Friday, July 11, 2008

Avoid being cheated

If a salesman sells you a product and charges you a higher price compared to a similar product of the similar quality, you will feel that you have been cheated. You will probably avoid doing any more business with this salesman or his shop.

Does the same situation apply for financial and insurance products? Do you feel cheated, if you are offered a bad product and charged an excessive price? Can you avoid doing business with the salesman or his company?

The problem with a life insurance product is that you will be stuck with a bad product for 20 years or longer.

How to identify a bad product? Ask this question. Is this an investment product? If so, how much do I have to pay for the first 1 and 3 years. What do I get back if I stop the investment plan? If you do not get back your savings, it is a bad product.

Lesson: Avoid financial products that has high charges, lock you up for a long term, and imposes a high penalty on early termination.
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2 comments:

zhummmeng said...

All wholelife and endowment products are bundled products.They are bad because protection and investment are bundled that it leaves to the insurer to do what they like and change whenever they like too.The investment is dumped into one big pot called the life fund. In the pot there are all sorts of things but the same heat is applied disregard the different properties of the different things in there. What is the result? Some properly cooked ,some half cooked and some over cooked.This is unfair. It is a one pot fits all way of investing. Your money is not given the best chance of getting better return. Your money is put into a portfolio with another whose expectation is conservative than yours and therefore held back becuase of them. You have no control at all.
Buy term and invest the rest is customised to suit your goals, everything put together to give your money the best exposure and chance of making more money.
As a result you have adequate protection and the best return.

July 11, 2008 11:04 PM
siewkhim said...

Dear Kin Lian,

Your advice came too late. I bought a whole life policy 18 years ago. The current yield on termination today is less than 0.5% p.a.

I know I have been cheated.

What do I do?

Call Batman to help me?

July 15, 2008 5:53 PM

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