The poly student receives a monthly allowance of $600 from his father. Half of this allowance goes to pay the premium. He is finding it to be a burden, but he does not wish to cancel the policies and lose the premiums that were paid.
It is bad advice for his friend to sell him these two policies when he has not yet started to work. His friend was greedy to earn his commission and meet his sales target, and left a burden to the poly student.
Why do he have to buy from his friend? Did his friend force him to buy? He can always say no.
ReplyDeleteEverytime someone buys something, regrets and it is the seller's fault... But buyer can always say NO.
Save first and spend later or Spend first and save later?
ReplyDeleteI also face this before, A friend of my(agent)bought and pay 3 policies for me just because to join in the Million Dollar Club. After 3 months he stop paying and his company called me up and ask if i still want to continue,i reply just cancel. So my advice to peoples are when u deal with (agents)u have to be extra caution!
ReplyDeleteI think that sales quota is the biggest evil, bigger than even the lure of high commission. Some agents may be fine earning a lower a income, but there's a sales quota imposed on them such that if they don't meet it monthly, they stand to lose all income, even income rightfully earned but pending to be receivable.
ReplyDeleteFor example, an agent has a quota of $2k new commission generated per month. After a few years, there'll be 2nd-, 3rd- 4th- etc. year of recurring commission. But to keep collecting that (which has been rightfully earned), the agent must maintain $2k new commission generating sales every month. Otherwise, can be dismissed for failing to meet quota and lose all recurring commission forfeited.
This commission "hostage/ransom" practice should be outlawed.
It is very typical situation not just for this poly student even working adults .
ReplyDeleteThe premium is a big burden and worse they are UNDER INSURED. High probability they lapse within the first 2 years due to inability to pay premium or within 7 years due to policy loan. Either way the policyholders suffer big losses.
Do the agents care????
Well, they are only interested in the high commission. If the policyholders lapse the agents are happy becuase this creates opportunity to sell another wholelife policy.
Anyway, consumers are forgetfool and they will soon become a victim again.
I went to pay my insurance premiums recently and I was surprised that the counterstaff was pushing some new policies and got an agent to speak to me after that. But what was really surprising was for a similar protection for my child, the premium is now several times higher just because it included a paltry unguaranteed return. In the old policy, I can get back the premiums paid but for the new policy, it include a promised higher return which surely does not justify that the premium be several times that of the old policy. Really surprised, no wonder our poly student has to pay so much for his policy. If only he knew how much it would cost during Mr Tan KL time then he surely would not buy it now.
ReplyDeleteI think the poly student bought it more "as a favour" to his friend than anything else.
ReplyDeleteMany people, especially younger ones, have a soft spot and feel obliged to do this, especially when approached by friends or relatives who are agents. Just like when approached for donations to "charities".
Sometimes where money is concerned, we need to let the "head" rather than the "heart" rule with so many scams nowadays.
Hope your Association can give free talk to each Polytechnic.
ReplyDeleteThis is better than reading an investment book.
I just learnt a similar talk organised by RC costs $60 !
That is what friends are for !!!
ReplyDeleteTo Anon 1.11am,
ReplyDeletethis is how friends break up too.
The Insurance Industry is targeting young people bec they are easy targets.
Wonder whether will MAS step in and further regulate the Industry?
I think they will not. Seeing how the Insurance Industry provides jobs.
October 25, 2009 11:36 PM,
ReplyDeleteI also maintain that mdrt , cot or tot agents are nothing more than product pushers and cheats. People who oblige agents to qualify for these dubious awards are the losers.
Mdrt or cot or tot agents are super dupers sales 'champions' duping a lot of customers to qaulify. Are these awards great? I let you judge.
Insurance companies are promoting them. They encourage their agents to rob their clients so that their agents can earn high commission to qualify for these dubious awards.
Remember, insurance agents with these titles or awards, it serves you well to avoid them otherwise you will be sold products that are useless to you but give the agents high commission. The tiltles show they are unqualified to help you but to rob you only.
Young people are often sold the wrong products. The worse victims are children's parents. The agents exploited the emotion of the parents to sell to them.
ReplyDeleteChildren and young people DON"T need this kind of insurance they are often sold, like education, endowment or even critical illness which is highly improbable although not impossible to get.
Medical if CPF medisave is used can be jsutifiable and a must have.
The first person to have and have adeqautely is the parent, the bread winner, . If he has not enough whatever insurance bought for others is WRONG. But insurance agents pushing products without planning but just to meet or to qualify for incentives or mdrt or to earn high commission is wrong.
MAS must control and regulate the activities of agents to ensure they dispense high standard of advice to jsutify the products.
It is no wonder that we get bad and negative views always about agents. They are the people whom we expect to get advice for personal finance instead we are dumped products that don't help us in protection needs and saving.
Commission must be replaced too for it is the evil behind every sale because that decides the product or so called 'solution' and not the needs of the clients.
MAS must make it mandatory that all agents must be accountable for waht they recommend to meet the requirements of the laws, failing which the agents must be punished. In order for this to happen , MAS must enforce them otherwise the laws are for show.
You pay so much and yet your are under insured? Does it make sense?
ReplyDeleteYou pay so much and yet your return is so miserable. It is crazy.
And whoelife and endowment, especially those crappy cheat people anticipated endowment called cashbacks make you poor and possibly die without a coffin.
Only insurance agents will benefit from these products but for the consumers they are big burden.
well..there r aslo real agents or planners out there that really care about the real protections and savings one needs.. typical singaporean only will complain about how much they are paying for their insurances..do u ever c people complaining about how much or high they r claiming? singaporeans...sigh
ReplyDeleteClaiming so much? How much? LIA in last report says that average claim was only $39K. Is it enough to bury the deceased policyholder let alone to provide for his dependents? Can the deceased complain? His family got short changed by the greedy agent who only went for the commission and not his financial welll being.
ReplyDeleteI am referring to greedy agents who sell for commission and sell only products with high commission disregard the needs of the clients.
Typical Singaporeans are usually short changed.
Everyone must know that wholelife and endowment product short change you in protection and saving.
If you want to save put in the bank, breakeven right away and not 15 years or 20 years, right?
if you want protection you can have ALL the FULL protection you need with term at very CHEAP premium.
Some people have a naive view about commissions, whole life and term insurance. Do you really think removing commissions and whole life products will lead to greater insurance coverage for the masses? I think quite the opposite.
ReplyDeleteA lot of Singaporeans do not care for insurance. They don't realize or accept that insurance has a cost, so when whole life products are sold to them based on the fact that they can get their money back after, say, twenty years, they are more willing to purchase it. When a term is introduced, they frown upon getting nothing back when the term is over.
Commission is a very controversial subject matter, but if you remove it, I am betting that the average claim will fall even below that miserable $39,000.
People who realize the importance of insurance will get themselves covered, with commissions in place or not. People who don't realize the importance of insurance have to be persuaded by something, and in this time and age we are in, that something is agents with commissions to earn. I'm not saying it's a perfect scenario, but it is what we have right now until something else manages to make Singaporeans more inclined towards insurance.
I tend to agree with Seth. Life insurance is sold, not bought, and selling entails cost of selling, i.e. the distribution cost, which is more than commission alone.
ReplyDeleteIf insurance for motor vehicles, designated commercial premises and industrial facilities, or workmen's compensation cease to be compulsory tonight, I won't be surprised if more than half of the general insurance business volume is wiped off by tomorrow afternoon.
Seth,
ReplyDeleteI disagree with you and completely.
Let me tell you , if tomorrow commission is removed and it will, most agents will leave , leaving only the competent ones with the right qualifications. This is expected and MAS will welcome it because it makes their task easier.Coming together with it , the change in the advisory process.Product pushing or advice will be outlawed.Possibly licensing qualification will be minimum tertiary level in financial planning.
Why you think that people will not buy insurance if there is no cash refund is because the agents are NOT competent and dishonest. Incompetent becuase many agents don't understand the mechanics of WL and endwoment and regular ILPs and they have been lying about these products.The agents only know that these products pay them high commission at the expense of their clients.This is conflict of interest.MAS had sounded many times.
Secondly agents push products upfront becuase of conflict of interest know that if they use the financial planning process, in all likelihood they will not be able to recommend WL or endwoment to justify the analysis.
Thirdly, MAS will want all advisers to be accountable for the recommendations and to comply with section 27, ie reasonable basis.
WL or endowment only suits the rich or the HNWI. Unfortunately or fortunately they don't need you.
There is a place for WL and endowment but these products are always sold to the wrong people who cannot afford them and cannot afford to buy enough to address their needs..These products short change consumers in term of protection and saving and they are the most INEFFICIENT PRODUCTS TODAY.
Why don't read the post above about the burden of having been made to buy WL products.
why cant we all buy term insurance with our CPF?
ReplyDeletemake it mandatory just like CPF Life.
To: Anonymous 10:58PM
ReplyDeleteYou can use your CPF to buy term insurance. It's called Dependant Protection Scheme or DPS. However, there's a limit, I think currently S$50k or thereabouts plus/minus.
Rex comments,
ReplyDeleteThe government has a very illogical idea of how it allows cpf money to be used.
It allows our cpf funds for investments of certain so called safe investments, but quite frequently these are not quite safe and one could lose money.
Yet when it comes to good products like term insurance, the maximum one can use is something like $200+ per year to cover for $50,000. I would very much like to use cpf money, like $800 per year to cover for $150,000+, but as above post mentioned there is a clip on the maximum.
Why doesn't the govt allow more usage of cpf for good products, yet allow it to be squandered away buying junk dubious stuffs?
It is very clear that term insurance is a good product, everyone ought to have cover of more than 50K. The sum cover is too small!!! CPF is our sweat money, why can't we use it to protect ourselves and loved ones more!!
REX
REX,
ReplyDeleteCPF allowed it long time ago and the whole market went wild and suddenly every member got all kinds of insurance until they could not breathe and then suddenly every member could not continue paying the premium with their CPF.It came and went swiftly.
Every insurance agent was rich becuase they closed big cases and they could becuase CPF money was seen as 'useless money, don't use it, it is locked and wasted". Members were convinced about this logic.This was the agents' convincing spiel.
Of course, the result was losses and losses until today. If not for the insurance agents' unrestrained enthusiasm to 'help' people insured maybe this CPF scheme will still be around. It was a case of over enthusiasm that the bubble burst.Or to borrow Alan Greenspan's 'irrational exuberance"
It was the biggest and unforgivable mistake CPF made and CPF never learned and made more mistake by allowing in 2001, the insurance agents to manage CPF members' money for investment.
What do insurance agents know about money management? Since that fateful day, today the CPF accounts are still reeling from losses. 83% of the members' accounts still show losses and only 17% have gains above 2.5%..
Is it a wonder why many have not enough to buy CPFLIFE?
REX, if you have researched what happened then to memebers' CPF money you too will be cursing and wishing the agents dead and sent to jail. It was free for all agents to raid CPF members' money.
Members were sold the maximum, not coverage, but the balance in their account assuming they could pay every year the same ammount of premium.If you had $20K balance every cent would be wiped out as a yearly premium. REX, where got conscience? Where got put the clients' interest first? It was daylight robbery.It was looting.
Why insurance agents are the most hated animals today I think you can understand.
Today, there is still no change. The agents are still salesmen out to make a sale. What do they know about planning? Many are still unqualified. They didn't bother to upgrade so that they could help their clients.But no, they are still interested only in the commission and their presentation strategy is HOW TO FOOL THE CLIENT INTO BUYING A PRODUCT WITH HIGH COMMISSION.
REX, check out the story and be the judge yourself.
Churning and twisting of investment were at their worst. They were so rampant before the regulator intervened and laid some ground rules to arrest the looting of CPF members' accounts.
ReplyDeleteChurning and twisting are still practised but less conspicuous becuase of the 3 month rule. Churning and twisting don't happen to investment they happen to traditional products. Replacement of policy is another disease. The most popular is agents con the CONNEDsumers into replacing their Wholelife critical policy with limited payment wholelife critical illness policy.Another variation is the buy one get one free popularly used ntuc agents. This is a subtle way of replacement.
You can see the insurance agents are very innovative also have 'lobangs' to sell an idea which ntuc agents call concept selling.
Very clever...the suckers are their poor policyholders.
A lot of the CPFIS endowment policies in the mid-90s were scams conspired by both agents and clients. It was to facilitate early cash withdrawal from CPF through commission. Both agents and clients were into this. I'm not excusing agents in such conduct. They should be terminated. However, don't assume all clients are angels. Many are devils willing and daring to take risks at high costs for cash now instead of cash in future.
ReplyDelete