Tan Kin Lian's Blog: Life insurance companies

Wednesday, May 19, 2010

Life insurance companies

This article explains that life insurance company works for shareholders and not for customers.

My comment
In the past, most life insurance companies are mutual companies (including cooperatives) that work for the interest of customers. In recent years, most of these companies have become de-mutualised or have started to think about maximising profits. It is dangerous to entrust your long term savings to these companies, especially if they have the discretion to pay a lower rate of bonus to customers.

It is better to invest in a low cost investment fund, which is within your control. This is explained in my book on financial planning.

11 comments:

Anonymous said...: One cooperative has become a social enterprise.What is social enterprise? Is it some fancifool name to CONfuse?Is it a predatory commercial company in disguise?
It says that it has a social purpose but run commercially.No wonder, it adopted the industry 'best' practice and pays very little annual bonus and they play play with the special bonus.
Do you think the $514million bonus benefited many substantially? If you spread over 2 million policyholders how much would one get? Would it make up the cut of the annual bonus?
Is it pulling the wool over the policyholders' eyes?
What I know of cooperative.
It is a thrifty and cost conscious operation.It is plain and doesn't waste on ostentatious rubbish, buildings and splurge and squander on on their profits becuase the profits are thin to make products affordable and value for money to consumers. It doesn't resort to wasteful marketing as it is a people to people business, direct business. Saving passed to policyholders. That is why it could acheive 5% to 6% return on their products but kenna hijacked shamelessly by social enterprise as their achievement.Put it in another way, someone is using another's backside skin for his face.
Well, what has happened to good old plain vannila products without the dubious packaging or false wrappings.
Personal finance is about managing your risk adequately and managing your money to grow with minimal risk.It is plain and simple without the fancifool craps many insurance companies are now using to fool the consumers. It is about protection at the lowest cost and saving at the highest rate without all the wasteful advertising and building facade or image sprucing or new colorfool clothing to hoodwink the consumers. Consumers are not dummies.
Today, it is about consumers on one side of the ring and the insurance companies and their greedy and trained liars insurance agents on the other side. It is CONfrontational. How to con the consumers and strip them off clean is the culture in all including the so called social enterprise.; May 14, 2010 9:47 AM
Anonymous said...: Quote:
"In recent years, most of these companies have become de-mutualised or have started to think about maximising profits."
Unquote

But some of these companies are govt linked and hence govt has control. Why the govt allow this to happen?

Is it because govt now also has a thinking of maximising profits? And the country is also run like a company?; May 14, 2010 10:04 AM
Anonymous said...: Remember this always.
No new par products can be better than the old products. The reason is cost and cost has been going up. What are the sources of cost?
insurance agents hefty commission.
Ceo and senior management high salary.One company has at least 20 GMs.I wonder for what?
Squandering on image and branding.
Squandering on building facade change.
Squandering on ads.
Squandering on incentives for agents and themselves.( if helping their cleints attain their goals
is enough incentive , they should leave the industry)
The list of cost can go on and on.
So you see , what chances are your wholeife, endowment products can give good return?
Remember the restructuring of your bonus by a social enterprise?
The aim is to put your premium to higher risk and hope to get higher return. No guarantee waht..if lost no need pay, right? Anyway there 2 casinos now.
The question you should ask your insurer is 'are you taking higher risk now than before?' Have they told you? NO..no where in the BIs tell you this, not even your so called trusted insurance agents or financial consultants.It is blank..silence...swept under the carpet...taboo..
So what is transparency that they are spewing like chicken backside?
They talk about transparency like being naked about it.The truth is they lie without batting an eyelid.
Well trained, hor?
Come on... the odds are stacked high against you if you buy wholelife. Even the Sunday Times writer, Miss Tan, wishes for greater transparency from now....she dares not to say explicitly lest she offends her employers, the advertisers.
This is a conspiracy that must be exposed soonest.; May 14, 2010 11:37 AM
Anonymous said...: Check out this article

http://business.asiaone.com/Business/My%2BMoney/Starting%2BOut/Insurance/Story/A1Story20091026-175963.html; May 14, 2010 1:43 PM
Anonymous said...: In recent years, financial companies are maximising benefits for senior mgmt and insiders, heck care the minority shareholders, much less the policyholders and customers.

The so-called social enterprise just came out with another crappy endowment called "Reach". It's a fancifool limited-premium-payment endowment with yearly cashback from the end of the 5th year onwards. I've started hearing some CONsultants selling it as "NTUC bonds" with yearly "dividends".

Anybody forking out money for this Reach crap is only helping the FT ceo "reach" for his next newspaper advertisement & dinner with minister, and the CONsultant to "reach" for the next free holiday trip & dinner.; May 14, 2010 4:24 PM
Anonymous said...: Think this is the article by Ms. Tan mentioned by one of you?

http://www.asiaone.com/Business/My%2BMoney/Opinion/Story/A1Story20100510-215241.html; May 14, 2010 10:45 PM
Anonymous said...: Don't buy insurance products that claim to have saving plan.Examples of these products are wholelife, endwoment, anticipated endwoment and regular ILPs.Why? They are rubbish products that CANNOT MEET your needs efficiently and EFFECTIVELY and immediately. Insurance is NOT for saving. It is for managing your risks.
There 4 areas of risk and you MUST have them and must have them ADEQUATELY and IMMEDIATELY at a point in time. If you don't have them you are self insuring. 99% of people are partly insured and partly self insured. Why?
1. insurance agents are only interested to SELL you products with saving/cash value becuase they earn big commission but they are too expensive to you to have enough, right? Do the agents care? They don't because there is more money to make from selling you a wholelife or endwoment than a term which is cheap and which you can be covered fully your risk and have peace of mind.If you are covered fully what can the insurance agents sell you the next time? No opportunity ,right? No chance to review your insurance, right? To ensure there is business for them they don't sell you enough. They know you can't afford to buy fully wholelife products. Worse , nowadays, you have limited payment wholelife , these products make thing even worse for you.
It is time people wake up to this fact. The insurance companies and their salespeople have NEVER your interest in mind when they design products. They use the agents and reward them with high commission to push them to you. The companies know the best way is to push these products to existing policyholders to exploit their trust but unknown to them their trust has been betrayed by both the companies and the agents. WHY? Are policyholders stupid? Unfortunately, yes... they are dumb where financial products are concerned. They buy on trust. Unfortunately , the insurance agents are dishonest and INCOMPETENT. Don't believe that your insurance agents are dishonest and incompetent? Have your policies reviewed by a third party, eg like FISCA or qualified financial planner. You will be shocked to know your so called trusted agents have taken you for a ride all these years. You were dumped with rubbish products that bring you no where to your goals.
Please,for your future sake take an interest in your financial future by at least monitoring your policies with someone.Don't wake up 20 years later to discover that you have been played out by your agents, cannot retire, or you are leaving only a miserable sum to your family to carry on their lives when you are gone.
The 'late than never' is as good as never or 'something is better than nothing ' is false. This is insurance agents' argument to sell you products that rip you off and earn them big commission.
Beware of wolves in sheep clothing. There are 99.9% of them prowling in your midst.

The Watchman; May 15, 2010 5:43 PM
Anonymous said...: Take a look at this article

http://www.straitstimes.com/STForum/OnlineStory/STIStory_527712.html; May 19, 2010 1:12 AM
Anonymous said...: NTUC started off as a cooperative insurance Company.
Is it still one, considering the fact they pay out annual dividends to shareholders, although the payout is getting thinner by the year ever since the new CEO took over.; May 19, 2010 11:04 AM
Anonymous said...: Ntuc is NOT a cooperative anymore. So don't expect the products to be as good as during Mr. TanKL's time.; May 19, 2010 12:48 PM
Anonymous said...: Is it possible to buy insurance directly from insurers to avoid the cost of commissions? I prefer not DIY and not to go through the likes of Providend which charge a fee, even though they return the commissions.; May 31, 2010 10:55 PM