Dear Mr Tan,
I notice that the policies from various insurance companies mostly work on the same pattern.
I notice that the policies from various insurance companies mostly work on the same pattern.
1. Low guaranteed returns
2. High but non-guaranteed returns.
3. Long break-even period.
Do you know why they don't have anything more innovative and provides a decent deal for the customers?
REPLY
They make more profit by giving a poor deal to their customers.
They provide low guaranteed returns so that they can make a good profit on early withdrawal or "surrender" of the policy.
They give high, non-guaranteed return to make the policy look good on maturity. However, a high component of the return is not guaranteed.
It's a marketing & sales gimmick that has now become entrenched in the industry.
ReplyDeleteAgents & companies sell products based on the high "projected" returns or yields, never mind that they are non-guaranteed. They will stress & highlight the so-called high return, but simply gloss over the fact that there is no guarantee and that in fact the return figures are plucked from the air.
I can tell you that all these products will give you only around 2.5% yield even after 30 years. If you surrender before 20 years, you will even lose money!
Even the older products which are slightly better, are only giving 3%-4% yields after holding for 30 years.
There is a thing called "Forced Savings Mentality in the minds of many people who buy
ReplyDeleteInsurance products that have savings component.
Heard one saying, if they dun pay the policy premiums, they would spend their money away on frivolous things. They said it's a form of paying themselves first before spending, or pain before future gains.
A son who was posted to his Company's Austrian Office noticed Austrians, who have a National Pension and Medical schemes for life, spend away their pay, leaving little as savings. Pay high taxes, but the life's important basics are covered, giving Austrians peace of mind to spend and enjoy life.
So now easier to understand the Mentality of buying Insurance savings products in Singapore. When TKL was CEO of NTUC Income, policy holders were invited to buy its shares, it is among the best investments we ever made, giving around 9% return, plus bonus shares given out in some rare years.
So shareholders gleefully look forward to see sales of NTUC Income products rising, can't beat the greedy Insurers, may as well join them.
The new 'greedy insurer" is not issuing new shares. They are keeping the money for themselves. The new CEO probably receiving $2 million in annual salary while his so many GMs are receving each $50K a month, which was the salary TKL received. Wonder why the return of the products is getting rotten each day.?
ReplyDeleteTo display their so called 'honesty is the best policy" they are using returns of TKL's time to con the public into beleiving that their products return are going to get better going forward. You saw the adverts in the SUNday times?
This is cheating and misrepresenting the products. If those stupid products can give the kind of returns WHY NOT SHOW IT IN THE BIs? instead of using this deception knwoing that they can't ACHIEVE.They can? Then don't disclaim in those only using magnifying glass can see only?
MAS must go after them.