Wednesday, May 19, 2010

Cut in policyholder's bonus

Read the letter.

My comment.
This criticism is not confined to one insurer. Many insurers have cut their bonus during a difficult time but are rather slow in restoring their bonus when the market recovered. This is unfair to policyholders, especially those whose policies have matured while the bonus are still not restored.

I agree with the call to MAS to investigate if the insurers have been fair in their treatment of the policyholders.

To avoid this type of unfair treatment, the public should invest in a low cost investment fund, which is transparent and give a better yield, over the long term. This is explained in my book, Practical Guide on Financial Planning.


Anonymous said...

Every time agents sell insurance, they use high PROJECTED returns.

To me PROJECTED can also be associated with luck and hope.

Anybody place great trust in luck and hope?

If people trust projected but it turned out to be greatly different (negative of course), then the only way is to sue. And trust that they will win their case.

Anonymous said...

Insurance agents usually show the projected amount at 25th year but NEVER tell you the RETURN.Why? because they won't disclose the miserable return. Yes, it is luck and more often than not it is unlucky because NO COMPANY, not even ntuc has ever delivered the projected amount. It is magic stone
style pitch which the agents know that they CANNOT honour.Therefore , the agents MUST warn the customers that it is for SHOW only to con some gullible and dummy consumers into buying. Unfortunately, they will tell the customers as if it is guaranteed. (body language and words implied that). This has to be stopped.
For example: at the roadshow ntuc agents pitch their single premium endowment product as FIXED DEPOSIT implying no loss of capital in the early years and there is gain every year and 4.0% return guaranteed.This is misrepresenting and misleading. More seriously this Growth will NOT deliver as projected and at best it can deliver at 3.5%.
There is nothing wrong to show this figure but it MUST come with a caveat and the customer must be told clearly that it has NEVER delivered as projected but it MIGHT this time. Informed decision can be made based on sufficient information. The truth is the information is always half truth half lies.
MAS talks of informed decision
but most customers cannot make because it is not easy to digest information by an untrained person in such a short time. Therefore MAS must make sure there are safeguards to protect the consumers from insurance agents who have no intention of giving accurate and full disclosure. Did the agents go through the whole quotation/benefit illustration with you let alone explain everything to you?
Selling is exactly about half lies and half truth to confuse the consumers as if they are the truth.
Trust is eventually the key to buying decision and not on information but unfortunately trust is always betrayed by insurance agents.

Anonymous said...

One year ago, Greateastern came up with a 3-year single premium policy taht my agent said would pay us two over pecent p.a. till maturity.
After signing I noticed that part of the payout is projected only, and when I asked about it, she said so far Great Eastern projection is paid out on expiry, the Company never go back on their words.
I would never buy any more from this agent, or from Great eastern ever. I am going to stay clear of insurance products for a long, long time.

Anonymous said...

Anon May 19, 2010 10:59 AM,

did the agent put in writing in the fact find form that the "projection is paid out on expiry" ? if he or she did you can take it up with the company to demand full return and as said or MAS. This is misleading and it is cheating. Anything that is not true is cheating.

Anonymous said...

that one insurer has no more right to call itself a cooperative when it joined the rest on the pretext of industry practice. In fact is is no longer one.

Anonymous said...

my 21-year-endowment policy is maturing in Jan 2011. Last year policy statement(for financial year ended 31 dec 2008)shows the 'projected' maturity value for my policy being cut by more than 10%. Last week I received my statment for financial year ended 31 dec 2009, the maturity value is still 'projected' same as last year. ie no upward revision given the improved financial situation in 2009. As my policy is maturing soon, am I greatly disadvantage because of the present 'poorer' economy?? Mr Tan, is this fair? Please advise.


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