Dear Mr. Tan,
My daughter who has recently started work, was approached by an insurance agent from X at MacDonalds. The agent gave a long sales talk to my daughter. She was not clear about what the product was, and was coerced into buying the policy.
I told her to cancel the policy, as a large part of her hard earned money will be used to pay commission to the agent. I advised her to read your blog and understand insurance and investments better, before she make this type of financial decision.
REPLY
Many young people have been approached in this manner. In many cases, the agent who sells them the policy was their friend or classmate.
It is true that they will waste their hard earned money buying the wrong, expensive product that gives a poor return.
It is better for them to buy Term insurance or personal accident insurance first. They can accumulate their savings in the bank account and decide later on how to invest it.
Never, never buy financial products at roadshows, whether it is at roadside or in the shopping mall.
ReplyDeleteLearn to resist their advances. If it turns to harassment report to police.You never get any thing right this way, from products to your needs.Get a referral from the Financial Planning Association of Singapore(FPAS).You find trained and accredited advisers here.
You said that your daughter just started work.Does any one depend on her for living expenses. If there is none , she doesn't need life insurance.What she needs is a medical H&S insurance which is already provided by CPF.
Maybe she can start a regular saving and investment program to inculcate a habit.Again don't jump at the first one that comes along.There is one available at NTUC, ID7. This is not the best but not bad. There are better ones from FA firms but end of the day is your adviser. He or she plays a very crucial role in the success of your financial future.Please avoid the insurance salesmen and women.It will be to your detriment if you don't heed.
There is another "never". Don't buy a traditional product, like whole life or endowment that combines protection and "saving', not even from NTUC. The agents may try to lure you with thier so called "best kept secret" It is no secret that these products will perform miserably in the future. They are very poor products.
The golden rule of thumb is separate the protection from saving and investment.
When I was in the university, many insurance agent would hang around the university when we were back collecting our convocation gowns. I suppose we were the best target since we were young, uninsured and stupid.
ReplyDeleteI was myself conned into signing up for an ILP by someone I trusted. He had volunteered at our society as a "mentor" but turned out he was after the member's list. I realised my mistake only a few years after the start of the policy. Anyway, I decided to grit and bear it but I learned that you must always know what you need instead of allowing an insurance agent to psycho you.
Now I have a term policy, a PA policy and IncomeShield. I'm fortunate my agent is quite no-nonsense. Once she knows my "type", she doesn't bother with trying to sell me useless policies.
Many bought insurance from friends, relatives or people they know because they want to oblige them or not to make them feel bad.The heart rules the head in such cases.
ReplyDeleteAnother type is they bought based on the physical attributes (pretty, handsome etc) of the agent and how smooth and seducing is the selling method.
You may be surprised how such situations can play a big part for those highly successful agents.
I think financial planning should start at home. Teaching our children about decision making also should be taught young. It always easy to point fingers at people to find a blame for your own "regretful" decisions.
ReplyDeleteI had someone talking to me about buying his company's products for past 4 years and still didn't get anything from him. I also didn't get anything from other people too.
Many people complained about gst increase in prices, ministers' pay etc - but when election comes, they know full well that such events are in the pipeline, but still voted for the very people they know are responsible for such increases.
If you buy a stock/index/product because someone you know (best friend/remiser) or you read (e.g. Mr. Tan/ or newspaper analyst) says it's good and if it turned out that it doesn't suit you, are you going to blame the fella?
Ultimately, it boils down to the person. you are responsible for the choices you make. Take it like adult and move on.
You are right about taking ownership of your investment but there is such thing as bad advice.
ReplyDeleteIt is recommended that you should not buy from your best friends, your spouse, or your relatives because you trust them too much to ask questions. Trust is dangerous.
You must have read about people losing money to trusted friends in the newspaper. They are honest people at best and your investment depends not only that but how good is the advice. Is the adviser a qualified, competent in the field of advice? The success or failure of your plan depends on the adviser.
I advise that you look for advisers to advise you on your personal finance and not insurance salesmen or saleswomen becuase they are only interested to sell you products that make money for them. Isn't this a fact?