Tuesday, September 28, 2010

Whole life policy with multiple benefit coverage

An insurance company may introduce a new policy with special features, but the consumer should not be distracted by these frills that they overlook the high cost of the main policy (as reflected by the high deduction from the accumulated premiums).


Spur said...

This is one of those crappy insurance that relies on emotions to make customers buy. I believe this 5X CI claim rider is from AXA. Prudential started it with their 3X CI claim wholelife.

The problem is the very very low chance of being able to claim multiple CI. In the first place, the criteria to claim successfully for CI is rather strict. E.g. for cancer, it must already have spread or is spreading i.e. already stage 3 or 4 cancer.

In the 2nd place, after you survive the first CI incident, in order to claim for the 2nd CI, this 2nd CI must be after 1 year from the 1st CI, and the 2nd CI must be unrelated to the 1st CI.

Exception is cancer --- you can claim for 2nd or 3rd cancer etc. But after each cancer claim, you must be certified by specialist to be cancer-free for 5 years before you can claim for the subsequent cancer. What are the chances of this, especially since all cancers must be at stage 3 or 4 in order to claim? You must be either damn lucky or damn suay --- statistically it is 4 or 6-sigma event --- in layman terms practically impossible.

Insurers are just engaging in intellectual statistics & actuary to play with customers' emotions and earning big fat profits for themselves. $4200 + $600 p.a. just for $100K cover. Ask yourself is this $100K enough? Especially if you have dependant children to support? Does it even cover 5 years of expenses for your family if you are gone?

For just 16% of the above premium, you can get cover from SAF insurance for $500K until you are 65 yr old. That is what real insurance is for --- to transfer risk during your life when your dependants are most reliant on you for support, and that they can get real meaningful support if you are no longer around.

The 84% of the premium that you save from paying to AXA, just follow Mr Tan's advice. Regular and disciplined investing into low-cost ETFs over the next 25-30 yrs. You & your spouse will be able to retire comfortably and do not need to depend on your kids. Unlike 80% of Singaporeans who can never retire, or have to depend on the mercy of their children for subsistence allowance.

zhummmeng said...

The insurance companies have to roll out 'new products ' every now for their salesmen and saleswomen as excuse to see their thier customers for replacement of their old policies. Example: Many poliicyholders were conned into replacing their old living policies with so called new 'limited pay living Wholelife products.
New products have to be different. Usually the differences are created with new frills, useless or impossible to happen illness or events. Then give high commission to insurance agents enough to embolden them to lie plus half truths. This is selling . Salesmanship is half lies half truth. One day salesmanship and conmanship can be used interchangeably and the protagonists are the insurance agents.

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