Dear Mr. Tan,
I read your survey about "life insurance policy". I bought a policy a few months ago, and the agent did not tell me about the distribution cost. I am now aware about it, after reading the survey results. I feel cheated that such a high cost (representing nearly two years of my savings) was not brough to my attention, although it is printed in the many pages of the benefit illustration. Can I seek a recourse now?
REPLY
It is the duty of the insurance agent to disclose to you about the distribution cost of the life insurance policy that you have bought.
If it is not brought to your attention, I suggest that you should make a complaint to the insurance company and request that the policy be cancelled for a full refund. If the company does not agree, you can lodge a complaint with FIDReC (www.fidrec.org.sg).
You should look at the amount of the distribution cost. If it is a few hundred dollars, it is a fair remuneration to the insurance agents, in which case, you should not make the complaint. However, if it is $1,000 or more, you can make the complaint.
8 comments:
Concealment of facts is mis-selling intended to mislead you into buying and therefore it has breached the FAA law. You are entitled to full refund.
Buyers should also ask for the return of the cash value in term of rate of return and the protection on dollar per $1000 sum assured, the commission the agent earns from selling you the product.
All buyers should take note of this fact below.
All whole life products in the market give very poor return and protection. Reason is the cost of the product has gone up enormously . This includes the CEO's high salary and the senior management and the insurance agents' commission. High cost means low return and protection. If there are any frills or supplementary benefits they are thrown in to hide and cover up the poor core benefits which actually you should be looking at.So, don't be fooled by the many benefits which are cheap 'riders' to bullshit you and to distract you from the main core issue.
Be careful.
Another fact buyers of whole life must take note is the increased risk of whole life product. The recent restructuring of the bonus by NTUC is an example of cutting of annual bonus to free up more money for investing or gambling whichever you want to look at. The insurance company is gambling with your money in the 'hope' of giving you more return which may or may not happen. This uncertainty is called RISK.
How do the insurance agents explain to you? Do they mention that risk is increased? or They still say it is the same and guaranteed. If they don't reveal that risk has gone up it is suppressing material fact which is important to you. If they tell you no risk they are lying and misrepresenting the product. All this is cheating you into buying and it is breaching section 27 of the FAA and it is a crime punishable by fine and jail.
Remember your consumers' right of fair dealing and beware of insurance agents pushing products using such ruse. Trust no one and ask as many questions and be prepared to report them to authority.
Ask for a refund from the company and same time complain to MAS otherwise it thinks everything is going well in this sector. No complaint doesn't mean no victims, no aggrieved policyholders or the insurance agents are well behaved.
In fact, the fact is every insurance agent commits mis-selling one time or another and it is almost the norm to commit misconduct.
NTUC recently launched a new endowment/annuity product called the SAIL. The review in the Sunday Times by Lorna has been too generous.It is understandable. It only mentioned the risk without elaborating how risky it is ; the truth is the longer the lock in period the riskier it is.
Be careful. It is a very risky product. Please make the agent disclose the risk to you during the accumulation period and the payout period.
Please note that there is no minimum guarantee after the 10 years. In other words, it is completely uncertain and it is left to the insurer to declare anyhting they want.All figures are projected and if there is a guaranteed like in the first 10 years it is ONLY 1.6% and the rest of the return is uncertain.
The projected return for 10 years is 4.1; 1.6% guaranteed and 2.5% non guaranteed or more correctly 60% of the return is non guaranteed.
So , what is the riskiness of this product in the accumulation period?
The longer the accumulation period the riskier it is.
What about the payout period?
The riskiness is lower but it is about 45% of the return or more.In other words the payouts can vary drastically or roller coastering.
All these have to be disclosed by the agents.
Another downside of the product is
, it makes no sense at all for a 35 year old person or younger to take so much risk to earn so little as 4.5%. With a time horizon of 20 to 30 years earning 6% and above is so easy as ABC and with similar risk or lower.
Of course, you should engage a qualified adviser or planner and not insurance agents or product pushing agents disguised as consultants.
Remember, don't be fooled or else you hand up like the minibomb saga alleging mis-selling.
pro consumer product reviewer
Report them to authority? Hundreds of thousands of policyholders are now hurting because NTUC Income changed the rules of the game decades after policyholders have bought their policies. All those projections are no longer valid since they unilaterally cut the annual bonus in the name of giving you better returns. Even fools know that cannot be true. All the NTUC ministers are aware of the many complaints. Fidrec have also received complaints. MAS have also received complaints. What did they do? When Mr Tan KL attended the AGM last year, they unleashed the NTUC ministers to speak to him and he backed down. Complain to which authority?
You should lodge a complaint with MAS
that the agent violated the FAA. Make the insurance company to return
all premium.
There should not be a distribution cost in the first place. The adviser should be renumerated according to work done - not on what product he sells.
So $1000 in cost is overcharging if the adviser only spent 1 min. On the other hand, $1000 is value for money if the adviser spents 30 hours on the case.
30 hours is normal if the advisor does a proper job, from gathering data to implementation of the plan.
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