Friday, May 18, 2018

Sale of life insurance products by banks

Mdm T went to a bank to buy Singapore Savers Bond. The bank officer recommended to her a 3 year deposit that gave a guaranteed return of 2% plus an upside that she did not understand .

She signed several documents, including an authorisation to transfer $100,000 from her account. She did not get any of the documents that she signed.

I found out that she had bought a single premium policy from a life insurance policy. She was not fully aware about it at the time of sale. She was not given any benefit illustration of the policy, which was against the regulations.

Mdm T thought that she had made a deposit for 3 years.

It is dangerous for banks to be allowed to sell third party products in this manner. Many consumers have been misled into investing in life insurance products which has penalties and high charges that they were not fully aware of.

It is advisable for the bank to give to the customer a copy of all the documents that they had signed. They should also give the benefit illustration of the life insurance contract that was sold to the customer. This is to avoid misunderstanding and mis-selling.

A better approach is for the Monetary Authority of Singapore to disallow banks from selling life insurance products. Let the products be sold by the appointed agents of the life insurance company.

Tan Kin Lian

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