Friday, November 06, 2015

Misleading information given to entice a sale

I have received another request for assistance from an elderly lady. She went to United Overseas Bank to deposit a cheque for the sale of her HDB flat.

The sales representative and her supervisor, who holds the title of vice president, were persistent in getting her to buy a Prusave policy. (This is a nice way of saying that they "put a lot of pressure on her").

They told her that the saving is for 5 years and that the return is 4.75%. They should her a brochure to this effect. She bought the policy without understanding what the contract really was.

She decided to take the advice of the vice president and trusted that she would give the right advice.

After a year, she learned that the policy locked up her savings for 15 years (although the annual premium was payable for five years only), and that she would suffer a large loss of her savings if the policy is terminated before the end of 15 years.

She was not told about the poor surrender value at the time of buying the policy. When she asked about these figures, the sales representative told her to ignore them, as they were given as "standard figures" for formality only. She should focus on the return of 4.75%.

The return of 4.75% was also misleading. This was the "illustrated yield". The actual yield, after removing the "effect of deduction" was probably 2% per annum. A large part of the actual yield is not guaranteed anyway.

She wanted to stop the policy after paying one year's premium, but she would have suffered a large loss on the first year's premium.

1 comment:

Anonymous said...

The real yield is only 1.3% at best . To be crude it is a Fxxxing scam product like another product called ReverseSave by company N.. The woman is MUCH better off putting in SSB(Singapore saving Bond) and the yield might be 3+% for 15 years.
The woman must report to police for being cheated and get MAS to investigate.

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