Tan Kin Lian's Blog: Bad advice on switching

Sunday, April 11, 2010

Bad advice on switching

Hi Mr. Tan,
I visited your blog and enjoy reading it. I need your advice on the following. Currently, I have (details of 4 policies provided)

Recently my new agent does an analysis and advise me that I required a life-policy. The agent suggested me to terminate the investment policy and get a life policy. The agent informed me that the premium paid till date is around $X and the surrender value is $Y (slightly more than $X). The agent cited that part of the investment profit are paid for the administration charge and others benefit like Death Cover, TPD and CCP.

I'm reluctant because I do not intend to terminate the investment policy but instead thinking of reducing the coverage amount so that the investment policy is indeed an investment policy not anything else. Please advise.

REPLY
It is bad to terminate an existing policy and buy a new policy. Do not buy a life policy that has high upfront charge. If you need additional cover, just buy a term insurance policy, e.g. available from Aviva (e.g. SAF scheme). If you need less cover, you can reduce the sum insured on the investment policy.

Get the benefit illustration from the agent (for the new policy) and show to me. I will tell you if the agent has given proper advice to you.

You can read my book, Practical Guide on Financial Planning. There is a chapter on how to deal with existing insurance policy, and a warning to avoid switching to a new policy.

The book is available here for $12, www.easysearch.sg/ishop

7 comments:

Anonymous said...: I think you bought a regular ILP with investing element and protection. This plan is called 'variable whole life plan' WHICH IS MUCH BETTER THAN THE TRADITIONAL WHOLE LIFE in that the regular ILP is more flexible and you have control over the protection and the saving.You can adjust them according to your needs at various stages of your life.
But both these plans,
ie. traditional and ILP are rip off
because the cost is very high. The commission paid are same for both the plans and it would take some time to breakeven. For traditional WL maybe 20 years, for regular ILP it depends on the performance of the funds chosen.
Since your regular ILPs have more than broken even they must have been taken for quite sometime and you have already paid most of the charges I don't recommend that you terminate . You can adjust along the way as your needs change. If you want to increase your coverage buy additional term plan. You can also increase your saving with your existing regular ILP if it allows top up of premium.
NEVER cancel and buy a traditional whole life. It is rip off and is a scam product which you will be shackled for life without additional benefits and worse rotten benefits..
You have bought the lesser of the evils, ie, your regular ILP is a lesser evil than the traditional wholelife or limited payment whole life which is very evil.Buying a traditional wholelife is like serving your life sentence in the dungeon to rot and you expect nothing but more misery after your release.Regular ILP is like serving a prison sentence under a house order with some restrictions but hope of seeing light at the end of the tunnel is better but the danger is the light might be the light of an coming train if you listen to the noises of your unqualified agent salesman.
From now keep your investment and insurance simple by using only term and invest in a broadly diversified portfolio that matches your needs and risk tolerance.
Get a qualified expert with right credentials but who is HONEST and put your interest first. Never use an insurance agent, a salesman especailly one masqueraded as financial consultant and one with a lot of mdrt or tot logo on his or her name card, it is safer to avoid them. Their name card already tells you the number of victims they had made. Remember the wild aborigins whose huts are decorated with human skulls, these are their credentials to show how fierce they are.It serves you well to keep away from salesmen, insurance agents and wolves and vixens disguised as financial consultants.; April 11, 2010 12:12 PM
Anonymous said...: To be safe don't buy the following products....
1. wholelife or limited payment wholelife
2. regular ILPs aka variable whole life
3.Endowment or anticipated endowment or anticipated endowment disguised as cash backs or coupon or dividend.
(you see how clever they use words to con you)

Today the insurers and their insurance agents are not truthful. All they want is YOUR money. The products say a lot about them. Sometime you wonder why MAS is not acting on them and do these agents buy them for themselves. I guess what is good for the ganders(the consumers) is not good for the geese(the agents and the insurers).
So, do you think they are conmen and women out to con you off your money?; April 11, 2010 1:42 PM
Anonymous said...: Ha ha, this is the Job Description of insurance salespeople or CONsultants or whatever names they call themselves. To sell high-commission products to anyone don't care how.

99.5% of these conmen & conwomen are also hit-and-run i.e. they themselves don't know how long they stay in the business, so their main motive is to whack as much $$$ from unsuspecting customers in as short a time as possible. That means making people buy wholelife, limited-pay wholelife, regular ILP, and all sorts of endowments.

If customers got spare money each month, then buy additional high-comm product. If no spare cash or if customer harder nut to crack, then pretend to review existing policies and find some cock-and-bull story to say new products are better. Better for the conman or conwoman's pocket that is.

Many of these con-people also buy some of these crap products. But you know why? Most of them buy in order to qualify for quarterly or annual incentives or bonuses. They did not quite meet the targets and they calculated that it is still worth it for them to buy and hit the targets. Most of these jokers will surrender or lapsed the crap products after they get the awards/bonuses or after the penalty period.

How I know all these? Coz I used to be doing insurance sales too. ha ha...; April 11, 2010 5:19 PM
Anonymous said...: I just heard from a friend that his agent is trying to persuade him to cancel his 5 living policies and take up a limited payment living policy on the ground that having 5 polices is disadvantageous because in the event of a critical illness claim he can't claim all 5 policies.He can only use one to claim. Isn't
this ridiculous? How can the agent use this ruse to con a simple man in order to make another sale? I told this man to lodge a report with the company and copy to MAS.Unfortunately these 5 policies were sold to him by a relative and he is reluctant to report her..
There are many of this type of cases and not reported.
I have warned people NOT to buy from your relative for this simple reason that you never can question the agent relative and inevitably results in a rotten buy.
In the first why 5 policies ? Have circumstances changed 5 times to warrant additional or top up coverage? I have already said every meeting or review is to sell you product supposedly to meet shortfall but actually shortfall was already created in the last review and the shortfall is always present so that your insurance agents can 'review' your insurance always, no end.
Review to insurance agents is to sell you a product or new product. What do insurance agents know about review?; April 11, 2010 10:43 PM
Anonymous said...: Anonymous April 11, 2010 10:43 PM,
Alert MAS otherwise MAS thinks the insurers are keeping up with the compliance. I think I know which company you are referring,. It is an agent from a local social enterprise, right? This is not uncommon unscrupulous practice in this company. When the limited payment premium living product came out they used this ploy to convince their existing customers.Some fell prey to this ruse.
It is certainly getting out of hand and MAS must act quickly. These agents must be punished and the company punished too.; April 12, 2010 8:45 AM
Anonymous said...: Hong Kong arrested fraudulent selling by bank sales people what about the insurance agents who tried twisting 5 living policies? They should be arrested too.; April 12, 2010 8:15 PM
Anonymous said...: Anon April 11, 2010 10:43 PM,

should ask your friend to report to the ceo and tell him in the face that was how he got #1. With practices like that can he be proud? Surely this is representative of the behaviour of the agents in the company. Or ask your friend to write to the press and shame them.; April 13, 2010 8:42 AM