If you are a policyholder and wish to attend the annual general meeting, you can send your request to the cooperative secretary at this address (lakshmi.b@income.com.sg). You can also send in your own questions.
Questions for the Annual General Meeting of NTUC Income, 29 May 2009
I wish to ask a few questions on behalf of many policyholders who bought life insurance from NTUC Income on the understanding that it is a cooperative working in the interest of its policyholders.
NTUC Income reduced its bonus rates for several series of policies last year, in spite of excellent investment results. At the annual general meeting, the chairman gave the following assurances to the policyholders:
a) While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.
b) Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.
c) I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund.
There is an announcement that the bonus cut will be extended to all other series of policies this year.
My questions are:
1. What is the total amount of bonus that were reduced in 2007 and 2008 compared to the bonuses that would have been declared if the bonuses had been maintained at the same rates declared in 2006. Please provide the actuarial value of the bonuses that have been reduced, in millions of dollars, for the policies that were affected.
2. What is the amount of management and selling expenses incurred for the life insurance business for 2006, 2007 and 2008. Are steps being taken to reduce these expenses in line with the reduction in bonuses suffered by the policyholders?
3. Please explain how the reduction in bonus can achieve a better payout to policyholders? With the reduction in the bonus last year, was the cooperative able to invest the undistributed surplus to earn a higher return for policyholders?
4. Will the cooperative be able to maintain the special bonus payable on maturity and surrender, which was adjusted to compensate for the reduction in the annual bonuses? Is there any likelihood that the special bonus will have to be reduced, due to the global financial crisis?
5. For policies which have matured since the last AGM, was the cooperative able to meet the promise that the payout will be fair and based on the actual experience of the fund? Where the actual payouts were short of what is due to them, does the cooperative intend to make the appropriate adjustment for these policyholders?
6. Based on renewals made in recent months, what is the average rate of increase in motor insurance premium paid by policyholders who did not make any claim during the past year? Does the cooperative intend to control its expenses and claims to allow it to reduce the premium rates for its policyholders? What steps are being taken to achieve this goal?
I wish to ask a few questions on behalf of many policyholders who bought life insurance from NTUC Income on the understanding that it is a cooperative working in the interest of its policyholders.
NTUC Income reduced its bonus rates for several series of policies last year, in spite of excellent investment results. At the annual general meeting, the chairman gave the following assurances to the policyholders:
a) While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.
b) Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.
c) I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund.
There is an announcement that the bonus cut will be extended to all other series of policies this year.
My questions are:
1. What is the total amount of bonus that were reduced in 2007 and 2008 compared to the bonuses that would have been declared if the bonuses had been maintained at the same rates declared in 2006. Please provide the actuarial value of the bonuses that have been reduced, in millions of dollars, for the policies that were affected.
2. What is the amount of management and selling expenses incurred for the life insurance business for 2006, 2007 and 2008. Are steps being taken to reduce these expenses in line with the reduction in bonuses suffered by the policyholders?
3. Please explain how the reduction in bonus can achieve a better payout to policyholders? With the reduction in the bonus last year, was the cooperative able to invest the undistributed surplus to earn a higher return for policyholders?
4. Will the cooperative be able to maintain the special bonus payable on maturity and surrender, which was adjusted to compensate for the reduction in the annual bonuses? Is there any likelihood that the special bonus will have to be reduced, due to the global financial crisis?
5. For policies which have matured since the last AGM, was the cooperative able to meet the promise that the payout will be fair and based on the actual experience of the fund? Where the actual payouts were short of what is due to them, does the cooperative intend to make the appropriate adjustment for these policyholders?
6. Based on renewals made in recent months, what is the average rate of increase in motor insurance premium paid by policyholders who did not make any claim during the past year? Does the cooperative intend to control its expenses and claims to allow it to reduce the premium rates for its policyholders? What steps are being taken to achieve this goal?
Tan Kin Lian
My two education policies matured earlier this year. I am not too good with numbers but I do notice that it was 10% less than what it was projected. I do not see any special bonus on maturity as what they claim. In fact, this amount was what they told me a year or two ago when I enquired, before they make any mention of a special bonus. So how to query them when they have it all worked out?
ReplyDeleteI would like to quote my case to you for ref.
ReplyDeletemy car:honda civic 1800cc
year of manufacture:2006
NCB:30%
quotation comparision
OAC premiun:$1010.71
Incom Premiun:$1434.49
almost 42% different!!!
I ask but no good reason was given.
How much of the undistributed surplus contributed by the cut bonus was lost last year? What is the absolute number? Is it because because of this loss that warranted bonus cut for other polices?
ReplyDeleteThanks Mr Tan.
ReplyDeleteI know we can all depend on you.
You have my support all the way.
I would like to repost a self confession of an insurance agent to impress upon the public and consumers how important it is to engage an honest and competent adviser who puts your interest first.
ReplyDeleteOn 30th April 2009 LIA posted the average death claim of $44,000.
I want to ask the consumers , is the $44K enough to see your family through life if you just left them with that much of money?????
Funeral expenses might have taken half of it.What about your liabilities? How much is left and how long it would last for your family and the children?
Have the insurance agents done a good job? Have they put your interest first? What product did they sell to you or what product did they con you into buying?
The figure leaves a lot questions about their integrity, competence and what they see their roles and the business of the life insurance.Do insurance agents see this business as get rich quick business? Do they see this as a temporary business to fill up their time while looking for a job after retrenchment or they can't find another job? Do they have the passion for you or the passion for the money?
What does it tell you? Does it tell you these people come into this business because they want to help you , consumers, with your financial matters?
NO< NO, noooooo!!!! They come in because they can make a lot of money from you, they can con you. Is much knowledge needed to sell you products? NO, only some conning skills , lies, half truths, cover up and emotional manipulation.
The next question is "how come only about 1000 agents have the CFP qualification or equivalent financial qualification out of 14,000 agents if they claim they want and can help you?" How to help you without the financial skills?
You see , the agents are grossly unqualified to help you with your personal finance.They think by telling you they are sincere, caring and do this or that and all non financial services they can substitute the financial skills with these. The FAA requires them to be honest and competent and NOT sincere or helpful.Are they?????? They only know how to push and peddle useless products to you using unethical, lies and emotive manipulation. That is why you are grossly under insured because they push to you products that earn them high commission. They are not interested in you, only your money.
Another LIA statistics, last year ,2008, only $37000 sum assured was sold. What can $37K do for your family and dependents if you are not around?
Below is a confession from an ex-insurance agent whose conscience was pricked. What he did caused untold suffering to his client's family .
// "When I was young and less wise, I became an insurance agent for a major insurance company.In my second month I sold a whole life policy to a young couple in their 20s with 2 young children.The premium was high but the sum assured was only $30,000. Three years later the husband, the insured, died in a car accident, leaving the kids with no father and the family without an income.
When the wife made the claim she received $30000+. The money barely covered the funeral expenses and a few months of living expenses.
I realized that had I done what was good for this family instead of what was good for me and the insurance company I would have sold the family a term policy. For the same premium I could have sold the family about $1 million of life insurance without the rubbish saving plan and the claim proceed would have taken care of the family and children for the next 20 years until the children became financially independent.
This experience shook me emotionally so badly that i quit the life insurance business forever. I honestly felt because of my knowledge and the lack of it that I stripped this family of the protection and the help they really needed."//
Will the outcome be just like last year's AGM? What are the chances this year's outcome will be better?
ReplyDeleteThe average death claim of only $44K and average of $37K of sum assured sold in 2008 speak volume of the motive of life insurance agents is not consumers' interest in mind but for themselves.
ReplyDeleteWhy do consumers still trust them?
It is puzzling and I can think the likely reason is consumers are clueless and ignorant about insurance. They are easy prey for agents.
MAS should see this as urgent to protect the consumers from predatory insurance agents who have never the interest of the consumers at heart. The figures are solid evidence. They don't lie.
MAS must start enforcing the fair dealing guidelines and the FAA section 27 to nip malpractices in the bud before more consumers are harmed by insurance agents. Few complaints does not mean no complaints. Does MAS need to wait for the consumers to get more litigious?
It would certainly complement
MAS if Mr.Tan's FISCA can get to work immediately, to provide review and advice for consumers. I am confident that review of existing insurance policies will uncover the shits and unscruples of insurance agents. And hope that FISCA can also provide contigency fee legal service to take errant insurance agents to court to seek compensation for people especially widows and single parents because of the dishonesty and incompetence of the insurance agents.
If the LIA statistics don't wake up the consumers and the regulator the insurance agents will get bolder and think that they are bunch of suckers.
MAS, please do something to protect the consumers . $44K or $37K is a mockery of what life insurance is all about. The agents make consumers look like fools.The insurance companies are blood suckers.
Hey Zhunmeng,
ReplyDeleteYou are obviously making an unfair judgement AGAIN. I understand you must have had bad experiences with insurance agents before. You claimed that insurance agents only sell expensive insurance products with insufficient coverage.
First of all, can I just say that consumers make their own decision. Our role in this industry is to recommend products based on their needs and financial goals. If consumers themselves are not interested in wealth protection at the moment but only savings or investment (ILP, endowment or even life), are you saying we are only to push term insurance products despite not what they want? If we force term insurance down their throats, wouldn't it be unethical?
While there are always black sheeps around in this industry, lets not forget ultimately it is the consumer who makes the decision. If they dont want term insurance because they presume they wont die early (thats what many people will think), herein lies my question: as insurance agents, are we supposed to advocate the importance of insurance with sufficient sum assured or are we to recommend products based on what THEY want.
To the ex-insurance agent, if I knew anyone who is going to die too early, I will definitely sell him term insurance with $1 million coverage la.. If I knew anyone who is going to live longer beyond his expectations, I would never sell him any term insurance la... If I knew, if I knew.. Who can foresee the future? Since you can already have first hand experience of the importance of insurance, shouldnt you stay in this industry and advocate the importance of insurance rather than quitting?
I.H.I.S,
ReplyDeleteI think you got all mixed up with your role as ?????? an adviser or a salesman.. Yes , I know salesmen either sell what the customers WANT or what they themselves want. Either way it fits nicely into the agents' scheme of things.
The agents NEVER sell what the consumers NEED but what they want.It is vely common to hear agents saying ,"this is waht the customer want one, waht." "I let the customers decide, waht"
According to MAS, this type of customers who make their own decision and know waht they want are known as SAVVY customers. MAS has suggested that a portal be set up to cater to this type of customers so that they don't have to pay commission after all if the agents can only give what they want.Why pay commission to the lousy agents who don't give or don't know how to advise on NEEDS.And of course Caveat Emptor applies here. Isn't this what the agents want and are doing, to dodge responsibility and to make the customers tick product advice option or no advice option?
Sorry , writing is on the wall!!!
Now, do you see yourself? a salesman or an adviser?
The next question is "when do consumers need most insurance?" when their children growing up or when they are old and about to die?
I presume you would sell them the idea that they need a lot of insurance when they are old because death is nearer or round the corner, right?
So , buy whole life to take care of that, right?
Let me give you a peice of statistics.
In 2008 only $37K sum assured was sold. What can $37K do for a family? In 2009 30th April LIA FOUND THAT THE AVERAGE CLAIM WAS ONLY $44K. What can $44K do for your family if you are NOT around?
Why so low sum assured was sold and why so low the claim?
Can an ordinary folk afford $1million of whole life? i have no answer but i know insurance agents will sell him $10K only and tell him to buy whenever he has the money so that the agents have the opportunity to sell him insurance for whole life.
What about this ? Can an ordinary folk afford a $1million of term insurance? Yes!!!!
I and MAS agree that it is due to conflict of interest and agents are PUSHING and PEDDLING products that earn them HIGH commission. Consumers' interest is NEVER in the heart of the agents, only COMMISSION.
Please check with MAS whether this warning was given to LIA to tell their members.
Next.. who is the expert, the consumers or the agents?
Of course the insurance agents..."can insurance agents foresee the future" The answer is the insurance agents can....They can from afar see and know their clients need wholelife..without analysis or check up. When they call up their clients they already know their clients need whole life or endowment. Who says insurance agents can't foresee the future? They are also good fortune tellers.They decide the customers' fortune. They are no different from the koyok man at the WAterloo/ Albert Street, who sells a cure everything and anything koyok like the whole life and the endowment. Don't believe, next time listen to a koyok insurance agent.
They can foresee what the clients want. They know when the clients will die so they tell the clients to buy a little bit now, not enough never mind they won't die, and buy when they have the budget again, when they get the year end bonus or increase in salary.
No need analysis, lah, so troublesome, what for? and cannot sell wholelife , afterwards.
If I don't know when I will die that is why I need insurance and I need as much as my FAMILY NEEDS and not less or no more but according to my family's needs.
The agent quit , probably he didn't want to be like the rest or like you. He said he quit because
" my knowledge and the lack of it that I stripped this family of the protection and the help they really needed."//
This exactly and aptly describes the insurance agents, their skills,their competence, their attitude, their conscience, their ethics and their heart, at large.
Hi Zhummeng,
ReplyDeleteHere is my question, if a prospect wants to have a combination of insurance from death and savings element (risk averse) and with a low budget, what would you recommend him?
Based on what you said, can I just PRESUME that you will advocate how term insurance to him and advise him to invest the rest else where? In that case, can I just PRESUME that what it is also product pushing? Can I also just presume that this is not in the heart of the consumers.
The problem is that you keep presuming stuff. You keep presuming we only sell life insurance, only sell endowment irregardless what the consumer wants. Worse still, you keep PRESUMING that all insurance agents are bad, like some evil salesman only aim to suck money from people. Yes there are definitely black sheeps in this industry, but is it fair to cast this whole industry of insurance agents/salesman in such bad light?
If I were to eat a plate of chicken plate of rice which turns out to give me food poisoning, can I say all chicken rice are bad and poisonous?
Obviously the ex agent is a quitter. Knowledge can be learned, he merely lack the proper knowledge and training. If he was feeling guilty, he should have stayed in this industry and better serve the public to make up for his mistakes.
Mr Bonez @ ihateinsurancesalesman.com
Dear Sir,
ReplyDeleteI bought FlexiLife20, an insurance-cum-savings plan from Great Eastern in Oct 2008, and am required to pay a monthly premium of $240 a month for 20 years. For the first year, I was given a discount of 3% for agreeing to pay the full annual premium using my credit card. I am insured for $100k.
Currently I have run into cash flow problems, but my credit card company still deducts about $230 a month from my account, and I am told that they will continue doing so until October this year.
Is it possible for me to terminate the policy now, and not pay until October, or is there no way for me to stop the transactions? I would like to cut my losses as soon as possible.
I have contacted my agent(an ex-classmate) regarding my intention to cancel the policy, and she offered to lend me some money until my cash flow problems are resolved. Is this a standard procedure for agents?
I am also wondering if it will be possible to convert this to a term policy as my agent is not supportive of this idea and is not forthcoming on providing details on how to do so.
I would be grateful for any advise on what I should do to cut losses.
IHIS,
ReplyDeleteYou said your client can afford only a small budget or rather he has a small discretionary sum for insurance or saving or insurance and saving. He wants a plan that insures him and same time provides him a saving plan.
To answer i would require a lot more info about him, his age, whether he is married; children; wife working,; other dependents; his cash flow profile, any existing insurance.
Assuming he has above profile I would help him to understand his needs and the need for prioritisation of needs.As he has engaged me as his adviser I will advise what he needs and what he must do to max his budget.If he disagrees with me and insists that he must have what he wants. I have 2 options. To go along with him and do what he wants and risk being sued by him one day. The best option is to discharge myself and give him my reasons.
Is this product pushing or needs driven?
Please distinguish between the customer's WANTS and NEEDs. Most insurance agents push what the customers want. This is wrong.. The customers don't know what they need and therefore don't know what they REALLY want.If they know they shouldn't be buying from you and pay a huge commission to you for doing nothing but form filling.If you do you DON"T deserve the commission. You should give a high discount in the form a huge rebate.
I am not saying you agents are evil
deliberately .Most of you are sincerely wrong and incompetent and the damage caused can be worser than one caused by an evil agent. You get me?. Incompetence is not a lesser evil because since the clients trust you the damage can be more disastrous.
Often scams are due to trust. Trust is abused very often by insurance agents.If insurance agents are REALLY sincere and trustworthy they should upgrade and equip themselves to give the best to their customers.What is best advice? According to section 27 of the FAA it should be on reasonable basis.
But alas, insurance agents only pay lip service.
I don't base my opinion of insurance agents on one bad hat or on a plate of chicken rice but statistics and survey.
Bad insurance agents and bad practice is on the rise in this bad time.
Hi Zhummeng,
ReplyDeleteExcellent point on the consumers dont actually dont know what they need or want, in fact most of them dont even see the need and want. I understand where you are coming from, the fact that financial consultants with tied agents (usually) tend to do product pushing not because they are sales driven, but rather because they have to protect the interest of the FA they are representing.
Combine that with high commission, its inevitable that MOST of the financial consultants are not doing a proper job of financial planning. In fact, I'm coming from a tied-agent which the company is obviously revenue driven. To be honest, I myself is not very comfortable with this approach. From the top down approach, many financial consultants are inherently made to think of their career first, client second. Example? Think of the recruitment drive, what do they advocate to potential prospects? Career benefits! Cant blame the companies as they are just trying to communicate the tangible benefits to prospects even though it is seemingly wrong.
But lets not forgo the fact that even some consultants with tied agent are purely in the interest of the clients. I've seen those who actually recommend products outside their FA to their clients which they dont get a single cent. Bravo to agents like them. The number is paltry, but they still exist. However, I feel that there is no need for you to demean all agents because they are just trying to earn their keep.
I feel that for this whole industry to change as a whole, we have to start from the top. It is not the agents that stain this industry, I would say its the management and the companies that have edified the wrong values of this industry. MAS should DO SOMETHING ABOUT THESE COMPANIES FIRST. Its common sense, agents become what they are today because they were taught that way. Put it crudely, they were 'brainwashed' and trained to think that the way - the way that sales is more important than the client's needs. Sad, but its the truth.
- Mr bonez.