In Singapore, where there is no tax incentive, the commission paid to the adviser is a burden to the consumer. It reduces the net return to the consumer. Some insurance companies do not care about the consumer and are willing to sell "poor value" products to them. They train their agents to "convince" the customer to buy these products. It is enethical to take advantage of the igonorance of the consumer.
All financial products with high upfront fees give poor value to the consumer. They include investment linked products, structured products, endowment and whole life policies.
Without any tax incentive, there is no justification for high commissions to be paid to financial advisers who sell the financial products. There is a pressing need for the regulator to set limits to the commissions that can be paid, so that the consumer's are given a fair deal.
Tan Kin Lian
4 comments:
Hi --
It is not quite correct that everyone gains.
Mostly, the tax incentive shifts the burden of high commissions from consumers to taxpayers -- (who are passive victims since they never purchased the life insurance).
Larry Haverkamp
Never buy whole life and endowment for whatever reasons you may have, whether is for protection or saving.
Why?
The cost is rising and the interest rate and the return are getting lower and they affect the cost of protection and the saving.
Insurance agents want high commission and they get up to 150% of the premium you pay.
The ceo gets million dollar salary; so many senior managers, Indian chiefs with high salary; everybody wants high salary. Where is the money coming from to pay these people?
You mean subsidy from government? from the thin air?
Of course, from suckers like the consumers who trust their agents.
For every dollar premium the suckers pay ,at least 80% goes to pay these people and 20% goes to build the cash value. The worst time is in the first few years when your premium just disappears into the thin air and appears in the pockets 0f the insurance agents.
That is why they can afford to go for incentive trips and qualify for those dubious mdrt. Your money supports them.
Remember, wholelife or endowment is never a saving plan nor a protection plan. These plans are meant for the rich who can splurge on them. They can afford to have low return. They don't need high return. They don't need more money.
They have enough.
What about the middle and lower income, the man in the street?
They need high protection. They need to make their money work harder. Are they getting them? NO. The unscrupulous insurance agents don't care, they lie , cover up, half truth and con their trusting customers with encouragement from their company. As long they get high commission from pushing the product to the consumers; as long the company gets the revenue, this is more important to them.
The suckers are customers who don't know that they don't know . There are other suckers who pretend that they know but actually they know nothing.And the unscrupulous agents exploit it by pandering to their wants and not needs; just sell what the customers want; don't care whether the products meet their needs.
WHole life products still sell because of this.
My advice to consumers is don't buy these products. You regret and you be trapped.
Sadly I'm one of those suckers. Now I'm stuck with premium payment. Either I continue to pay or I lose lots of money. :(
There are just so many complexities getting involved in any of the legal or financial matters in today’s world that getting proper help and advice is just so much required.
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