Dear Mr. Tan,
I met an insurance agent on the street, and was introduced to their "savings" plan. I read through your website and understand that such a policy is called a regular premium ILP policy, which provides life insurance cover and also an investment portion.
The agent told me about the "percentage that is allocation for investments", which is described as the distribution cost in your website. She did not mention anything about this percentage as being a cost.
I asked her what is the minimum amount and number of years needed for the plan. She said that the life insurance policy portion of the plan will need a minimum amount of $100 per month and take 13-15 years just to break even, and I understand from your website that this means the company has high expenses.
I told her I could buy term insurance and invest the rest in index funds and get better returns based on what I read from newspapers. Also, I told her that I understood that the commission she gets from selling ILP/life insurance policies is more than what she would earn from selling term insurance policies.
She said for the investment portion, the cost is 1-1.5% per annum. I asked her if her commission and other expenses are included, what is the total cost like ?
She said she was unable to tell me the figure.
She then introduced a medical insurance plan which she said enhances cover for Medishield, as its coverage is very low.
I asked her to provide me a copy of the terms and conditions for the earlier ILP Policy and the medical insurance plan. She said she would only provide me the benefits illustration (with terms and conditions) for the medical insurance plan.
Questions:
1) The agent said that the commission she gets from this ILP policy or a term insurance policy is the same (50% in the first year). I did not ask her the percentage for the subsequent years. In the end, she did not introduce any term insurance policy to me (although she said she also sells them) , which I had at least shown some interest in.
Does this mean she is dishonest or does the insurance company earn much more from the ILP policy than the term policy (and she earns the same from both) ?
2) What do you think of this insurance agent ?
3) I had in the past encountered insurance agents from the same company selling this type of ILP policy at least 4-5 times on the street during their roadshows. I understand other companies do sell the same thing too, but they are much less aggressive and seem to organise very few roadshows compared to this particular company.
What is the reason for this ?
This has become very irritating to me, and I would try to avoid this company once I see them from afar.
REPLY
I believe that this agent is dishonest and is not looking after the best interest of the client. Unfortunately, this type of behaviour is typical of most insurance agents from most companies. It is a sad state of affairs.
I hope that clients like you, are willing to write to the MAS and tell them about the real behaviour of insurance agents. If MAS acts against the dishonest agents, it may improve the situation and make the agents more ethical.
This type of regular ILPs takes at least 26 months of your premium you pay to pay commissions to agents and the profits for the company.Maybe on the 3rd year you find some money allocated to investment. Breakeven is therefore very long , at least 15 years.
ReplyDeleteWholelife plans are similar to this. Also a lot of your premium goes to the agent and at the expense of return the breakeven is long too.
You can say they are both whole life plans except that the regular ILP's investment component is variable.
You should avoid both types of plan. They are the least efficient insurance as far as customers are concerned. They benefit the insurance salesmen in term of high commission. Insurance salesmen sell them to make a lot of money and to qualify for mdrt award which is based on the money you earned for the year.So agents are not interested in your needs and not interested to sell term. Term is good for you but it pays very low commission to the agents . How to qualify for mdrt with term?
How to qualify for MDRT or cot by selling term? Do you know that to qualify the agents have to earn a certain amount of commission for the year? The agents are not idiot.Naturally they go for products that carry high commission.
ReplyDeleteDo you know the agents are well trained and specialised to overcome objections, any objection about wholelife and endowment products? "Wholelife , lah, no need to pay wholelife and yet cover for wholelife, got cash value, forced saving for you and you sure to die when old or sure to get cancer when old , sure claim and sure eat, one" and other craps. These are used to frighten you. If you have a weak heart you will buy.
If you have children they play on your emotion and exploit your love for the children. The crap is like this; "when young the premium cheap, also to buy insurability in case your child gets cancer cannot buy insurance anymore; or if your child dies this is to compensate you for bringing the child up or to repay you; or the children may get married when grow up and have children what happen cannot buy insurance?"
I am sure you have heard those lines before.They are so well trained only to sell wholelife and endowment products or products that give them high commissions. You think they are trained to help you with your needs? Oh yes , they do say they want to help you meet their needs but only with whole life, the one miracle cure all product.
Consumers, don't play into their well crafted presentation. The company pays specialist trainer to
turn them into unashamed predators with glib tongue, heartless and without conscience.
If insurance agents tell the truth about their products they will not be able to earn a living.
ReplyDeleteAll of us in one way or another deceived another guy just to earn a living. Dishonesty is still the best policy if you are not caught.
We were taught by our masters on how to use our tongue to deceive other for business and profits.