Hi Mr Tan,
After reading several articles in your website and Fisca, I am wondering whether my decision to becoming an insurance agent recently is wrong!
I am always interested in insurance line many years ago and believe that the various insurance policies when used appropriately can protect people from unforeseen circumstances. Of course, this is only my own wishful thinking without putting any number in any calculation. My decision to become a insurance agent is to be able to see for myself on how to recommend to my clients that the insurance plan that benefit them the most.
So I am wondering whether it is of any good at all in being a insurance agent since the insurance products out there are mostly gearing towards high cost upfront and not to the benefits of our client. I felt like we are fighting a losing battle against the "big boys" out there.
REPLY
You can continue to be an agent and sell term insurance and single premium products. If you are keen to do it, I can recommend clients to you , provided that these products give good value.
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ReplyDeleteI am glad that you joined because you want to help people and not becuase you were attracted by the promise or potential of get rich quick schemes by the recruiters at business opportunity talk.Many joined believing that and naturally they go for products with high commission and they sell as if they are one size fits all products or cure all products and worse as snake oil products.
ReplyDeleteToday, these snake oil products like wholelife and endowment are being pushed and peddled to the poor people, the man in the street who don't and cannot benefit from them. Only the rich can afford the snake oil products and have enough of them but the rich are smart they don't buy from run of the mill agents. As a result the poor become the victims and condemned
to poverty. They become the dumping ground of insurance agents.
Seriously, tell me which type of customers make up the bulk of your clientele?
I bet you, the lower middle and the ordinary man in the street who are providing the business and living to you and yet they are the most abused, short changed customers who need a lot of help to get out of the rut.Instead, they are kicked at the side by insurance agents when they are already down.
Can wholelife and endowment products help these poor people? NO...they give poor protection and poor return and they are very expensive and the poor CANNOT afford to have enough to address their needs.Insurance is about addressing the needs FULLLY and NOT half heartedly as insurance agents are doing because of commission.As a result they are under insured and have low saving.
Why? generally insurance agents are dishonest because they NEVER give their customers the whole truth but only half truth.They are trained by the company to tell half truth plus lies too. Secondly, they are incompetent as a financial professional. They only have certs , have or don't have , makes not much difference after all they are selling only and not advising.
Thirdly these agents peddle whatever products the company produces, good or bad ,anything.They are incentivised with high commmission to dump them on their trusting clients. The company is clever. Make use of the agents. Give them enough incentives to peddle to their clients.This is a despicable act and the agents are abetting the company in cheating the consumers.
If you want to be a good honest and competent adviser you need to acquire the skills and knowledge of financial planning and practise like the doctors who do not peddle the medicine as soon a patient walks into the clinic.The premise is you don't know the problem until you examine and uncover the problem before fixing it with an appropriate product.But the despicable agents knew the product even before the check up. I am sure you don't want to short change your clients, right?
Get a correct mentor to guide you. Get the necessary tertiary qualifications in financial planning like CFP. Don't be motivated by commission and be greedy because if you don't guard yourself against them soon you become like of them.
All the best.
The Watchman
The only way to put client's interest first is to do fee-based planning. You can't survive just by selling term.
ReplyDeleteThere are increasingly more complicated financial matters that clients need to be advised on. For example CPF rules have become so complex and yet they affect everybody. You don't earn any commission for advising on CPF rules but yet your clients need your help. Therefore, the only way is fee-based.
There are extremely few firms that support fee-based planning and definitely these are not banks and tied-agencies. All fee-based planners in Singapore know each other at least by face. You can count by your fingers how many fee-based planners there are in Singapore. Therefore, it is easy to choose which firm to join because the list to select is so few.
Dear Watchman,
ReplyDeleteYou said that whole-life products are not good products. While I totally agree with you, that from investment point of view, the returns are very low, and from insurance point of view, the returns are also abysmal, there is actually one advantage of whole life product:
After paying that high premium for example $30,000 over a period of 10 years only, there is an assured payback of typically, $80,000 right up to death even if you live to 120 years - and, no need to pay any more premium for the rest of your life,once the 30K premium is paid. I personally would prefer a fixed sum bequest to my caregiver to pay for coffin, funeral, and last medical expenses, all of which come from the fixed sum of 80K, rather than from shares which some benefeciaries may have trouble understanding what to do with it. I think it is less hassle for a beneficiary to acquire the cash if it is a straightforward bequest from the insurance claim... compared to, if the beneficiary received the shares, than he has to prove he is the legal owner of the shares, then only he can go to the stockmarket to sell it, it involve more bureaucracy, do remember some beneficiaries are simple housewives don't play shares, dont understand too many procedures due to lack of education.
As for Term policies, though cheap, usually stop after certain age, or become so proressively expensive that when you are very old you probably don't want to bother any more with thinking to extend it. The older you are the less you should be given a decision-list as you don't want to be reminded of Death. Therefore if one lives to 100 or so, it might seem a reasnoble deal if during the prime of his life, he had already set aside fixed 30K booked to the insurance companies. So between 50 to 120 years old he knows for sure that without paying any more, he has $80,000 to "reimburse" his caregiver for any medical expenses which might have to be incurred in the years leading to his death. The caregiver will not be stingy to pay money for meidcal fees first, if required, since 80,000 is guaranteed cash from the insurance company.
So i think whole life policies are not that bad, but i agree with you that Term policy is still a must-have for everybody because it is good value for money product.
Please do not be caught up by the so called mdrt or cot awards your managers or company will ask you to hit. These are dubious awards that are commission based. These awards are obsolete and suitable for salesmen only.In US they are despicable marks that consumers are asked to beware for they tell the bearer of these marks are thieves in disguise.
ReplyDeleteBe a financial planner and be fee based and this is comensurate with your advice and work you provide to your clients , not commission.
@ 1:08 pm
ReplyDeleteYou are wrong. This is one of those half truth.
I have an insurance policy that gives 100k benefits payable for 18 years. I would have paid $32400 premium in total.
If I were to buy NTUC LUV deluxe term plan with critical illness, I would have paid $22830 in total for coverage till 70.
So, if I died anytime before 70, I would have saved more than $10k.
If I simply put the difference between the two monthly premiums (150-20=130) in my CPF account to earn 4% interest. In year 19, my CPF would have extra $41k. With no further CPF contribution from premium, at age 70, my CPF would grow further from $41k to $133k.
The above is just a simple computation. I cap at 70 as no premium was stated beyond 70.
Now, you tell me which is the better deal. I would choose $133k over $80k anytime. So, I pay less (-10k) and earn more, even when LUV requires payment till 70.
The above is a simple illustration. Do your own sums. Consumer need to open eyes BIG BIG.
regards
@ 1:08 pm
ReplyDeleteAlso, if I were to die at 69, my family would get $100k in insurance payout plus CPF with extra $133k. I think my children and grandchildren would be happier with a bigger inheritance. I would go with less worries.
@Mr Tan
ReplyDeletePlease try to include such an example in your book to present a full picture of term vs whole life insurance.
I am 38, I am glad to learn from you and dr Money. Swtiching to low cost term, the extra hundreds of dollars I saved a month have a great positive impact to my retirement planning and quality of life.
regards
I refer to anon 3.15 post reply my post of 1.08
ReplyDeleteMaybe the market has changed and the product i mentione is no more typical. It is true, there IS a product which i bought many years ago, it was under ICS now Aviva. I paid about $28,000 over a period of 10 years, the Aviva will guarantee me payback $84,000 on death even if i die at 120 years old. Don't you think it is worth it?
now of course i agree with you, anon3.15pm, that your products which you paid "32,400 and the coverage of 100K stop after 18 years" or the other one, if you paid "22840 and the coverage stop when you are 70" then these two are horrible products!!!! waste money!
I think if anyone paid xx,0000 and get a complete life coverage till any age, i feel it is quite ok. (please see my post of 1.08 pm)Maybe this product dont exist in the market any more?
For goodness sake , don't beleive the insurers and the agents about wholelife products.
ReplyDeleteNobody except 0.5% of policyholders will ever keep their policy beyond 60 years old. The insurers put up a lot road blocks along the way to make it difficult for you.Your policy either dies of lapses, termination, surrender because of reccession, loss of job etc etc and last one last roadblock is the insurer will entice you with 5% more for your cashvalue if you convert to annuity. So you see,the insurer doesn't want you to keep for too long and make a claim. At the MAS par product graveyard site you will know what I mean. I agree with what the insurers are doing to stop policyholders' stupidity to keep for whole life it means they, the policyholders are foregoing the cashvalue because beyond the age 60 the cashvalue is declining and declining and the insurers also. feel 'pai say"
I guarantee you will stop at age 60 or maybe 65 when you see your money fading and vanishing before your eyes. So please , open your eyes big big before you believe the greedy insurance agents to buy whole life products.
Buy term and cover your self till 60 or 65 and then throw it away into the singapore river or kallang river and invest the rest for your old age for a wonderful golden year retirement instead of working at McDonald kitchens as cleaners . Your agents wont' be there fro you.
Do you know insurance also pay for suicide?
ReplyDeleteIf life in Singapore becomes unbearable and there is no way out and you are already living beyond your retirement years and running short of cash and nothing to really live for and you are sick, can consider terminating your own life before your term plan expires. That way you can fully optimize the term plan.
Dear MR Tan
ReplyDeleteI think you blog is getting out of control. I think you should make some comments on the last mail of 9.33. I don;t believe insurance covers suicide. In fact it doesn't even cover terrorist related death. If you check in to Mumbai hotel and then got killed in terrorist attack.. my insurance policy expressly says terrorist related and war risks are excluded. Most definitely suicide is excluded.
If i am correct, then the last post of 9.33 is quite irresponsible and it is your duty to remove it. You should remove my message together with it. Your blog should be a source of information not obvious inaccuracies. You are getting so much mail i can imagine you are losing the quality.
REX
Insurance companies issue policies with suicide clasues. Some 1 year some 2 year.
ReplyDeleteREX is obsolete. Suicide after 1 year the policy pays. No wonder you are questioning many of the comments.
ReplyDeleteI believe whilst policies do not purposely cover suicides, the death exclusion from suicide is only for 1 year for most or many policies.
ReplyDelete@6:18
ReplyDeleteI don't think you misread post.
You paid $28K for $80k and I paid $32k for $100k death coverage. Both of us enjoy the death coverage till a theoretical eternity, till we grow old at 120, 130, 140 years old.
I am saying that investing the savings from buying term into low risk CPF OA will give more than the $100k death benefits. At 70, stopping the term, I still have $133k to replace the $100k death benefits. If I don't withdraw, I am still earning interest.
regards
REX clarifies as follows
ReplyDeleteSorry i had confused the issue.. i checked the documents..you are right. i mixed up "death benefit" and "TPD benefit". "Dandy" 10.49 pm is correct. Suicide is covered usually only after the first year. I had mixed it up with TPD coverage.
That is to say, Total and Permanent Disability due to violent activity, war, and ACTS OF TERRORISM are NOT covered. This is the case at least for UOBLife and Manulife, i dont know about others. (i remember i argued with the insurance agent before, why so. IF i lost a limb due to terrorist bomb, and no longer can earn a living, i am not covered, The insurance agent was not able to explain why. It is strange that if i lost my life due to the bomb, then only i am covered. I cannot see the logic.
As suicide would fall into category of violent death, i guess, if a suicide is unsuccessful and you end up a vegetable, god bless you, insurance company wouldn;t pay a cent since it is disabilty arising from a violent activity.
The moral of the story seems to be, if you gotta kill yourself make sure you really die!
REX
If you take up policy, you'd have faced questions on the form like, where have you been to over the past 6 months, where do you intend to travel to over the next 6 months, are you now engaged in or do you intend to participate in sports or activities that are considered high risk etc.
ReplyDeleteDepending on your answers to these underwriting questions, there may be some exclusion clauses inserted or some additional premium loadings (some temporary and expire automatically after a period of time, some permanent until circumstances change and you report to the insurer).
The question, do you intend to commit suicide is never asked. The contestability period of 1 year is usually standard inclusion.
As for critical illness policy, many people didn't know and many agents didn't explain. There's usually a 3-month waiting period before policy can become claimable. That is, even if you answered perfect health to all the medical underwriting questions, you can't claim if you're diagnosed with a critical illness within that period.
Hi Mr Tan, I got a Hospital Income Insurance that cost $17 per month.
ReplyDeleteWhen I waned to cancel, 1 of the reason he declined due to the reason was "no-basis" (Basically I later feel such is no need given that I am under 20)
He always told me that he earns only a mere $5 per month from me (Probably commission) and "that is too little". He always giving his clients a image of a good agent (Which earns himself as top 50 agents in Double A Insurance Company) who provide good service due to his value to customers (He said he wouldn't want just to lose me as a client and find 3 more people to recoup the loss)
My query is, is the commission too much?
It appears that a term and Medishield is sufficient for most people from this blog where term should only get when one starts to married (Probably got stable income then)