Wednesday, September 30, 2015

Insurance agents who sell bad life insurance products

Some insurance agents get angry when they read my advice to consumers to avoid life insurance policies that lock up their savings over the long term and give a poor return. They attacked me personally.

Some of these agents, who are supposed to be trusted professionals, who do not know why the policies are bad for their clients. They do not understand how the "effect of deduction" reduce the return on the policies from the projected yield of 4.75% down to 2% or less. At a yield of 2%, the return cannot cover the inflation rate.

If the policyholder cannot continue the policy to the maturity date, they will suffer a large loss of their savings on termination during the early years. Many policyholders suffer this fate. These agents are responsible to cause large losses to the clients who trusted them.

Some agents already know that these policies are bad for their clients. But they think only of the commission that they earn. They are dishonest and unethical. I would even call them "crooks".

Personal attack
These agents, who are either idiots or crooks, were surprised to read my views and pointed out that I had headed a life insurance company for many years. They don't know that the life insurance policies that were sold by my company (actually a cooperative) gave a yield of 5% or higher, which was more than able to cover the rate of inflation.

It was able to give a higher yield as the "effect of deduction" was much lower. The commission paid to agents was also lower.


Anonymous said...

As former CEO of a cooperative these salesmen expect you to protect their ill gotten rice bowl. I heard of you , before you left , that you tried to forge win-win strategy for both customers and agents especially during bad times when the agents were suffering from bad sale. But the agents mistook that you tried to cut their commission . Your strategy was to help the agents by incentivizing the customers to buy from them and it was a temporary measure to help these ingrate agents tide over the bad times.But they saw otherwise and many left for "greener pasture" but only to realise they were NOT up to par,; not up to standard when many started crawling back to SAFE HAVEN in this cooperative.The truth is the cooperative household brand name
sold itself and sold for them without the need for them to push and convince their customers. These 'don't know die" agents must have regretted that you left.Alas, it is different now , their products are no longer competitive. Go to to see for yourself. You will notice that they rank 5 to 6 in competitiveness in term of premium.
The current company's products have gone to the dogs like all the other companies' despite being a cooperative, with cost saving in taxes and other perks of cooperatives. Sad to know , the change to 'social enterprise' label didn't bring any much benefits to policyholders. Instead , the products became more expensive and have low returns. What is social enterprise, anyway? Is it a cat or a dog?
Worse, the new management unashamedly exploited your past returns and used it for their projection of their new products to mis-lead the public, that the 'past' performance maybe repeated.Of course there is disclaimer but it is in microscopic print.
Mr. Tan, I hope you will continue to educate and help the public , especially the young people. The Ah peks and aunties have no hope , they have already been raped financially.

Anonymous said...

We hope you will continue to expose these conman insurance agents to weed them out of circulation , especially to protect the unwary old folks.
Why old folks?
Old folks are often the victims of insurance agents in UK, Australia, in Hong Kong and many other jurisdictions.No difference in Singapore.
Because of their greed the agents blew up their conscience and threw out ethics out of the window.
Another group of victims are aunties and housewives. They are gullible, trusting, loss averse and they easily fall for the "guarantee" feature of endowment products, disregarding their goals and needs. The agents are too happy when they meet such customers at roadshows.No need to say much , just emphasise the word 'guarantee' and better than the bank rate. Despite the clamp down on this approach by MAS the insurance agents continue to take risk pitching the 'safety' feature. Nothing could deter them from the commission they can plunder from their victims.
Consumers must be wary and NEVER buy from insurance salesmen who are actually conmen and women disguised as financial consultants when they are not and no expert in finance.

Mdm Lim said...

Dear Mr Tan,

I am one of the silly aunts who was being misled into buying this product. I went to UOB with the intention to open a fixed deposit after selling my flat but was recommend to buy prucash max limited pay. They only repeatedly highlight the investment return will be 4.75% much higher than the bank.After agreeing to buy,they let me sign a stack of forms which are difficult to understand and didnt properly explained to me.Only recently after reading your article then I realise this product is very unfair to policyholder. Only win win situation for themselves. My total premium will be $60000 pa for 5year, how come guaranteed return only $43000 after 15 years. I thought of terminating but will lost $12000. Why MAS approved this kind of product. I am at a loss,pls advise. Thank.

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