Monday, June 13, 2016

Insurance products are poorly understood

Wildy Chia said:

Hi Mr Tan,
My mum was also a victim of such a circumstance (i.e. rejected medical claim). Her medical bills are just overwhelming especially if one has recently graduated from school and fresh in the work force. I have seen various insurance products. Many are poorly understood and sold often on the basis like "because the agent is my friend". Such issues wouldnt go away unless consumers are properly educated on what they are buying and what truly fits their purpose. The mere act of signing on every page of a policy doesnt demonstrate that the principal understand what he or she is purchasing still.

Real effort has to be made from the schools and how agents operate. Till that day, consumers will really have to set aside a conservative sum to meet this contingent risks for which no one can foresee. That in itself also defeats the purpose of insurance because its very purpose is to insure against unforeseeable and yet likely risks. It would be nice if something can be done to educate consumers for the sake of it, rather than for purpose of closing more sales. Then again, who would? It would make certain unprofitable products even more unsellable. Moral hazard just prevails in this business... Indeed perhaps a business which prospers on the presence of asymmetric information flows.

Appreciate your kind sharing

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