Published in Straits Times Online Forum
I REFER to the ongoing discussion on insurance products (Mr Gideon Lee, "Buyers, not agents, decide the products they want..."; Nov 5), and would like to highlight some misconceptions.
Whole-life policies that "give back" the premium come with higher price tags. For a young healthy male who is just starting his career, a coverage of $500,000 for term insurance costs around $2,000 a year, whereas a whole-life policy with the same coverage could cost around $10,000 a year.
The difference in the premiums between the term and whole-life policy is invested by the insurance company and a significant portion is pocketed by the company before the remainder is returned to the customer.
Whole-life insurance policies provide only the illusion of "giving back" some of the premium paid. It is akin to pulling money from your right pocket, taking some of that for myself, and putting the remaining amount back in your left pocket.
I simply do not see how this is a good deal when consumers can pocket the difference, save and invest the money by themselves. The claim that many customers prefer a policy that "gives them" something at the end shows their lack of understanding of the purpose of insurance - that it is meant for protection against catastrophic effects and not for savings. So one should not expect anything back if the catastrophic event does not occur.
- ► 2019 (1839)
- ► 2018 (1406)
- ► 2017 (1258)
- ► 2016 (828)
- ► 2015 (691)
- ► 2014 (144)
- ► 2013 (501)
- ► 2012 (1269)
- ► 2011 (1873)
11/14 - 11/21
- Read my book - Practical Guide on Financial Planni...
- Business Times: UBS takes on couple in $9m lawsuit...
- Large increase in membership of FISCA
- Garrett Goh's original letter
- Garrett Goh: Strategy behind buying term insurance...
- Motor claims - protect consumer who make third par...
- Motor insurance premium
- Why Investment Linked Policy make a bad investment...
- Myths about Private Shield
- Election is coming - read SGEP
- Lim Pueh Joo: Investment-linked policy works best ...
- Medical insurance for elderly people
- Buy 2 get 1 free
- Ask Mr. Tan - Low cost investment fund
- Pretty good for Government work
- Shape Quiz (bundle of 10 minipaks)
- Intelligence Quiz - vol 1, 2 and 3 (bundle)
- Wisdom on How to Live Life (Book 3)
- USB Charger
- Articles in SGEP
- SCMP:Bank officer charged over minibond investment...
- Living on accumulated savings - DIY
- John Bogle - Investing in indexed fund
- Warren Buffet on Low Cost Investment Fund
- Dave Ramsey on Life Insurance I
- Suze Orman - Life Insurance is a bad investment
- FISCA talk - Insuring your Financial Security
- FISCA Talk on Financial Planning
- Costly rider to cover critical illness
- Financial Calcuation with Excel
- Choose a good life insurance company
- Living on your accumulated savings
- Suzy Orman - Cash value and Term Life Insurance
- Poor deal from a life annuity
- Economic Growth and Equity
- Donation to FISCA
- Suzy Orman on Life Insurance
- Existing life insurance policies - continue or ter...
- 33.3% discount on Financial Planning book
- Why only term insurance plans make sense now
- Life insurance - agent and consumers
- Misconceptions about insurance
- Noisy carnival at Bishan
- Gold investment scam?
- Interesting articles in SGEP
- Sound policies, impressive candidate for General E...
- Get a Fair Deal
- Vitamin Account (6 year SGD equity linked structur...
- Be prudent in buying insurance
- FISCA analysis of DBS preference shares
- ▼ 11/14 - 11/21 (50)
- ► 2009 (1654)
- ► 2008 (2104)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)