Wednesday, October 17, 2012

Whole life "Umbrella" policy

The taxi driver who drove me to the airport told me this story. 30 years ago, he wanted a life insurance policy that pays him at age 55. The NTUC agent sold him the Umbrella policy. When he read the policy documents many years later, he was angry. The Umbrella policy required him to pay premium for 55 years, rather than allow him to collect his money at age 55. He found that the premium was very low, so he did not raise a complaint.

When he reached age 55, he was told that he could surrender his policy for more than $50,000. The increase in the surrender value each year was more than 9%. (I do not know if this figure is correct, but that was what he was told). The sum assured was $100,000 and the accumulated bonus was more than $20,000.

He then realized that it was a good life insurance policy and decided to keep it for as long as he could. He was still earning an income as a taxi driver. It allowed him to give more than $100,000 to his wife, if anything happened to him. He said that the NTUC agent had recommended a good policy to the customer, although this was not explained well at that time.

He recommended his son to buy the Umbrella policy, but found that it was no longer being sold by NTUC Income. To buy a similar coverage today, the premium would be a few times higher. (Again, I am not sure that he is given the correct figure).

I told him that I was running NTUC Income at that time. 

6 comments:

  1. Hi Mr. Tan,

    I bought a Living Refund policy from NTUC Income in 2001. It is a good policy but has been discontinued after you left the cooperative. Another good investment from NTUC Income is the Income shares which pay 6% - 8% dividends year after year.

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  2. Hi Mr. Tan,

    Another good policy from NTUC Income during your tenure is the Living Refund policy which I bought in 2001. I also invested in NTUC Income shares which pay 6%-8% dividends every year. Unfortunately, all these policies have been discontinued after you left the company.

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  3. I agree. income shares used to be good because it pay a good rate and it is kind of inflation indexed with the bonus share at 5 years interval. Now, that is being removed for reasons that are completely non nonsensical.

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  4. I read from papers today that ntuc income now talk about ethic etc so I think buying insurance from them should be safe?

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  5. Walau
    I heard that they are using simple language for the policy wordings.
    It is also important to have the right attitude, e.g. to interpret policy conditions in a manner that is fair to the customer. It involves the company culture.
    I hope that NTUC Income can live up to both expectations - transparency in the contractual wordings and a customer-friendly way of interpreting the policy conditions, especially on claim settlement.

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  6. More importantly the salesmen approach their clients' needs ethically and competently according to the prescribed MAS guidelines.
    Talks are cheap. Action speaks louder than words.

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