Hi Sir,
I would like to ask how to get justice for the loss that I suffered on my Prucash endowment policy bought in 2007.
My objective was to have a saving plan. I was induced by my agent who told me that I could earn interest of 3% p.a. but this rate was not guaranteed.
After paying more than $4,000 in premium for the past four years, I was shocked to learn that the surrender value was only $1,000. As an undergrad student, I found it difficult to service this policy.
I felt cheated by the misrepresentation made by the agent. I wanted to get back all of my savings from Prudential, but it was not possible. I face a difficult decision whether to terminate the policy and loss the $4,000 or to continue till maturity and get a low return. It seemed to be a lose-lose situation for me. Is there any way for me to mitigate my damages?
REPLY
Who was the agent who sold the policy to you? How did you know this agent? Are you able to find the agent now and ask for an explanation?
COMMENT
Students should not commit to a life insurance policy. It may not suit their needs and they face the risk of losing a large part of their savings.
8 comments:
For getting protection, term insurance is better than whole life insurance which helps to save cost in insuring oneself. The difference in savings from buying a term insurance rather than whole life insurance when prudently invested over a long term gives far better returns on one's money.
If one is willing to get himself financially educated, investing one's money through investment tools such as a low cost unit trust or Singapore bonds may be even better than the yield from an endowment policy over same period of time. This is because part of the premium in endowment policy is paid for insurance which eats up one's money if one's main aim is to grow one's money through a savings plan. Imagine the amount of money used up for insurance portion in an endowment policy is compounded over a long period of time, it will mean a huge opportunity cost for the endowment policy holder as he may get far better returns if he had invested his money elsewhere.
Do not confuse insurance products with one's investment objective. Insurance products are only good for their insurance! If one desires to invest his money, go for other investment tools (e.g. low cost unit trust and Singapore bonds)which may give better returns than endowment policy.
If one requires insurance, term insurance is a low cost way of getting oneself insured. Even if one does not get back the premiums paid for term insurance, however the savings from buying term insurance over a long period of time if prudently invested and compounded will yield a return which is financially better compared to getting one's money locked up into paying high cost whole life insurance premiums.
Can Mindef stop the insurance talk for recruits immediately!!!
It is very damaging as some of these recruits become students after NS. Some of them really cannot afford to pay for yearly premiums for the next few years during their study.
Top officials in Mindef kindly look to this matter.
All regular ILPs also pay the insurance agents about 160% of the premium .That is why they take about 15 to 20 years to break even. Ridiculous , right? It is supposed a regular saving plan .
As a general rule...all insurance products that claim a saving element they are actually scams. It serves you well to remember this.
To Jeremy Ow,
"The difference in savings from buying a term insurance rather than whole life insurance when prudently invested over a long term gives far better returns on one's money."
If you are investing/saving purely for investment/saving's sake, there are no point for getting WLI. IMO WLI products make very risky investment products but adequate insurance products provided the buyer understands his/her insurance needs and is informed of all the charges and clauses (which I presume most wouldn't know).
When buying term policies, the distribution costs are already being factored into the premiums. Good thing is that the person would not have excess funds locked into the product he does not need.
Hi Zhummeng, if those ILPs are marketed as savings plan then they are scams as you have emphasised.
In regular premium ILPs the costs are more transparent/obvious and are paid upfront - and therefore the "cash value" of the product do not break even until the 10th year or so. I think of it as BIG-PAY-UP-FRONT term policy with opportunity to participate in the Insurance company's fund portfolio.
If the product has an investment component, another way to fast forward and try to minimise loss is to note the bid and offer prices.
When the bid ( your selling the units back to the insurance co ) is higher than when you first bought the plan, sell all the units.
This will reduce your losses and you can then consider to surrender the entire plan.
Do not be swayed by more persuasive words about how much you will lose. Be cold, calculative, and close the relationship.
You can always buy from another company at a more convenient time.
The world is very afraid of no buyers.. keep them waiting.. there are thousands and millions of products that you can choose.
In fact if you ever earn/save enough, you wont need insurance at all.
Hi tatos,
are all charges mentioned upfront to the customers? ie. do the customers know that agents are getting so much commission? This is one cost, what about other costs. Do you expect the customers to read and understand them? IT IS THE DUTY OF THE AGENT TO DISCLOSE EVERYTHING...
Remember cost kills return and a big chunk of cost at the beginning sure hammers the return flat...it is not 10 years.....it depends too on the funds selected. From survey it is at least 15 years. What a crap??? saving ? it is a big ripped off..I can show you immediate cash value and breakeven after a few months.. THIS IS SAVING.
I urge people to attend a talk organize by FISCA on investment, especially the needs of Insurance.
It will save you money and time. Get to know the right perspective of buying insurance.
People should really be taught on how to make sure about their insurances, getting help from an agent with a health insurance continuing education.
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