There is a bigger risk that they overlook. It is insuring against poverty. The chance of this event is 95%.
Here is a good way to insure against poverty:
a) Save 10% to 15% of your monthly salary
b) Invest in a low cost, diversified fund to earn a good return over the future
Many advisers do not recommend this approach. They introduce high cost products to consumers, as these products provide an attractive commission to the adviser. The consumer gets a poor return. They face a conflict of interest
I hope that more advisers will come forward to give the proper advice that are good for consumers. They can earn a fair rate of commission, but at least they know that they are acting fairly and honestly.
3 comments:
I agree with you that too much is spent on high cost insurance like whole life which gives little back to policyholder. But then insurance companies are clever to hide this from blur and ignorant customers by using words that cheat the customers into believing that the product can do for them.
Examples like revosave and vivolife from ntuc. If you study their advertisement copy, they are rubbish and twisting words to confuse. That is the strategy. Like vivolife that touts life long income and live life to the fullest, maybe to fullest poverty.How would the product make such claim when its return is so low and how many can afford to use this as a saving plan in order to achieve reasonable life long income? More correctly vivolife gives and ensures customer life long poverty.The rich get richer and the poor get poorer, if you have insurance agents helping you with your finances.
Wholelife insurance cannot give you adequate coverage and is a very poor saving vehicle. But this product is a favourite with insurance agents. So if you have insurance salesmen as your "adviser" or more correctly your "stealer" don't expect your financial independence. You will be financially DEPENDENT and may have to live on social handouts.
Some time I think financial planning is common sense.
1. Plan for protection
What does the family need for the future should anything happen, CI or lost of life or PTD.
2. Plan for contingency needs in midlife, change of lifestyle, retrenchement, or need of children's education.
3. Retirement Planning.
Do we plan to plug these gaps? I suppose if one think ahead, one will then learn to live practically.
Do not live for today only, live today to plan for tomorrow.
If you get insurance agents to help you with your finances it is as good as condemning yourself to poverty. If you are rich you may escape but for majority they are at the mercy of the agents. Imagine you bough a whole life like Vivolife from ntuc the cash value at age 60 is so meagre that you will have to live life to the fullest poverty.You know whatever you saved has lost some value due to inflation too?
So you can see the advertisement is misleading and misrepresenting. If you have stayed with it for 20 years, I wonder how you would feel when you discover that you have been cheated. You have been cheated of 20 years and it is a long time.
How to avoid poverty? Only honest,competent financial counselor can objectively help you.
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