Tuesday, November 20, 2012

Misleading statements

Here are some statements made by some life insurance agents to convince their clients to buy their expensive insurance policies that give a poor return. Have you been misled by these statements?


zhummmeng said...

The lies the insurance agents tell you.
1. buy term there is no cash value but with wholelife you got cash value..
Not true ..whether you buy term or whole life plans the portion of the premium paid for cost of insurance or mortality charge is gone , eaten up by the insurers as revenue or profit.
The cash value comes from the EXCESS portion of your premium you paid and the insurer invests it into the one size fits all par fund where AhTu, Ah Kow, Jane or Ah l;ian or Ah beng, Ahmaed, Fatima or your little baby's premium is invested . All of you are treated alike, young or old,.....your risk tolerance, goals, time horizon are NOT considered.What a crap..,.did your agent, the expert financial consultant tell you this?
Buy term and invest the rest..performs far better than the wholelife and at low risks.
2. this is NOT only lie but cheating by both insurer and the agent.
When a time comes, let's say you are 60 years old, your premium paid will not be enough to pay for the cost of insurance or mortality charge,DO YOU KNOW WHAT HAPPENS?
The insurer takes from your cash value to the difference in mortality cost. Did the insurer ask your permission or tells you in the BIs? Did your agent disclose this to you? What would consider if the money is taken from you is NOT with your permission? It is CHEATING, right?
Now you know why wholelife is profitable to the insurer because it provides perpetual revenue to the insurer, never ending only until you terminate. But if you terminate a large portion of the cash value is forfeited and becomes the profit of the insurer.
Very good business is whole life products, hor.
3. The 3rd lie is whole life is a saving plan. If you are saving in the dumb plan the money can be accessed by you ANY TIME , right?
But can you? Walau!!! you need to BORROW your OWN money and pay ah long interest rate and the agent told you that it was saving plan and now you need money and you have to borrow and pay hefty interest rate. Worse the bonus the insurer pays you is NOT EVEN half of the interest rate.BTITR no need to borrow...it is your money to have any time.
Ok... just give you consumers the 3 lies agents and their benefactor, the insurance companies
There are plenty of lies both colluded to con you into buying the most useless products that have made you guys UNDER INSURED AND money no enough to retire.
I shall continue in my next post.

Jeremy Ow said...

Thanks Mr Tan for highlighting the half-truths of what insurance agents say. It requires more people to be financially educated or informed to think independently and make the best choice in selecting the right mix of insurance products that provides suitable amount and types of protection depending on individual's needs on a low cost.

Insurance is not investment. It is only a safeguard against drastic circumstances (dread diseases, accident, disability, hospitalisation or death) that may drain one's/ one's family financial resources. No one hopes to activate his policy unless due to unforeseen circumstances that hit him.

As such, a term insurance policy with 25 to 35 years period of protection is a cheaper means of going for a higher amount of protection payout for a much smaller cost of insurance premium. The extra savings from not over-paying on whole life and investment linked policies can be invested to receive better returns (even in relatively safe instruments such as exchange traded funds like STI ETF, low cost unit trusts, Singapore govenment bonds, or corporate bonds and preferred shares from large blue-chip companies like SIA, DBS bank etc.) Such relatively safe instruments may provide higher returns than the returns from whole life or investment linked policies, if there is even any returns from these types of policies.

At the end of the day, it is still about the need to be financially educated so as to make better financial decisions as any wrong financial products bought that have a long contractual period such as insurance policies will have long lasting impact on one's finances since it is always to one's disadvantage even to terminate any insurance policies prematurely.

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