When you were in charge of NTUC, did your products have a breakeven point of 5 years?
REPLY
If my memory was correct, most of the products have a break-even point of 5 to 8 years. They also provide a good yield to the customer, after 20 years, i.e. 5% or higher. So, most customers who bought the NTUC policies in the early days obtained a good deal. The high yield was possible due to low distribution cost, and a high rate of bonus distribution.
26 comments:
but not the current products...why?
they have to feed the greedy agents with high commission or else they don't want to sell. Why term cannot selll becuase of this although they are good for you.
So you see these agents care for you or for their own pocket?.
Sincerity ? Caring? my foot.!!!
Not only that they also want incentive trips and makan and party at posh places. With whose money? your money, lah..add to the products and the breakeven becomes even longer.You consumers are suckers to have believed your so called trusted agents.They dump these retro saving plans on you.
Everybody wants high salary, the ceo wants million dollar salary, the senior managers and so many of them also want 6 figure salary. I wonder who are the idiots who pay them.....must be some suckers who have been conned...beware of of salesmen and women with title like Finanical CONsultant. You will become their CONNED-sumers.
REX comments as follows,
I believe the products we are talking about is quite generic and can be found in other countries.
Could you share with us, what is the norm in, for example, Malaysia, Hongkong, USA, UK, any information would be helpful.....
i.e. what is the market practice regarding commissions and also r.o.i. for these policies over there..
thanks
REX
It is not good to point Mr. Tan this question. Even though he was Chief executive, He was sole owner for NTUC policies.. Anyhow he replied.
I think NTUC better start think abt lower distribution cost, even 10% cut could make big relief to us.
Didn't somebody important say "cheaper, better faster" was the way forward.
Cheaper premiums, better coverage and faster break-even point.
I like it...
Cheaper premium, better coverage and faster break-even..
But I heard the ntuc new slogan is something like this..
bigger commission, rising premium and higher bonus for agents
Mine is only 4.25% compounded return on my NTUC endowment life.
I happened to have worked with Tan Suee Chieh at Prudential and Tan Kin Lian when he was at NTUC Income. Two very different styles.
After T.S.C. took over NTUC Income from T.K.L., I immediately can recognise the change of corporate style, and even the new products, e.g. Revo and Vivo look so familiar to me like deja vu.
Who's the better is not for me to say. Prudential and NTUC Income clients past, present and future have to judge for themselves.
Whoever is better is the one who cares for the customers and the agents. This FT uses the greedy agents to carry out his agenda. His agenda is to beat Mr. Kin Lian and to be #1, at all cost. And the cost is paid the consumers
Mr. Tan Kin Lian is more caring and not cunning. Mr. Tan kin Lian cares for the consumers and also the agents to bring about win-win and not exploiting the consumers and the greed of the agents to achieve #1.
Mr. Tan Kin LIan thinks of the long term good of the agents and the consumers.
But alas . such good people are becoming dinosuars and MAS has to step in to stop the exploitation and stop the greed and dishonesty from ruling the indsutry.
In 2001, I bought a Living Refund policy from Income. This policy comes with 50K death coverage plus full refund of premium at the end of policy year. Such kind of attractive policies are no longer offered by Income. I guess the company has dropped all the non-profitable policies and instead introduced less favaourable policies to customers. Sigh...
In my opinion, it is not fair to compare the past returns to the returns looking forward. The environment had changed a lot over the decades. The bonds yields are low compared to the past. The interest rate environment was so much higher in the past. The equity market had became more volatile than before.
Even if Mr Tan is still in helm in NTUC Income today, he may not be able to achieve the type of returns that he achieved in the past.
So what sort of return is considered fair value for policy holders? 3%, 4% or 5%?
I refer to the comment:
"So what sort of return is considered fair value for policy holders? 3%, 4% or 5%?"
I respectfully think this is the key question.
I'm no scholar, but can only suggest that the rate of return of an insurance policy should be compared with a Singapore Government Bond.
The idea being that the Singapore Government Bond represents a 'risk-free" rate of return. The rate of return is "guaranteed".
And the insurance policy's rate of return carries some degree of risk (i.e. not guaranteed).
So the insurance policy's rate of return will have to be higher than the Singapore Government's Rate of return over the period insured.
Higher because the insurance rate of return is not guaranteed.
But again ... how much higher? I really do not know.
REX comments again
referring to my earlier post, can someone please shed some light, what is the norm in other countries? what kind of commissions of agents and roi on the investments are expected? It is quite futile to continuously gripe about which insurance compnay is bad, which CEO is good, who is better, etc. since as adrian said situational changes also plays a part in shaping policies.
I want to know, for example, how much commission hongkong or malyasia or usa agents get, for similar products. Then we have a better perspective how greedy or not-greedy our agents are, and how our systems fare in relation to world "standards"? Then there is some basis for reform. We are just too inward looking, that wouldn't result in much progress.
REX
I got 2 policies since 1990 and none has broken even yet.
Both from Income.
Adrain Kiat,
Mr. Tan can... by reducing the cost of operation...cost has not stopped going up...the Ceo wants million dollar salary, the senior managers want 6 figure salary, the insurance agents only want higher commission but more incentive trips like going to Peking in 6 star hotel and more incentives to make them to sell. Cut all these craps and the cost will drop and the return will go up.
It is common sense that cost and return have inverse relationship.
IF YOU CAN'T KEEP THEM DOWN , STOP SELLING THESE DUBIOUS PRODUCTS TO CON THE POOR MAN IN THE STREET.
The insurance agents collude with the company to cheat the consumers by claiming that these products are saving plan. The truth is they are RETRO SAVING PLANS, ie losing money plans.
The most despicable thing they do is they cheat the poor people to feed the greedy agents and the ceo and the management with high salary and commission.
The only decent return and acceptable return is at least 4% after 20 years (bond yield).
If the company cannot offer such return they must NOT roll out poor products and use the greedy agents to cheat THEIR OWN FREINDS AND OWN POLICYHOLDERS WHO TRUST THEM.
The objectives of an insurance product is to offer the highest protection and highest return at the lowest cost(efficient frontier product) so that consumers can be adequately insured AND WEALTH CAN BE ACCUMULATED. Currently ALL products cannot acheive these 2 objectives. But why offer them to the market? Isn't it to cheat the consumers?
The existence of the financial market is to help the consumers, the man in the street to meet their financial needs and goals and NOT TO FILL UP THE POCKETS OF INSURANCE AGENTS OR TO CREATE HIGH SALARY POSITIONS FOR CEOS TO LIVE OFF THE POOR MEN HARD EARNED MONEY.
or TO LET THE INSURANCE AGENTS TO EARN HIGH COMMISSION TO QUALIFY FOR MDRT, COT or TOT or to earn the accolade of SUPER DUPER SALES CHAMPION by duping their own freinds and trusting policyholders.
MAS, where are you? This is worse than the structured products if you consider the losses by policyholders due to inability to pay premium , early termination, lapses , policy loans etc etc.
because in the last 2 years the new management cut the bonus.
To: Rex
I understand that Malaysia and HK insurance commission range is about on part with commercial standard in Singapore (using average AIA/GE/Pru as standard). It should be about 50 to 60% for a whole life policy. In the US, it's higher and should be about 70 to 80%. I'm referring to first year commission for agent only.
The total distribution cost is of course higher, including subsequent annual recurring commission and other expenses.
I also understand that traditional whole life and endowment types of policies have lost most of their market shares in the US.Term insurance and mutual fund (unit trust) are the norms there.
However, remember that even it's only term insurance, if the assistance or services of an agent or adviser is required, commission or fee is still payable. However, most US insurance companies and brokerages nowadays offer online quote and sales services with are usually no-load or low-load.
Correction to earlier posting: should be "on par" not "on part".
To add, not everybody can buy term insurance DIY online to save on commission or fee. For insurance is different from investment where all that's required is money.
If the potential client is unable to answer the underwriting questions, can't understand the questions or answers precipitating necessity of a medical checkup, then s/he has to go through an agent or adviser, or else declined.
As people go on an insurance-bashing binge, don't forget that not all people are angels. Some may be tempted to just click "no" to all on the automated questionnaire. Such application would probably go through and policy issued without hassle. However, there'd be problem of non-disclosure in case of claim.
Come 2011 UK will remove commission from all products.
In US today, there are direct channels which don't charge commission and it is popular and soon all the insurance companies and fund houses will go the same way.
Australia is still mixed but will follow UK.
Singapore? MAS has sounded that
the industry should remove commission but still short of making it compulsory. It has long been recognised by MAS that commission has been the cause of mis-selling and unethical selling and the removal of it will be a courageous move to level the playing field.
Removal of commission and along with other changes like making need based selling compulsory and making agents accountable for advice should bode well for the industry to be professionalized.
Licensing exams will be raised as the current tikam tikam exams are too simple even my pet dog can pass. In Australia and soon US and UK it is minimum tertiary level in financial planning.
The whole idea is to keep out ah beng and ah lians, retrenched receptionists , secretaries, bus drivers, factory workers , mrt drivers, the con artists, the liars, the get rich quick people and some prostitutes etc to join the insurance to con consumers. Currently most of the top agents are from these cohorts. Do their clients benefit from their so called noble selling? The ink and pen crap? Are their clients adeqautely insured can retire comfortably? Or they have a cupboard full of crap insurance policies.
MAS must address all these issues instead of giving speeches at luncheon meeting and talk talk only and no actions.
The Watchman
5% compounded yield cheong ahhhh!!! :)
Certainly the style of the two CEOs of NTUC Income are different. One cares for the policyholders and wants to give him the best returns. The other is more cunning and treats agents and the mass media better as he sees that it is in his interest to do so. How he did it is through using the returns of the policyholders to feed the agents and mass media through higher commissions, higher perks and incentives to agents and a constant stream of revenue to the mass media through full page full colour advertisements singing praises to NTUC Income. This way, he hopes the mass media will favour him and paint a positive profile of him. Complaints to the press will also be muted as there is a conflict of interest. Yes, the situation has indeed change. The end result is that the hand that is feeding him is shortchanged, and there is nothing policyholders can do about it. Conmen get away with their conjob by promising the future. The problem is our lives are limited while the future is not.
The problem is with the greedy agents who are willing to be used by a scheming manamgement.The agents are willing parties to any scheme or prdoucts . The mamangement knows that if they treat the agents well and motivate them with high commission the agents will eagerly obey the bidding of the managemnt and will con their own relatives, friends and their trusting policyholders. The agents will exploit their relationship with their policyholders and introducing toxic will be not be easily discovered.This is a commonly used ruse by companies which want to launch new products.
So you have two hands that clap perfectly, both will benefit. One will be #1, an obssession, and the other, the agents can buy condos.
The hand that fed these greedy agents is forgotten becuase there is a new hand which is more willing to feed their gluttony.
In this place everybody is using and doing anything to fleece the consumers.
I cannot trust NTUC Income now. I think Great Eastern is safer and has a better reputation.
The amt of $$$ the new CEO of NTUC Inc is spending is scary.
1) Large salary which cannot be disclosed to policy holders (shareholders)
2) Expensive overseas (e.g. Australia) retreats for hundreds of staff members.
3) Parties and meetings at posh locations
4) Expensive renovations and decor
5) Millions of dollars spent on marketing. And what do we see? A double-helix DNA poster at the bus tops. Huh??
Am I the only one thinking something is wrong? The rate the spending is going, I doubt break-even is possible in 10 years.
See http://kiasee123.blogspot.com/ for evidence of my claims.
The greedy agents don't mind so long they get to go for free. After all they are only salesmen who are in the eyes of the beholders the Super Dupers sales Champions of the company
who duped their own friends, relatives and trusting policyholders.
The money is these people's money and the more places they go and more money they spend in posh places the longer the breakeven point. Who cares? The aim is to beat MR. Tan Kin Lian at the game to show how smart and clever he is. He IS very clever. Anyone can see.
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