1 which don't need to pay annual policy fee. I have a friend who signed for ID2 plan. He learned later from your blog that ID7 plan (no need to pay 45% fee) was available.

Many advisors from business center only talk about Life or Limited Life, but did not recommend Term or Decreasing Term.

REPLY:

Sometimes, the earlier plans are withdrawn by the company and are not available for the adviser to sell.

Generally, it is true that the adviser prefer to sell a plan that give higher commission to them - at the expense of the customer. Some "honest" advisers will recommend the plan that gives the best value to the customer.

The 45% fee under ID2 is low, compared to similar plans in the market (which takes away up to 150%). See http://www.askdrmoney.com/