Sunday, December 27, 2015

Period of premium payment

Some insurance buyers are not able to distinguish between the duration of the insurance policy and the period of premium payment. Usually, they are the same, but some plans are designed to be different.

A insurance buyer may be misled into thinking that he or she is investing in a life insurance policy for 5 years when the premiums are locked up for a much longer period.

Read this article to understand the difference.


Anonymous said...

Limited pay products especially whole life are very misleading because the customers think they are only paying for a limited period only. It is not true because the policy continues to pay from its cash value and the advance or compressed premium payment for the TERM or for LIFE or as long the policy is IN FORCE.
This makes the products expensive and worse the sum assured is usually lower and the return very poor compared to a whole life payment term.
Customers must not be conned into buying this kind of rubbish products.
Insurance is about insurance and one must must have adequate coverage. Saving is about good return and not about insurance.Therefore , don't let the cost of insurance eat into your saving. But then this is the trick of the insurer to mislead and to cheat the customers into thinking that buying endowment has insurance coverage but this is not the objective of buying a saving plan, right?
Remember to keep saving and insurance separate. This is the best way of planning . But unfortunately both the insurers and their agents are not happy because separating insurance and saving is too transparent and they cannot con the customers of paying unnecessary money into the products which don't efficient return and coverage.
As in US and UK, they say to con customers make the products complicated so that the customers don't understand and therefore need a insurance salesman to make it more complicated by CONvincing, CONfusing and then CON them.
Beware of them.Remember the insurers and their salesmen are in this business to make money OUT OF YOU and NOT to insure or make money for you. They are not Santa ClAUSE but CENTa ROB.

dodo said...

My mum is a retiree and she was pounced on by an insurance agent who sold her an investment-link policy. The thing is she is 65 years old, not working and educated not even till primary 6. She signed a policy with a premium of SGD3000/annum for 15 years payable. Meaning until she is 80 years old. Any kinds of payout (death, withdrawals etc.) is from our own pockets as its a withdrawal from the fund itself. The policy is really unsuitable for someone of her age and profile.

I really don't know how come the agent can suggest such a policy to an old lady who may need medical policy more than investment. Really sad and nothing we can do since she already signed it.

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