Tan Kin Lian's Blog: Insurance company has a duty to render a clear statement on ILP

Sunday, June 28, 2009

Insurance company has a duty to render a clear statement on ILP

Hi Mr Tan,
I'm writing regarding a recent blog post "Full refund of premium under ILP". I was surprised and envious when I read this.

For the past 6 months, I have been pursuing X for two ILPs I bought a few years ago. I wanted to track my investments and insurance, but was not given the full disclosure of fees involved.

The total contribution I make every month goes to 1) policy charges, 2) mortality charges, 3) insurance, and 4) investment funds. The fees and charges were not disclosed to me explicitly. I learned about these fees only very recently when I started to track my investments. I realised that the numbers cannot balance month to month. Then I read the policy booklets in detailed, and learned of all the extra charges.

X was also not able to give me the number of fund units that I buy every month, after the deductions of the charges. Hence I am unable to track the performance of my investment. I tried to contact them several times. But every time I'm told this is
not possible.

The company sends a yearly statement on the "Average" no. of units I have, and I'm told that is the only best info they can provide me. Unfortunately, it is not clear how many units are deducted for charges, and how many are added. I've spent many nights on Excel spreadsheets, running the statements, the info they provide, and the amount deducted from my bank. I tried to balance the numbers to the current units I hold, to no avail.

I get a lot of pressure from X and my financial advisor. They told me I'm being unreasonable when I ask for the funds' units every month, and that no insurance or fund companies can give me this information. I cannot imagine being stuck with these two policies for the next 36 years, not knowing where my money is going every month.

I am considering bringing my case to MAS and FIDREC. Is my request for more transparent information an unreasonable one?

REPLY
I support your idea to bring up this matter with MAS and FIDREC.

The insurance company owes a duty to the policyholder to provide details of the charges and a clear statement of how the money is being invested. No policyholder, regardless of how well educated, will know what is happening, unless a clear statement is rendered each month. It is not possible to know at the end of the year from a consolidated statement.

Many insurance companies fail to provide a clear statement, and in the process the policyholder is unaware about the high charges that are being deducted. This is an unacceptable practice, from the consumer's point of view. This shabby practice cannot be condoned.

All the best in lodging your complaint.

11 comments:

Anonymous said...: MAS thinks the FIs and their insurance agents are disciplined enough to self regulate. Tell them they are not . Behind MAS back these insurance companies and agents are playing monkeys and are committing a lot of irregularities. Send in your complaints that these so called self disciplined insurance companies are not following the guidelines. Although provided in the guidelines that insurance companies should have whistle blowing channel no one is using it for fear of retribution.
The policyholders must fill in that role to report the anomalies and irregularities in the company and also expose the malpractices of the insurance agents.
Make use of the whistle blowing.; June 28, 2009 3:09 PM
Anonymous said...: Sorry my previous comment got some error.

Three months ago i bought an Regular ILP, only recently found out that my money invested for first years is 15%. That means 85% of my money goes to other charges. this is absurd. The policy never stated that 85% of the money is for other charges and the agent never bother to tell me also. I was given an impression of average 8% return (lost 85% to get back 8%). Now then i found out that 1st year is 15% invested then follow by 2nd year 50% follow by third year 75% and 4th year onward 100% invested and that mean i lost nearly 50% of my money. And the agent even tell me if i want to cancel my policy i must at least hold the policy for three year (now i know why three year, i feel so stupid and angry). One more thing is that the free look period start from the day the 'letter of condition of acceptance' or the day i sign the contract? Because i ever want to cancel durin the free look period and the agent tell me that the free look period is over,but when i call the hotline they say not over yet. the insurance agent is not honest. I am still thinking want to complain or not, and if i want to complain, should i complain to the insurance company or mas 1st.; June 29, 2009 9:17 AM
Anonymous said...: I cannot understand that despite all the negative reports on regular ILP, there are still so many people buying it. Is it because there are many unethical, pushy agents or just that investors are plain careless/ignorant themselves?; June 29, 2009 2:58 PM
Anonymous said...: Exactly... the insurance agents are not only pushy but dishonest.
The above case should be reported to MAS and the company for full refund with interest. The 14 day free look starts from the moment you received the document or from the date of issue which ever is earlier.
You must get rid of this agent, one lesser in the industry.; June 29, 2009 7:19 PM
Anonymous said...: yes, i totally agree with the comments above. do lodge a complaint with the insurer, which i have just done so. my mom bought an ILP 2 yrs back, but there was non-disclosure of mortality charges which are eating into the returns every mth. my agent had the cheek to say that he wasnt trained and not many agents knew abt this. if the insurer does not respond in a timely manner, i will definitely lodge with MAS, FIDREC, CASE, etc. i do not wish for anyone to fall victim to these agents preying on the masses.; June 30, 2009 12:54 AM
Anonymous said...: Don't beleive the insurance agent. When it comes to problem they tell you they are not trained. They ought and must know their products before they sell. This is to meet "fit and proper" requirement of the FAA. If he said that it means he breached the fit and proper requirement and non disclosure.This is good ground for complaint and refund or else report to MAS.; June 30, 2009 8:46 AM
Anonymous said...: sue the agent for lieing, failure to disclose and unqualified. If you bring this up to MAS sure agent kenna.It is better that we don't have this type of agent to cheat people.; June 30, 2009 12:34 PM
Anonymous said...: There seems to be a lot of little MADOFFs among the insurance agents.
Is MAS waiting for one big one and not interested in many little MADOFFs?; June 30, 2009 8:07 PM
S H said...: i was the one who left the earlier post on my mom's ILP. the insurer said investigation is going on but i'm not sure how neutral they will be. i was also given a personal cheque to pay for the mortality charges. till date, i do not know what to do with it. the insurer has given conflicting replies when i questioned on the practice of agents giving cheques. has anyone received such cheques for similar incidents and if yes, how do u deal with it?; July 01, 2009 12:11 AM
kelvin said...: If we are able to find a group of victim and complain together to MAS. At the same time bring out the topic to newspaper to educate people on ILP product. Hope that MAS will take action.; July 01, 2009 1:16 AM
Anonymous said...: remember to copy to mas whenever you send one to the insurer. Meantime, don't cash the check.
if there is no reply from the insurer you can write one to the press. This is a way to expose both the agent and the company; July 01, 2009 8:55 AM