Some life insurance companies design complicated products that are difficult for the consumer to analyse.
It is easy for the agent to get the consumer to buy the product, as the agent can make a misleading presentation of the product. In some cases, the product is designed to take advantage of the ignorant customer.
After buying the product, the consumer is stuck with it for 20 years or longer, as they have already incurred a large upfront cost.
I hope that the regulator will look after the interest of the consumers and disallow these types of poor value products from being marketed to the general public.
My advice to consumers: Avoid all these types of complicated products, as they are likely to give you a poor return. Do not trust any company that market these types of products.
To further complicate and confuse the buyers NTUC agents are using the "buy one get one free" scam to beguile them; buy revosave to fund vivolife with the cashbacks.
ReplyDeleteIs this ethical? It is mis-selling and misrepresenting. Is the total result enhanced? If there is, how much? What is the downside for the customers?
The poor customer is locked with a bundled package. The agents make 2 commissions and for them there is an enhancement in remuneration.
Insurance products and offerings are getting harder to decipher day by day...
ReplyDeleteDear KIn Lian,
ReplyDeleteI wish to reiterate that we should find a way to inform the public to stop purchasing participating and investment-linked products of any forms from any insurance companies.
Insurance companies should stick to selling just pure protection type policies like term assurances.
I would advise policyholders who have purchased participating policies to request from their insurers the following items
(a) the average yield of the company's participating fund since the policy was purchased to date
(b) the average yield of his/her participating policy if a surrender is made to date
(c) request whether the surrender value is computed based on experience of the participating fund with respect to investment yield of the fund, expenses, cost of protection, tax, bonus rates declared etc. Meaning request that the surrender value be computed on "earned asset share" (some actuarial bullshit) basis.
From the above information you will know whether you have been taken for a ride.
I think it is not viable to tell all insurance companies to stop sales of traditional policies. Choices should be given to some who may prefer traditional plans than investment. There have genunie reasons why they prefer traditional plans.
ReplyDeleteHowever, I do hope regulators will set a limit on how much Insurance companies can charge on the distribution cost. The cost is sometimes a bit too high. However, advisers must be reasonably paid at the same time. It must not come to a point where consumers expect that advice must come free in order that an adviser is considered ethical.
There must be a scale and balance on how much a consumer should pay and how much an adviser should be reasonably compensated.
Adrian Khiat
Dear Adrian,
ReplyDeleteI am not proposing to demand insurers to cease selling traditional products. When I said is let no buy participating and investment policies from insurers. They are tricky products which in many instances are cloaked with a lot of empty promises. Yes we should continue to purchase term insurance policies as this provide the most crucial protection for untimely death and/or disability etc.
Let not misunderstand each other. Our common enemy is the insurer who will want to sell to our friends, family etc those fancy named participating policies promising all kind of bonuses and benefits which eventually will never surfaced.
If you look at the latest ntuc policy it's the same old style. Add a new name and tell the public it's something different. Look at manulife latest annunity plan they offer in S$ and US$.
ReplyDeleteIt's high time ntuc to be creative and sell a policy which people needs.
Talking about products that give poor value to consumers, banking with any bank now is also giving poor value to customers. If I have $50k with a bank that collapsed, I could get back only $20k. I lost $30k. It looks like putting money in the bank is not yours anymore!!!
ReplyDeleteDear BW,
ReplyDeleteManulife latest annuity plan is a money spinner for the company. They found that as longivity improves, their profits from investment also improve and as a result the overall product gives them good return.
It is not creativity. It is profitibility.
I just have a modest sharing about this annuity plan from Company M.
ReplyDeletehttp://akhiat.blogspot.com/2008/05/super-complicated-plan.html
In my opinion, its creative but not of good value to the PH. Its better to invest regularly into a low cost diversified fund.
Adrian Khiat
http://akhiat.blogspot.com