Friday, July 25, 2008

Low return for 10 years

Dear Mr. Tan

I bought a Pru-link Assurance Account policy with sum assured of $120,000, crisis cover (critical illness) of $60,000, and a disability provider of just $6,000. I pay a yearly premium $3,800.

The policy started in Jan 1999 and the current surrender value is just $20,170/-
I would like to know what I should do with this policy since it is not excatly making good money. The surrender policy is much lesser than the total premiums paid to date which the policy is coming close to its 10th year.

REPLY
You can ask the insurance company to give you a projection for the next 5 years, say up to the 15th year, based on 5% and 7% gross investment yield, and deducting the charges. You may get a better idea about whether to continue or stop the policy.
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2 comments:

zhummmeng said...

Do you know why you are short changed? Imagine paying for the all insurance covers and at least 150% of your premium to the insurance agent, what is left? It will take exceptionally extraordinary returns of the ILP funds to make up for all the "losses" to the insurance company and the agent.
Did you know what were you buying into in the first place? Did the agent tell you every thing, disclose everything, his commission , the charges, the risk, and the insurance costs?
I bet he or she didn't. You can bring this to the company to complain that you had no idea what you bought. The recommendations might have been inappropriate; you might have been mis-sold. You can lodge with FIDREC that you realised the mistake after 10 years of education from this blog. You can even sue for the losses because you had no idea that you had to pay so much. You were not disclosed all material information . You can even cite that you were under undue influence from the agent to buy. This policy earned the agent a huge commission, more than 150% in total.
Mister , you are not alone. There are so many been made suckers by insurance agents. The main culprit products are whole life , endowment and regular ILPs.These products carry high commission.
That is why I have suggested a review body to help consumers check their polices.To help them if they have been sold rubbish wholelife and endowment which short changed them.
Actually, CASE should have an arm to do this. Staffed by voluntary or paid QUALIFIED FINANCIAL PLANNERS to provide unbiased review for consumers to catch and sue or prosecute the errant insurance agents before they are dead or the company they represent.

July 26, 2008 1:07 AM
hongjun said...

If not wrong, there was a Straits Times article on the various insurance companies charges on their investment linked policies. If I can remember correctly, Pru is the worst and in fact need many years before we can even breakeven.

Too bad I cannot recover that article.


hongjun

July 26, 2008 8:50 PM

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