Tan Kin Lian's Blog: Good advice from an uncle

Thursday, March 27, 2008

Good advice from an uncle

Dear Tan Kin Lian,
I purchase the investment link policy(ILP) for 1 year. My uncle told me that ILP is not worth to buy. The insurance company and agent earn more commission. His advise is:

1) Don't join investment and insurance together, will definitely not benefit the policy holder.
2) For insurance, buy term life insurance which is cheaper and coverage higher.
3) For investment, buy mutual funds by our own.
Then I consult my agent and told him what my uncle told me.

My agent said that:
1) Term life policy do not cover the 36 diseases and medical card.
2) ILP coverage are Personal Accident(PA), Medical Card, 36 disease, Permanent Disability.
3) If I want to buy a policy which cover up all the above without investment, the premium pay is even more higher than ILP.
4) He will get higher commission if I buy all those policy separately.

Is that true? Hope can receive your valuable advise.

REPLY
I agree with your uncle. The agent does not give you the best advice.
Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html

3 comments:

Anonymous said...: I think if there's more information about the real benefit for different types of insurance, it'll be much clearer for public to buy insurance. Sales people can only talk good thing and sometimes can decieve customer. I think even some kind of regulation can be introduced to the somewhat turn into a wild market. You can see from the number of insurance agent swarming into several crowded MRT. And government keep pushing all people to take care of their older days, which actually push more people to get more insurance.; March 27, 2008 11:51 PM
Anonymous said...: Mr Tan: This is an excellent answer! Short and sweet.

To the person seeking advice: I find that your agent's points (1) to (4) are not good advice at all. You should change the agent. Why did I say that?

(1). There are term insurance that covers major illness. It may be level term or decreasing term. Both cheaper than whole life or ILP.

(2). ILP coverage are personal accident, 36 diseases, are term riders. they can be purchased separately. Most permanent disability coverage stops at age 65, so term is sufficient.

(3). Most term policies bought separately are cheaper than ILP.

(4). From my experience, it's quite impossible for him to earn a higher comm if you buy separately. If this is the case, you might want to consider other companies term plans. In fact, you can ask him to write down exactly how much he earns from each type of policy and judge for yourself.

I did not mention "medical card" provision above. I assume this is something for outpatient treatment? Well, think about how much such outpatient treatment costs and how often you find yourself falling sick before you get this card. Sometimes, for the small items we can self-insure.

R.; March 28, 2008 12:11 AM
Anonymous said...: FREE MEDICAL CARD - MOH Primary Care Partnership Scheme

Eligibility : Senior Citizen
Benefit : Subsidised Consultation & Medicine at Neighbourhood GP and Dentist
Application Form : your Comunity Development Center
More Information:
http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=314; March 28, 2008 1:17 PM