Dear Mr. Tan,
I purchased a life policy known as 'Financial Guardian' from AIA in 1993. My understanding from my insurance agent then was that the policy has the concept of 'critical year' where the policy will be 'self paying' from the critical year onwards, and this critical year is around the 13th year after the start date of the policy.
Recently, I received a package from AIA which listed two options which I have to choose one of them. It seems that the accumulated dividend is not sufficient to fund future premium payments after the critical year.
Option 1 is for me to continue paying the premiums. Along with this option, I have to declare that "I understand that dividends and the critical year are not guaranteed and there is both upside and downside potential depending very much on the investment experience of my policy. However after due consideration, I elect to contimue paying the premiums."
Option 2 is to stop paying the premiums. For this option, I have to agree that "I understand that accumulated dividends and interest earned will be used to fund future premium payments for my policy in accordance with Option 2 "Premium Reduction" of the Dividend Options as provided for in the policy contract.
I also understand that once/if accumulated dividends and interest are exhausted, I will have to:
* restart paying my premiums; or
* convert my policy to Reduced Paid Up status; or
* take a loan advanced against the cash values of my policy for payment of premiums for my policy.
I understand that interest at such rate as may from time to time be stipulated by AIA will also be charged on this loan. I also understand this loan will be offset against any benefits paid from my policy."
For Option 2, it also mentioned that any supplementary benefits attached to it will be terminated when my policy is converted to a paid up policy.
Could you please advise on which is the better option to choose?
For each of these options, could you please highlight what are the disadvantages/pitfalls that I should consider before making my decision?
What does it mean by my supplementary benefits would be terminated when my policy is converted to a paid up policy for Option 2? Is supplementary benefits referring to the riders?
With AIG going thru' financial crisis and requiring bail-out in the USA, is it advisable for me to choose Option 1, ie to continue paying the premiums? Or should I elect for Option 2 now and then wait and see how AIG/AIA rides out the current financial crisis?
Looking forward to hear from you. Any advice that you could provide in this area, would be very much appreciated.
REPLY
Please get advice from the AIA agent or their company. You have to decide based on your needs.
Here are some general remarks. It is better to take option 1 and continue paying the premium. Under option 2, you are probably charged a high interest rate (perhaps 6% ore more) for the loan that is taken to pay the premium. Why pay a high interest rate on the premium loan?
I think that AIA should be quite safe, as it has a separate life inurance fund protected under Singapore law. It should be sheltered from the problem of AIG.
I too have bought a FG (a yearly premium of $1233.60) in 1995 and have always thought that it will run itself after the 16 the year (next year). I was shocked to find from AIA that I need to pay until I am 88 ( I am now 44). This is totally different from what my friend (the agent) told me. I have asked AIA to send me a new BI (so I can study when to terminate to break even). Just wonder if there is any channel to complain ? Or can I lodge a complaint in the first place? So stupid of me to buy such a plan in the first place.
ReplyDeleteBloody 'scam' or 'set-up' by higher power behind.
DeleteI,too, have this plan from AIA & choose to continue paying the premium from my wallet.(option 1)
Leave me no choice.
So be carefu when you take out money from your wallet especially in a place like SINGAPORE.
Full of 'shit' & 'greed'.
The problem is they're never enough & never stop.
AIA scam, They have cheated consumers with this Financial Guardian, promising the Critcal Year where you pay premiums for only 16 years and the policy would self fund after that. Most Financial Guardian customers bought from AIA on this understanding, but they now are cheating customers by refusing to fulfill their promise. Big institutional organziation out to cheat consumers. AIA is totally unreliable and untrustworthy. Crappy insurance company that grew to its size through deceit and short changing customers.
ReplyDeleteAIA scam, I am also a victim on Financial Guradian. They have cheated consumers with this Financial Guardian, promising the Critcal Year where you pay premiums for only 16 years and the policy would self fund after that. Most Financial Guardian customers bought from AIA on this understanding, but they now are cheating customers by refusing to fulfill their promise. Big institutional organziation out to cheat consumers. AIA is totally unreliable and untrustworthy. Crappy insurance company that grew to its size through deceit and short changing customers.
ReplyDeleteFG plan is a scam. All the insurance companies are scamming people. I bought my policy in 1988 and have been paying premium for the last 32 years. I was told that on death benefit I get back less than what I have paid. At the end of the day only one winner, thats the insurance company.
ReplyDeleteThe agent promised you all kind of benefit but when you died you won't see your payout benefit. Sad.
I have been paying premiums for the last 30 years for AIA Financial Guardian when I was supposed to pay up to the 17th year (Critical Policy Year). If I surrender the policy, I will get back hardly any money. If I stop paying, then I lose the policy all together. There should be a class action suit against AIA for their deceitful policy, which has cheated thousands of consumers who believed in them. Singapore government has to do a better job in protecting consumers from AIA.
ReplyDeleteReceived a call from an AIA agent last week asking me to convert my policy into another Whole Life Policy without further health check as my riders will be ending soon. Upon questioning if I have to pay additional premiums, discovered that I have to pay even more to convert. Luckily I asked. AIA is a blood sucking insurance company where the staff are well paid to con and suck from those innocents. Beware
ReplyDelete