Quite often, the policies are specific to the company that has offered it. I am not aware about the features of the policies, or the charges that are being taken away from the premiums that have to be paid. I know that, in most cases, the charges are excessive and the insurance policy represents a bad investment for the consumer, but I am not able to give a conclusive view, without the underlying facts.
My reply to the consumer is, "get the Benefit Illustration and send it to me". With the Benefit Illustration, I can point out the key points in the policy and how consumers are being overcharged, or "ripped off".
A few consumers who sent their Benefit Illustrations to me in the past were shocked that a large part of the potential investment gain was taken away from them, and this was not explained by the financial adviser who sold the policy to them. When they learn about it, it was already too late.
If you want my views, send the Benefit Illustration to me.
Tan Kin Lian
4 comments:
Now, get this fact. Insurance agents are salesmen and women. They earn their living by selling you the hgihest paying commission products .Your financial well being is NOT their concern.
Many are deluded by conman agents that the more policies you have the better is for you. Is this true? better for who?
In the first place your needs should have been addressed fully at a point of time when you met the agents and not again and again.
Your circumstances didn't change so many times,right? A few times maybe but not 15-20 times, right?
What is review? When a review is required? Is it every year?
A review is required when there is a change in circumstances. The truth agents review when they know you get a bonus especially when they want to sell you a new product. This is not a review.The review is an excuse. They already knew you have short fall which they created the last they sold you a whoelife product. So, don't you think this is dishonesty? a trick? a con job?
In support of 12.35pm post, I propose the following New Pledge. We have already been told our old Pledge is just an aspiration. So it's probably no longer relevant.
We the citizens of Singapore
Pledge ourselves as committed critical thinkers
Regardless of financial advisers, banks and "buyer beware" government policies,
To build a financially secure future for our families
Based on self reliance and self education
So as to achieve happiness, prosperity and progress for our families.
For ILPs, confirm not worth it -- the built-in charges are too damn high. Even if get wholelife at a relatively young age, it's also just so-so.
Taking an optimistic scenario of a fresh female uni honours grad, 22 yrs old, starting pay of $3,300/mth in stat board. Recommended life cover of 5-10X annual income. Ok, actually she doesn't have dependents, except maybe parents, but let's say she wants to start young. 5X her annual salary is about $200K (excluding any bonus and 13th month).
Using Vivolife as example of wholelife (one of the cheaper around). Premium term of 20 yrs (most popular) means she needs to pay $322/mth for 20 years.
Is it Affordable?
$322 represents 9.8% of this young grad's gross salary, or over 12% of her take-home pay. In both measures, she's already paying too much, somemore for coverage that is actually less than 5X annual income. Ideally this insurance cost should be 3% or less of her salary.
Is policy Low-Cost?
From the Total Distribution Cost in the BI, 13 months of premiums are taken away for commission, incentives, service charges to distribution (sales) channels. 13 months is not low-cost, but is already considered not-so-teroh among other wholelife in S'pore.
Is policy giving Good Value?
From the Table Of Deductions in the BI, if this customer surrenders after 30 years i.e. at 52 yrs old, she loses 32.6% of her potential returns. These deductions are due to cost of insurance, but mostly due to other expenses and operational costs charged by the insurance company.
If customer surrenders after 40 years i.e. at 62 yrs old, she loses 40.8% of her potential returns.
So after reading all the above, which may sound like gibberish, you can decide if wholelife is worth it or not.
Oh, btw 98% of agents or consultants or planners etc will not mention about the Distribution Cost or the Table Of Deductions. They will quickly flip over these pages in the BI. If you ask them to calculate for you the CAGR or the average annualised expense ratio for the policy (which you can from the Deductions Table), lagi worse, confirm 99.99% won't even know how to start.
Ex-Con
I want to make this statement.
Wholelife, endwoment and the regular ILPs are rip off and border on scam.They are NEVER a good saving plan nor a good and efficient protection plan.
Agents argue that they are forced saving plan. This is rubbish. The MAS website will show you only about 1% made it to the finishing line , ie at age 65. What happened to the rest? First 7 years at least 60% terminated. What discipline? What kind of saving plan is this ? They are losing plans.What protection?
The best protection plan is one that is low cost and one that you can afford to have enough of it to address your needs, flexible and be thrown away when not needed without incurring high losses unlike wholelife.
A saving plan is one that gives a reasonable real return of at least 4% above inflation.No real wealth is accumulated if it is below inflation like vivolife, revosave and all those crap scam wholelife and endwoment products out there.
Wake up and don't be an idiotic consumers kenna conned by insurance salesmen disguised as financial consultants.
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