Hi Mr Tan,
Thanks you so much for the detailed analysis. I think a lot of people who bought insurance policy did not look deep into the details and think it through. I think your analysis is very detailed, step by step and easy to understand. I hope more readers can benefit from your experience and make informed decisions on their future financial planning.
The insurance agents NEVER go through them thoroughly but quickly skim through. The whole idea is not to let the buyers know the downsides/negative benefits . The agents will focus on the positive benefits and dwell on them until the buyer is sold.
ReplyDeleteThis is selling and all insurance agents are salesmen. Selling entails pushing a product; convince on the positive aspects; downplay the negatives; confuse the clients; con the clients; cheat the clients if all fail.
Never deal with a salesman or woman.
They don't add value but burden and false peace of mind.Many discovered too late.
Policyholders who have doubt about the products or about the agents should bring it to the FISCA's attention for analysis..and review to see if the agents cheated on you.
Mr Tan
ReplyDeleteThanks for the analysis. Unfortunately, it came too late to me. I am stuck with multiple life policies...
sadman
REX comments as follows,
ReplyDeleteAdditionally, based on the data, i have calculated the equivalent interest p.a. yields for 9 years and a principal sum of 100k: Guaranteed yield interest 0.3 %pa and Non guaranteed yield interest 1.0% pa over 9 years.
(check: just take 1.003 exp. 9 you get 103K, and 1.01 exp. 9 you get the 106K matching the table values of 97+6 and 97+9)
In the past, single premium insurance give equivalent yields about 2 to 3 % if you put for five years. Now it looks like the data show you get 1% pa over 9 years!!!
Maybe market is bad.
But should not be as bad as 1% over 9 years @@@!!!
One could put the 100K in FD and achieve the same 1% pa interest, and then also buy term insurance around $600 pa to insure for $320K to match the data here. (same conclusion as TKL) And you get your liquidity bec the FD is more flexible.
I hope 1% pa over 9 years is not the market norm. IF this is the case, Single premium insurance is no longer attractive. Might as well put the 100K in Hong Leong Finance, now they offer 1% pa for 1 year FD. Or the ETF recommendation of TKL.
Conclusion: This single premium product is really stupid. In my opinion SEP can be considered if the equivalent yield over 5 years is around twice to three times the FD rates, assuming one doesn't particularly enjoy buying shares.
REX
Should encourage existing policyholders to have their policies checked and also to review if they have been sold wrongly by their agents.
ReplyDeleteIn one of your former agents' blog this agent claims that the single premium endwoment Growth bought 10 years ago has outperformed the projection. The actual return is given as 4.5%+ .I know it is a lie and misrepresentation and there is no details about the product.
I bring this up to highlight what unethical agents are doing to misrepresent their products.It also misrepresents that in the future the same product will deliver this kind of return.This is not true. This is misleading and there is willful intention to mislead.You must expose them so that consumers will not be lulled into it.People should know that that this product will not deliver this rate of return and you are no longer managing the company.The good return was due to your pro consumers company culture and fair dealing..
Kin Lian,
ReplyDeleteWhat about the yield of the policy on surrender at the stated point of time?
I would recommend a regular premium 25-level term assurance to age 60 for the same sum assured and invest the rest of the single premium.
Avoid par or ILP policy.
Dear Mr Tan,
ReplyDeleteMy dad have a Living Policy with I****E.
We are claiming for TPD, due to stroke that my father is currently suffering.
My dad took up the policy in Dec 1996. He was diagnosed with High Blood (as confirmed by the insurance comp) a month later (i.e. Jan 1997).
As such, my ques is, can I****E deny payment, for whatever reasons??
October 16, 2009 2:26 PM,
ReplyDeletethat ntuc agent by the name of TP misrepresented the actual return as 'better than projection'.
I believe this product had NEVER outperformed the projected yield and the best was near it although rarely.
The current GROWTH's projected return is 4.1% and if deduced on historical returns Growth will not return as projected but lower, below 4%.
The past returns were good but this person TP cannot imply that it will 'outperform the projection. This is misrepresentation. It will under perform as it had always .
The public must be aware that the blog misrepresents the truth.
I have seen this type of product issued by at least two large life insurance companies.
ReplyDeleteI feel that it is quite unfair for the insurance company to penalise the policyholder by 25% of the single premium on early termination and to take almost 10 years to reach the break-even point.
The actual cost of the term insurance cover is quite low. There is no need for this heavy penalty.
I hope that the MAS will consider the fairness of this product. After all, they did ask the top management and board to be responsible for "fair dealing outcomes" for their policyholders.
I cannot stretch my imagination to believe that such terms can be considered to be fair. It may be legal, i.e. written in the contract under "caveat emptor", but it is not fair to impose such terms on unwary customers.
While this analysis apparently comes too late for many, one can only hope that this information and other sites like it, allow information about life policies to become more accessible to many people. Nice work!
ReplyDeleteRegards,
Peter Topperwien,