Tan Kin Lian's Blog: Full refund of premium under ILP

Tuesday, June 23, 2009

Full refund of premium under ILP

A policyholder was shocked to learn that the surrender penalty under his ILP policy at the end of 2 years was so high that it took away 90% of his savings. He was not properly advised of this matter by the distributor who sold the policy to him.

He pursued this matter vigorously against the distributor who sold the policy and the insurance company who created the product. He met with the senior officials of both organisations and also complained to MAS.

He was given various types of excuses and disclaimers. He was not discouraged but continued to fight on.

He was finally offered a full refund of the premiums paid for the 2 years and was asked to sign a non-disclosure agreement.

Lesson: If you are willing to fight for your right, the financial institutions may surrender, instead of the consumer.

Tan Kin Lian

12 comments:

zhummmeng said...: The problem is not many people know their rights; afraid to pursue against their insurance friends; ignorant about the product until it is too late; think it is expensive and a hassle to take their insurance agents or the company to court; don't know how or where to start.
If there is an association like FISCA which can provide a service like insurance policy review and can advise the actions to take if the insurance policies are found to be mis-sold, misrepresented, wrong product, no reasonable basis.
FISCA can work with lawyers to provide legal service on contigency fee basis along the same line like the "AFTER THE Event" insurance . These types of legal service are popular in US and UK.
The ordinary folks who make up the majority of any insurance agents' clientele and are the easiest victims, should not feel disadvantaged because of lack of financial ability or clout against insurance companies.The playing field is leveled as a result if this type of legal service is available.
There should be a lot of opportunities for lawyers to have cases especailly from this group of policyholders and widows whose deceased spouse didn't leave enough money for the family because of incompetence, unethical or conflict of interest by insurance agents.There are also many single mothers with children left in the lurch to fend for themselves because their deceased spouse was incompetently advised by insurance agents.
On the other hand MAS can pursue the case on behalf of aggrieved policyholders because of breach of section 27 of FAA by fining the agents and the insurance companies to compensate the aggrieved policyholders due to incompetence, mis-selling or inappropriate recommendations.Both the agents and companies are severally or jointly liable after all.
The right thing must be done to eliminate the bad hats and the incompetent.MAS must send a strong signal to both the insurance companies and their salespeople that violating the interest of the consumers is a grave offence that will be dealt with severely.
The UK FSA had never failed in this respect to fine the insurance companies and their agents. Recently FSA fined an insurance company hundreds of million pounds and also made the company to compensate hundreds of million to their policyholders.
This is the kind of regulator and enforcer that Singapore needs.
In the paraphrased words of HKMA CEO, he said that the financial market was NOT created to serve the interest of the FIs or insurance companies or to enrich the insurance agents so that they can qualify for mdrt or cot or take holidays, to buy condos or to drive big cars but to serve and help the ordinary folks , the man in the street to achieve their financial goals.
The ball is in the MAS's court and the consumers are watching how the recently introduced fair dealing to consumers guidelines are to be enforced.; June 23, 2009 7:35 PM
Parka said...: It is such a shame that people actually have to make extraordinary effort just to get back what is theirs. Even more astonishing is these people who work for insurance companies, they are not even protecting their own money - it's the company's money.; June 23, 2009 8:30 PM
Anonymous said...: Most insurance agents are incompetent in investment. They sell ILPs or funds and they don't construct portfolio. Consumers should avoid insurance agents. They are unqualified.
You are better off buy directly from portals if you know. If you don't know either you get a qualified adviser with acceptable investment qualification or forget completely about investment. It is suicide to use an insurance salesman. They don't know about investing so, how to help you. Yes they know how to sell funds and this is dangerous.; June 23, 2009 11:13 PM
Anonymous said...: The super high surrender value of the ILP sounds like Zurich's Vista. Is this correct?; June 24, 2009 8:30 AM
Anonymous said...: Most regular premium ILP in the market have very low allocation rate during the 1st 3 years with most of them allocating 10 to 15% of the premium to buying units.

If you know how to DIY, just go to any online portal like fundsupermart or poems to do a RSP.
You can get low sales charges of 1.5% to 2% and it is full allocation of your contribution.

Don't believe what the insurance salesman tells you about Dollar Cost Averaging. You are never gonna breakeven all your life if you buy any regular premium investment linked plan from the insurance companies.; June 24, 2009 11:38 AM
Anonymous said...: It sure sounds like Zurich Vista to me. Many advisors who sold this type of plan are in trouble now. Some no longer in the industry. It's good that they left. They don't belong here in the first place. Moral of the story: you reap what you sow. That's karma in this world..; June 24, 2009 1:46 PM
Anonymous said...: yes, I am always fighting for my right when I am right.
""The End Justifies The Means""; June 24, 2009 3:06 PM
Anonymous said...: Hasn't the former policyholder broken the non-disclosure agreement?

Were they not shown an illustration? I thought that was mandatory.; June 24, 2009 3:50 PM
Redstar said...: Businesses are employing PREDATORY tactics in order to reap big profits and bonuses for their CEOs.

Just look at the Banks.
On the one hand, they made hefty cuts to depositors' interest rates.
On the other hand, they dish out higher interest rates for fresh funds and lucky draws for new accounts and fresh funds. And the renewal rates for fixed deposits are often not openly published so the customers can make an informed decision.

Is this morally the right thing to do, especially to the poor, lesser educated and elderly of our society??; June 24, 2009 6:43 PM
Anonymous said...: Anonymous, June 24, 2009 1:46 PM,
tell these so called advisers, they can't get away if they have mis-sold. They think by leaving the industry they can escape punishment. No, no, there is no such thing. Maybe when they are dead. A crime or misdeed must be repaid. Many insurance agents think that once they leave the industry the law cannot touch them, so they can commit crime, mis-selling, unethical practice and cheat their customers. They are ignorant fools. These insurance agents CANNOT escape until they pay for their crime.; June 24, 2009 8:29 PM
Anonymous said...: MAS, where are you? Why are so slow in catching these people? If you don't audit them how to know who are they and from which company.
Do you know insurance agents are committing them EVERY DAY with full collaboration and blessing from their supervisors and the company ceo?
Do you really want to regulate and clean up the industry.
Do you really want to vet the products before they hit the market?
Do you really want to enforce section 27 of the FAA and regulate the way these products are recommended to consumers?
You said you encourage whistle blowing but many have blown the whistle so many times and yet you remain indifferent, bochap.
Can you hear, see? Is your head still in the sand?; June 24, 2009 10:07 PM
Anonymous said...: Suing your insurance agent for malpractice negligence without the worry of cost?
Here is the good news.
A local company, Lockton Companies(Singapore) is the broker for First Capital Insurance which underwrites the "After The Event" insurance.
Ask your lawyer about this insurance scheme if you have a strong case against the insurance agent or the insurer for mis-selling, misrepresentation, or any malpractice that causes you to suffer loss, inadeqaute protection,
etc.; June 24, 2009 11:17 PM