Tan Kin Lian's Blog: Poor payout on Anticipated Endowment policy

Tuesday, October 07, 2008

Poor payout on Anticipated Endowment policy

Dear Mr Tan,
My dad has bought a 20 Year Modified Anticipated Endowment Policy in 1988 and his policy matured in August 2008.

After calculating the total amount of 5 yearly and maturity payout by the insurance company, we realize that the total payout of $11,000 is less than the total premium of $15,000 paid over 20 years.

He recalled in the 20 years, he has received payout of bonus every 5 years and the total bonus received is around $11,000 but he has already paid about $15,000 in premium for his endowment policy.

We cannot understand why he is making a loss with this endowment policy. I have writtent to the insurance company to ask for an explanation and have not heard from then yet.

As a layman, we do not understand how it works and I thought with your wealth of knowledge on insurance, you may be able to explain to us why my dad made a loss with this Anticipated Endowment policy. I sincerely hope you can also advise me on the next course of action.

REPLY
You can lodge a compliant with the CEO of the insurance company. In my view, the total payout should be more than the total premiums.

If they do not give you a satisfactory answer, you can file a complaint with FiDREC, www.fidrec.com.sg.

18 comments:

zhummmeng said...: There is nothing you can do as far as the product and its return projection are concerned.
Your only hope is the evidence, if there are in documented form, to sue the agent or the company for misrepresentation and miss-selling and for lying and concealment of facts.
I know of many people who were miss-sold this anticipated endowment by agents and they quietly surrendered them without a fuss. In those days many were afraid of taking legal action because it was costly and they worried what if they were to lose the case.But today we can bring it up with FIDREC and complain to MAS.
OVer the years anticipated endowment has under gone a 'revolution" and it amazingly continues to trick and fool consumers.Today there are a few of them in the market.There is one that borrowed the first 2 syllables 'revo' from the word 'revolution' and unashamedly claimed as such.It is a repackaged product hidden in thick layers of wrappings.It is not even an old wine in new bottle. It is actually vinegar passed off as wine. These products are rotten products and unaware to the policyholders the total sum of payouts(refunds)plus the bonus may just equal to total premium paid even after 20 years.The bonus is non guaranteed and without the bonus the total return is NEGATIVE.
Don't fall into the trap of this so called cashbacks anticipated endowment which the cash backs are actually partial refunds of your premium. But unscrupulous agents promote the cahbacks as yearly guaranteed interest or dividends which is misrepresentation and mis-selling.
This product is being pushed at roadshows as a product and NOT recommended as a solution to the needs of the customers. Why? because it is a poor solution and cannot meet the needs of any cleints ADEQUATELY.It is expensive and the return is so low.The bank interest rate was often used for comparison but not now because the bank rate is higher.You can see how rotten it is that there is no better benchmark to compare than the miserable bank rate. Now the bank rate is better than this cashback anticipated endowment.
Consumers must be wary of dubious means used by unethical insurance agents. If you feel that you have been misrepresented and cheated there is a venue to take your case to, ie. FIDREC.
I am very sure that all policyholders who bought the cash back anticipated endowments have been cheated. They have been product pushed.Their needs were NEVER examined and there was willful breach of section 27 of the FAA by the insurance agents.
I advise consumers who bought the cashback product to get a review of the fact finding form or KYC by a competent and honest financial planner to check for mis-selling and misrepresentation.
These products are rotten products.; October 07, 2008 6:11 PM
Anonymous said...: zm, I do share yr view that the revo is a crap product, but I'm amazed by yr strong emotion against the provider and the distributor... after all it takes two hands to clap,

and if u are a little more objective to look at things, it is still better off than those who 'play' shares.
- still get insurance cover
- though guranteed lower than premium, it's not likely to loose captial

this is how I engage this junky revo:

1) check what is the yield, the projected IRR over 25yr is 1.68%p.a., which is worse off than historical fixed deposit rate in sgpore.
2) insurance cover is not adequate, not meaningful

3) full of features/flexibilities, and un-utilized, is a wastage. i.e. already priced in, but not many will use, it will bleed consumers' money.

if the consumer is a little more literate financially, they will know how to ask the right questions, that is critical to good decision making.; October 07, 2008 11:27 PM
Anonymous said...: How can they pay you more than what you have put in nowadays. Their new cEO's pay is three times more than before and they need the money to pay for huge bonuses for their foreign talent management. It is also used to pay for colourful full page advertisements and huge colourful banners all over town. Also the posh hotel space for their meetings and designer chairs for their board meetings. Not to forget the higher commissions and incentive trips to exotic places for their agents. Where do you think all these money come from? From your contributions all these years lah. What to do. Listen to Mr Tan and Zhummmeng loh.; October 08, 2008 12:27 AM
Anonymous said...: Agree that this company has a very high operating cost. Wonder the company is making money.
Cost eats into the return and protection value.
What if the profit is negative?
Is this the reason why bonus needed a reshape?; October 08, 2008 10:00 AM
Anonymous said...: section 27 of the FAA is a bullshit and is meant for MAS to bullshit the consumers that it is looking after their interest. The truth is MAS is protecting the insurance companies and the banks. I have NEVER heard or seen Section 27 been applied vigorously and pro-actively. Come on, who do you want to bullshit.
The current financial problem is because Section 27 was never used to regulate the behaviour and the way insurance and financial products were sold by greedy and unethical insurance agents and RMs. Don't tell me MAS is dead, blind they couldn't see what these salespeople have been doing.
From insurance products to structured products, daily somewhere people, old and uneducated, trusting and gullible consumers are fleeced and robbed by these unscrupulous people.

Concerned S; October 08, 2008 11:00 AM
Anonymous said...: In MY PAPER, the ceo of ntuc was quoted as saying,
"I want to make it(ntuc) a FASHIONABLE for GRADUATES to join us, because it is EXCITING place to work and MERITOCRACY with a overriding SOCIAL PURPOSE.".
Comments:
He is making ntuc into a entertaining company where fashionable people with fashionable and weirdo ideas are gathered. Examine carefully, this is what is happening. You notice the weirdo names of the products.Its social purpose is to
make them entertaining products and NOT products that address basic needs of protection and financial well being of the man in the street.
No decent graduates will be that dumb to join a company whose culture is entertaining fashionable
people and not helping the man in the street.For agents the progression is only in titles.Agents don't live up to the titles they bear. Can't even handle a financial
calculator. Graduates will soon become like the rest of the aunties and uncle agents.
It is definitely exciting when its sole social purpose is to enrich the agents with high commission without in return give true benefits to the consumers and customers. Customers promise is low protection and low return with expensive products.
Meritocracy is how many customers you can con to bolster the bottom line.
Social purpose is to create more fashionable products without real monetary value for the consumers and to make poor poorer and the rich richer using greedy agents to abet in the scheme of purpose.

Amuzed.; October 08, 2008 1:23 PM
Anonymous said...: Anon 12.27am,
yes there is need to change the reward system in the wake of the current financial turmoil. The agent reward system must change to reflect more accurately the work, advice rendered to customers and not for product pushing.
The problem is the company management rewards themselves with high salaries and pass the cost to the customers in the form of more expensive products and also use and reward the greedy agents with high commission whcih is also passed to the consumers.
Its socail purpose is to maintain their socail status by persuading the man in the street, through the greedy agents, to be COOPERATIVE by bearing the cost of their status. This looks like charity cause for the privileged.; October 08, 2008 2:15 PM
Everlearning said...: How to have faith in the future insurance and banking fields. News of AIG staffs spent thousands of money after the bailout by their Governmenton spa. Nothing can justify their mentality and lifestyle. No qualms at all!!!
Will Singapore be like that? It won't be too long for us to realize what sort of society we are in, just in a matter of a year or two.; October 08, 2008 2:54 PM
Crazy Aries said...: the term "FASHIONABLE" used by ntuc income ceo to me, mean creating a better brand name for ntuc to attract younger generation to join the company.

of course i might read a difference paper....; October 08, 2008 3:12 PM
Anonymous said...: This comment has been removed by a blog administrator.; October 08, 2008 3:21 PM
zhummmeng said...: Hi Adego,
at last we do have a common ground to agree , ie. the revo product is a suck.It is scam beneath it.Yes it may not lose the money(face value) like the structure deposit but it is also another 'structured' rubbish. You have calculated the IRR to be 1.68% and that is provided the bonus is paid as projected. This bonus is not
guaranteed.1.68% is already bad and in real term it is a guaranteed LOSS.The agents pushing this product as better than bank interest rate will have to shut up their mouth now because the SIBOR has spiked to more than 2%.The bank rate has been badly bashed and abused by the agents.
How can one accumulate wealth with this shit.The retirees got to eat shit.Some agents even dare to tell the customers to make their money work harder with this product without batting an eyelid. They really aren't ashamed.They really stoop to anything to push the product. The poor victims are usually ignorant and gullible housewifes ,aunties and old folks.
Adego ,don't blame me for being strong in my condemnation of these people. Who knows , this may be another MInibomd debacle one day when policyholders discover they have been cheated, that is when they wake up.Now they are in comma.
You see ,these customers are clueless like sotong and were easy meat for these 'creative cunning agents". There is much at stake for these agents, very good commission.
They now go even further in their unethical practice. They are now selling this revo together with a whole life product. They are selling them as " buy one get one free", ie. buy revo to pay for the limited payment WL. Wahlow, completely no conscience at all.They must have left it with the devil. How can this package benefit the customers is baffling.But I know the agents benefit 2 commissions from this scheme or scam.
How can MAS close their eyes to all this? It is blatant breaching of section 27 of the FAA before their eyes. On second thought, some people may have eyes but they can't see.; October 08, 2008 6:59 PM
Anonymous said...: I thought he left Prudential to become a salesman in Shanghai, selling courses I think.; October 08, 2008 10:32 PM
Anonymous said...: i know what happen to him. He had an affair with his secretary.

His wife found out and created a scene. He was booted out and found a new wife when he was studying.

Ok lah. Men are all horny. So i think it is fine to have affairs.; October 08, 2008 11:06 PM
Anonymous said...: Anon 11.06,
so like revosave covering up its rotten core with rubbish options he is doing the same.The product design is a reflection of the creator.; October 09, 2008 12:06 AM
Anonymous said...: Saw this news on AIG spending lavishly on spa retreats for its senior executives while being bailed out.
""They were getting facials, manicures, and massages, while the American people were footing the bill," said Rep. Elijah Cummings, a Maryland Democrat on the House Oversight and Government Reform Committee.

The Federal Reserve extended the two-year loan on Sept. 16 as AIG faced a cash crunch following $18 billion of losses over three quarters, mainly on complex securities tied to mortgages that have declined in value.

Robert Willumstad, chief executive of AIG from June until he was replaced last month, told the oversight committee he was not aware of the retreat that included $200,000 in hotel rooms and $23,000 for spa services. "... had I been aware of it, I would have prevented it from happening."

This certainly rings a bell, doesn't it? I remembered during the cut in annual bonus from NTUC Income that some insiders were saying that they spending $40,000 on 20 chairs and had meetings in Ritz Carlton and renovated the cEO office lavishly. Some even say there is a golden tap in the bathroom. Same style lah, high rolling at policyholders expense. A foreigner to boot, heard he won some Malaysian of the Year award. No wonder so stuck up and refuse to communicate with policyholders. Sikit Atas lah, why not balek Kampong leh.; October 09, 2008 1:04 AM
Anonymous said...: ntuc income is down graded from stable to negative by s&p. wonder is it because too much loss after the restructuring the bonus when more money moved to special to be lost. it is the only company down graded?

policyholder waiting for better time to cancel; October 12, 2008 12:43 PM
Anonymous said...: it has to do with investment loss.
it looks the restructuring is showing sign of crack; October 13, 2008 12:11 AM
endowment-king said...: If you have an endowment that you are selling try this endowment policy valuation tool for free.; October 19, 2008 8:16 PM

Tuesday, October 07, 2008

Poor payout on Anticipated Endowment policy

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