Tan Kin Lian's Blog: ST Online Forum: Hit hard by insurance policy termination

Tuesday, February 02, 2010

ST Online Forum: Hit hard by insurance policy termination

ST ONLINE FORUM
I BOUGHT three policies from Prudential for my children 15 years ago. Recently, due to a need for cash, I decided to terminate one of the policies.

To my shock and disappointment, the amount I am getting back upon surrendering the policy equates to less than 50 per cent of my contribution in the last 15 years.

I can understand if the early termination results in an 80 per cent return, but 50 per cent?

The customer service officer told me that given the crisis last year, policyholders did not have good bonuses and therefore the drop in value. So my questions are:

How can the year's bonus affect 50 per cent of my investment because a good bonus does not double my principal sum.

Is there an organisation in Singapore that ensures that policyholders are being protected?

As much as there are risks, what about those who have invested for 30 years hoping to get a good return only to be given the same answer?

Will the authorities please look into this so all of us who hope to retire well by investing in insurance policies will not lose a substantial amount of our hard-earned cash.

Sabrina Tan (Mdm)

MY COMMENTS

MAS should be the body that is responsible to look after the interest of consumers and make sure that they are fairly treated, especially on the declaration of bonus. I hope that MAS will ask Prudential to given an explanation and check if the explanation is acceptable. I am surprised that the cash value is only 50% after 15 years. It should have "broke even" by now.

MAS should not refer this matter to FIDREC. It should be investigated by MAS, as it is the core of the operation of the insurance company.

13 comments:

Anonymous said...: The odds are stacked against the policyholders for whoelife and endwoment products.Everything is against the buyers. From the moment you bought you are already a loser.
Even ntuc products today they are vely verly bad unlike in Mr. TanKL's time. Please get into your head.
Wholelife and endwoment products ghoud not be allowed to be sold. They should be banned. I wonder why MAS is not doing it.
These products are scams. They benefit the insurance agents and the company.; February 02, 2010 11:58 AM
Christine said...: I bought a 13 years term policy from Prudential with my CPF savings maturing June 2010. At inception, Prudential has projected a return of 5.92% pa. Todate, the vested interest shown on the statement for the last 12 years is at 1.98% pa. I have spoken the Customer Service Officers and also written to the CEO on several ocassions to address my unhappiness and the explanation given was the effect of SARS and financial crisis that have eroded the returns, hence the sharp drop in values. I'm extremely upset over the thought that Prudential has chosen to overpromise a 5.92% return at inception and underdeliver a measly 1.98% after 12 years of investment. If I have chosen to 'do nothing' with my CPF savings, I will have a stable interest return of 2.5% for the 13 years. I'm now wondering where and how small policyholders like me is able to address the short change by the insurance companies.; February 02, 2010 12:22 PM
Anonymous said...: "...all of us who hope to retire well by investing in insurance policies..."

From above it seems that some if not most thought that by buying insurance they can retire well!

No wonder some if not most insurance agents can make so much money!; February 02, 2010 1:07 PM
Anonymous said...: Anon February 02, 2010 12:22 PM,

You should check the fact find form to check if there was any mis-selling, concealment of facts and misrepresentation. Maybe seek help from FISCA to review your policy
You cannot let it pass and let the agent get away for conning you into buying as you know that your CPF money is meant for your retirement and investing in any instrument must give you at least 5% if not 8% otherwise you should not put your money there.You can see instead of growing your fund was eroded.
Consumers must be careful about investing your CPF money. Currently THERE IS NO TRADITIONAL PRODUCT OR SINGLE PREMIUM ENDWOMENT THAT CAN GROW YOUR MONEY IN REAL TERM..there is no other way except to take risk. Only qualified adviser might be able to help you and certainly NOT INSURANCE AGENTS masqueraded as financial consultants.
Beware of the salesmen, the product pushing insurance agents. Your retirement fund will go up in smoke in their hands.
Don't be hopeless and demand your right; February 02, 2010 7:45 PM
Anonymous said...: You must know that OLD par products are better than new par products.
New products don't get better simply becuase of increasing COSTS. Remember COST.
If old products give such return what about the new products? One word to describe is ROTTEN.
No matter which company the par products are Rotten. Don't wait until 20 years to regret. All investments require TIME. Without time there can be no investment.
You cannot reverse time..
You have wasted 16 years and 16 years could have doubled your money if the return is 4.5%. 4.5% is very easily obtained if you have invested regularly.; February 02, 2010 10:06 PM
Anonymous said...: Christine,
you should lodge a complain with MAS if your agent misrepresented to you.
This is really cheating. Who is compensating you for the loss? With CPF 2.5% is risk free and you should be rewarded with higher return for taking risk and yet you suffered losses. Is it fair ?
There are a lot of these cheat salesmen disguised as financial consultants today. Beware of them.; February 02, 2010 11:56 PM
Anonymous said...: I have another case here:

My colleague who don't earn a lot and is the sole breadwinner of his house recently got married and had his first child. His good friend cum insurance agent sold him a limited wholelife policy covering $200k with critical illness, PA, PTD and Terminal illness riders for over $3,000 per year.

When I heard him telling me about his insurance proposal, I advice him to just buy term insurance with 25 yrs tenor and invest the rest of the money. However he still go ahead to buy that insurance instead.

I can only shake my head as given that he is just below 30 yrs old and having a clean bill of health, his term insurance plus whatever critical illness riders should not cost him more than $500 per year. I got a feeling that 15 years down the road, he may live to regret his decision. What to do?; February 03, 2010 12:24 PM
Anonymous said...: First thing the $200k may not be enough to take of the family if he should die not of disease but if he should get the disease first and die later after a few years it will be more disastrous for his family, a double whammy.
The premium he is paying may be too much to bear if he is not earning much and will lapse inevitably and he will suffer losses.
Obviously his agent didn't do a need analysis and fact find his financial constrains.
The recommendation was not reasonable and thus breached section 27 of the FAA,.
His recourse is to terminate and take personal losses or check for mis-selling and sue the agent and the company for refund of all premium or take it to FIDREC.Same time MAS to be informed of such shoddy work.; February 03, 2010 10:32 PM
Anonymous said...: Christine,
There is no practical recourse for us policyholders. I have tried and ended up aging more rapidly. The official recourse is just a show! Fidrec is sponsored by the insurance companies and the staff there are not well paid. They are just hanging on to their jobs and thankful to the insurance companies for employing them. As for MAS we all know their stance. Sometimes I think our government is co-operating with these insurance companies to take the cream off us. We are the cheese and reason for the existence of these companies.
We have no choice but to move on otherwise we will frustrate ourselves to sickness and early death.; February 04, 2010 12:02 AM
Anonymous said...: I am not surprised that we will be hearing of revosave product of ntuc giving peanut return at a loss.
Hope this will cause an avalanche of surrenders and legal suits when policyholders come to their senses, when the spell of the glib tongue agents wears off.. When reality dawns pain will creep in.; February 04, 2010 12:30 AM
Anonymous said...: You people who bought revosave should re examine and get an expert to help you before you get conned deeper into losses.The term you get locked in is long and the benefit is miserable. Do you know when your agent told you that the return of revosave is better than the bank rate? Now MAS has banned its comparison because of misrepresentation. It is a dubious and false comparison.The banks give a POSITIVE return every year the moment you deposited but not revosave. For revosave to return positively it may take 20 years at least and if you fail to keep it for 20 years it is big loss.
So friends, wake up to this scam and take a closer look before you lose more and worse you lose TIME.
Time is money. If you find something amiss it is time to take action against the so called trusted agent who sold or conned you. You will realise that this trusted agent is actually a wolf in disguise and you have been trusting and feeding it without your knowing it.
Get an expert to calculate for you to show you the truth and take action by reporting to MAS, FIDREC or sue them in court.
Your hard earned money is about to be stolen if you don't protect it.; February 04, 2010 9:33 AM
Christine said...: The person who sold me the plan was my temp staff during her undergrad years. She's a very qualified professional and I have trusted her to recommend me a plan that will meet my needs then. I know that there is no recourse for me and that frustrates me so much. I wonder why these insurance companies are allowed to over- project the returns to propective policyholders but fail to deliver at maturity. Though I can fully understand that every organisation has to reward their employees handsomely during the good times, they should consider handing out deserving returns to policyholders too. At this point of writing, I can only feel sick....; February 04, 2010 8:05 PM
Anonymous said...: I can understand how you feel to be let down by someone whom you trusted.
The problem is buying insurance relies too much on trust and the regulator doesn't seem to recognise it and insisted that consumers can make informed decision. We have been fighting the regulator that consumers can't and they need honest and competent adviser. A good adviser will conduct due diligence on the product and if the product in his evaluation is not good he or she will not recommend let alone sell them. This should be the position all good honest and competent advisers will take in the best interest of his clients and not salesmen who disregard and peddle them for commission. It is sad that in the insurance industry it is very hard to find a qualified adviser who will act in the interest of his clients. This is an industry full of dishonest and greedy insurance agents.; February 04, 2010 11:42 PM