I was deeply troubled by a 20 year limited premium policy that bought from NTUC Income 2 years ago. I bought the policy for my daughter to provide her with lifetime coverage by paying the policy premium for 20 years.
Recently, NTUC Income no longer accept new policy for the product and was replaced it with a similar limited premium product called Revo Life. My agent said that my existing policy is inferior to the new Revo Life:
1. My existing policy is more costly for the same amount of coverage
2. Revo Life took a much shorter period to breakeven
3. Revo Life provides extra benefit of 3X payments on accident coverage.
Why is the original product more costly with less coverage, where the contract already specified the % of premium that represented the distribution cost in maintaining the policy.
Could this be due to some miscalculation that caused the higher cost in initial policy?
As the consumer has not been notify of this difference, people who purchase the original 20 years limited will continue to pay more for less for the remaining year!
Do you think the consumer have the right to ask for some kind of bridging arrangement to the newer policy with minimum loss? I was suggested by the underwriter (through my agent) that I should cancel my policy (with a huge loss of course) and buy the new policy. Do you think this is a fair suggestion?
REPLY
You should ask the agent to present a detailed comparison of the cash value of the old policy and the new policy after 5, 10, 15, 20 years and the premium. You can read the FAQ in my website, www.tankinlian.com/faq
You should also consider this point. By stopping the old policy and taking a new policy, you are suffering the high front end charge again (which can take up more than one year of your savings).
Normally, it is unethical for an agent to advise a client to stop an old policy and take up a new policy, as it is against the interest of the client. This is called "twisting a policy". You can lodge a complaint to NTUC Income against this unethical practice.
It is not correct for an insurance company to introduce a new product that offer a better return compared to an old product. This is unfair to existing customers. It is their duty to ensure that existing customers are given a fair return, through higher bonus, compared to new customers. You can ask NTUC Income's management to give their comment on this point.
You can also raise this matter with the Monetary Authority of Singapore. They will ask NTUC Income to give you an explanation. If you are not satisfied with the reply, you can discuss with MAS.
5 comments:
It is NOT correct to say that it costs more. There were some tweakings.
Yes, cheaper and break even faster BUT THE CASH VALUE IS VERY SLOW TO ACCUMULATE AFTER THE BREAK EVEN POINT. It is as if STUCK and NOT MOVING. So son't be fooled by the new vivolife. It is a stregegy.
The vivolife is inferior in term of protection and return.
It is twisting when an agent persuades and deceives a policyholder into replacing an existing plan for his or her personal gain.In this case the agent stands to benefit another commission.
It is NOT true that the vivolife is better than the old living policy. Those additional 'benefits' are red herrings to cover up the rotten core, the protection and the return.
If you look at the sum assured at various periods you will find that they are lower than the old one but ntuc adds a dubious minimum guarantee sum assured in the first 15 years to make up . What does it mean? As you know that sum assured should grow in tandem with cash value but it is isn't with vivolife and that explains why it has a 125% guarantee. What does it tell you also ? It tells you that they are marketing gimmick to fool you that vivolife has additional features to distract you. The truth is ,it is trying to cover up the weaknesses.
Compare the cash value in the early years and after 25 years you will see vivolife is inferior. Do the agents highlight to you this feature? NO!!!! They tell what you are telling us and to alarm you .
The question is , is it the same insurance agent or so called consultant who sold you the old living policy and is now recommending to replace it with vivolife?
If it is , it is very clear a case of twisting which is an offence under the FAA.
The second offence committed by the agent is the old product that was recommended to you was NOT of reasonable basis and that is what the agent is telling you and why he is trying to ask you to replace it with a 'better' product.It is an admission of inappropriate recommendation.
You can lodge against him or her with MAS and have her or him punished under the FAA.
This agent was obviously committing the crime of twisting.
The right thing to do was to ask the policyholder to buy the vivolife to plug up the gap if there was any and not replace the old one.
Is MAS aware of such practice by insurance agents?
No use being aware if no action is taken against the errant salesman.
MAS must send a strong message that it is intolerant of this unethical practice.It is getting more rampant not only among ntuc agents but across the industry.
The economic downturn could see more of this. Ethics and conscience will take a back seat. Even Ms Teo of MAS in the lunch time talk to LIA noticed that the needs of consumers were ignored and commission reared its ugliest head last year. Only $37000 was the sum assured and this sum only enough to send off the deceased policyholder for cremation and to purchase a niche in a collobarium and left nothing for the family.
I am sure everyone knows why. Insurance agents only sold wholelife and endowment products because of the high commission. Worse these days more dubious anticipated endowment with cashbacks are being pushed to the unwary and clueless consumers especially old aunties and uncles.
MAS must remove this sore thumb once and for all. Commission has been the cause of all the malpractices and mis-selling and misrepresentation. The minibond episode was a good testimony of how greed and dishonesty operated hand in glove.
The consumer is right to come to this blog to seek advice. This is the right place to share your concern if consumers have doubts about the products and the insurance agents
Whoever the ntuc agent , you must report him or her to the regulator for encouraging policy replacement.
Policy replacement in ntuc is rampant now.The agents are persuading policyholders to replace their old living policies with vivolife citing shorter payment period.
They are also encouraging buying revosave to pay for vivolife with the cashbacks. This is unethical and should be reported to MAS.
It churning twisting all in one.
In bad times these agents are resorting to bad practices without considering the customers' interest.
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