A consumer asked my advice about a disability insurance product offered by an independent financial adviser. The adviser recommended one product and did not give the benefit illustration.
I asked the consumer to get the following explanation from the adviser:
a) What is the coverage under the product
b) What is the premium rate charged by several insurers offering the same product?
c) Which product does the adviser recommend, and why?
d) How much commission does the adviser get from selling the product?
e) Provide the benefit illustration
The adviser owes a duty to give proper advice to the consumer. The consumer should not expect someone else to explain the product, when it is the adviser that is earning the commission from selling the product.
If the adviser is not able to give clear explanation about the product, the consumer should not buy the product.
If the consumer wants confirmation, the consumer can approach FISCA (www.fisca.sg) to get the assistance of a knowledgeable volunteer to go through the benefit illustration and verify the points against the explanation given by the adviser to the consumer. An administration fee of $50 is payable for this assistance (which does not amount to financial advice).
Tan Kin Lian
I advise consumers to seek advice from FISCA first before committing to an insurance or investment product.
ReplyDeleteThe product may not be the right or suitable or it may not be the best of its group or it may not be cost efficient.
This is necessary because insurance agents have no other products but wholelife or endowment products to sell to you. They seem to have only 2 products to sell and expect them to address your needs adequately and at low cost.They don't conduct due diligence on the products of their company.
I don't blame them after all they are salesmen or product pushers. These salesmen are not advisers or financial planners and therefore they can't help you with your goals.
I am sure many of you are under insured.Please check against this rule of thumb. An average family with 2 young children requires at least $600K for death benefit and $200K for critical illness for the bread winner at any moment.
FISCA is your insurance against mis-insurance by miss-guided agents.
* From the posting, we are not clear as of which stage of the Financial Planning Process the client and planner are at.
ReplyDelete* A Financial Planner do not use the Benefit Illustration until the proposal stage.
* The IFA might just be at a stage whereby the consumer was informed about the availability of a Disability Income Plan and the recommended amount he/she needs.
* I hope readers will not assume that that IFA is trying to pull a fast one and sell without disclosure.
** QTE **
ReplyDeleteb) What is the premium rate charged by several insurers offering the same product?
** UNQTE **
Though it is prudent that the consumer ensure that he/she get good value for the plan, it is not very realistic for the adviser to provide quotation for all life insurers. It is not easy to compare based on pricing alone as cheapest may not necessarily means the best.