Tan Kin Lian's Blog: Heavy penalty on single premium policy

Friday, October 16, 2009

Heavy penalty on single premium policy

I have seen the single premium whole life product issued by at least two large life insurance companies.

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 life insurance protection 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.

Tan Kin Lian

4 comments:

Anonymous said...: MAS's fair dealing guideline is wayang intended to pull the wool over the consumers' eyes. Consumers must still open their eyes big big when making decision on products they hardly know under the pressure of caveat emptor.
In the recent months many single premium endowments were luanched and NONE of them beats inflation and yet they were sold. Yes, the correct word is 'sold'. Consumers were sold. I wonder what was used to sell these losing products.Relationship?!!! Yes the clients are trusting and that is why they bought out of 'friendship'. Do the agents care whether their clients' money is working hard? Well, so long the agents can convince their trusting clients the products can beat the bank rates it is alright even it is losing in real term.
This is how the salesmen and women masqueraded as financial consultants hoodwinked their clients.These salesmen and women insurance agents have given the bonafide consultants a bad name.
MAS must stop them from using misleading titles to hoodwink the buying public.It is misrepresenting and therefore it is a crime.; October 16, 2009 10:11 PM
Vincent Sear said...: Clients must really open their "eyes big big" and also "eyes clesr clear". However, if the agents are clear upfront upon this, then it's a fair deal. To agree to expensive or punitive charges first, then complain later, the client has no case legally or even morally. Claiming not understanding is a very weak defence, for there's the millennia old maxim, don't part with your money unless you understand what for. Keep on wasting your money away and then keep asking the government to recover it for you? That's not how this world works.; October 16, 2009 10:24 PM
Anonymous said...: Yes, there are problems and challenges to solve.

"Ïnsanity is doing the same thing over and over again, hoping for a different results."

Asking MAS to do this or that is just plain insanity. Last year has shown that no amount of petitions, feedback or writeup will change their attitude and their responsibilities to the public. They need authorization to move while forgeting their responsibility lies with the public. Their ears are tunned to the top and the businesses. As for you and me, read more TKL blog and open your eyes. If more misled or missell, well, MAS cannot micromanage and with their powerful investigation report, the FIs will be severely punish by tarnishing their names in the same mighty report. It is a win-win situation as it makes the FIs happy and their salary intact.; October 17, 2009 10:39 AM
Anonymous said...: Vincent,
i do agree that consumers should not part their money on products they don't understand BUT the distributors and manufacturers are smarter and know this too. In US and other matured markets the insurers and manufacturers know too. How do they get around this?
They use the insurance agents or salesmen who have large client base and on the premise that the agents and cleints have good relationship they use them by incentivising them with huge commission.
This works all the time . Pandering to the greed of the salesmen is the only strategy that it is time tested.Because of huge commission at stake , no need to teach them , leave it to the agents to come up with the convincing and winning sales strategy.
The agents will muster up all 'skills' and do and say anything to make the sale.Isn't this is what the insurance have been doing? The commission must be big enough to 'embolden' them to take the riskiest path to the sale.Take now and talk later after all the clients they know won't find fault with them. They trust the agents. That is right , the trusting customers trust waht the agents 'recommend'.
Trust is the behind all sales and the distributors, the insurance companies exploit the relationship their agents have with their clients and the agents have no qualms betraying their cleints for money.Win-win for the agents and company but the suckers always the policyholders.
In order for 'open your eyes big big' to work fairly financial products must be sold on the shelves like in the supermarket. NO HUMANS to distort, twist, cajole, to influence and it is at arm's length then it is truly caveat emptor.No 'promotion , in other words, only information and full disclosure. Put a human in between all hell will break loose.It is finished. Trust and ethics and conscience will take the back seat.Insurance agents are super duper salesmen trained to lie, to confuse and con.That is why land banking and other so called alternative investment products prefer to use the insurance agents becuase the agents have a ready clientel base to tap.
MAS must act.

The watchman; October 17, 2009 12:25 PM