Friday, November 12, 2010

Churning of Life Insurance Policies

Some life insurance agents 'churn' their client's policies to earn a fat commission again. Does this practice apply to unit trust, where the upfront commission is 3% of the invested amount? Here are my views. Consumers should be aware about this practice and avoid being churned by the agent.
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2 comments:

David Soh Poh Huat said...

To me if I invest $100,000 in non insurance unit trust, my adviser charge me 3% commissions and I agree to pay. My nett investment amount will be $97,000. If within few months my funds gone up to $110,000 and I asked my adviser to sell for me to take profits and should I reinvest my $100,000, I do not see any reason that my adviser should be renalised for churning even if i pay another 3%.
If I keep on buying and selling at a loss and pay the 3%, than this is churning.

If this is the case, what about stocks and shares?
Should brokers be penalised if a investor cut loss in their shares and buy new shares.

Maybe our regulators themselves are not sure of the definition of churning.

November 12, 2010 6:02 PM
zhummmeng said...

Soh,
churning is about agents persuading customers to buy and sell to generate commission.
Why do you want to lose money when you can switch to a money market fund FOC if you wish to take profit and wait for an opportunity and then switch to a fund you fancy.
Do you understand now?

If you keep buying and selling at a loss you must be some kind of investment guru.You are better off at the casino.You $100K might be become 1 million in ONE day.

November 13, 2010 11:58 AM

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