Someone posted a comment in http://www.theonlinecitizen.com/ as follows,
"Mr. Tan suggested that the public should look at the Effect of Deduction and Distribution Cost" in the Benefit Illustration. What is the point of these information, when consumers do not understand what they mean?"
I agree with this comment.
The regulator required the financial institution to disclose these key information. The financial institutions found a way to provide these information buried in 10 pages or more, of other details. The consumers are lost.
The financial advisers have the responsibility to explain the relevant points to the consumer. I suspect that they will skip these sensitive areas. Even if the consumer ask, the adviser could find a way to confuse the consumer and side-track this issue.
I suggest that the regulaor should carry out a survey (say with 50 consumers who have recently bought a life insurance product) and ask the following questions:
1. Have you been told about the Effect of Deduction and the Distribution Cost?
2. Did the adviser explain these terms to you clearly, before you buy the product?
3. Now that you are aware about these items, do you feel that you have made the correct decision in buying the product?
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