Hi Mr. Tan,
Thank you for making such a great simulation game filled with many life twisting events, which could influence the success in the outcome. I learnt a lot from the game such as balancing out resources in improving all areas, especially work and social in early stages. This leads to higher probability in promotions and early marriage! With some luck, I manage to get 3rd in one of the game in the screenshot.
Dear Mr Tan,
It is my first time playing and I managed to come in 5 in the final year! I found the game interesting but perhaps some modifications can be made to the game to make it more realistic and meaningful, however i am certain you would already have thought of it.
Hi
Just out of curiosity and wanted to try how different it would be if i had fine-tuned my approach and am surprized by the results. Would you consider signing your autograph on the book for the top 10 highest score for the month? That would be much appreciated although i am assuming the score i have received is high enough.
Showing posts sorted by date for query twisting. Sort by relevance Show all posts
Showing posts sorted by date for query twisting. Sort by relevance Show all posts
Thursday, February 10, 2011
Monday, September 13, 2010
Twisting of existing life insurance policies
Dear Mr Tan,
I read your blog (http://tankinlian.blogspot.
I listened to the agent's explanation how the new policy is more economically beneficial. In summary, the total premium i have to pay under this new policy is $25k less, yet the coverage is $50k more than what I have for my 2 existing policies added up together. Also the guaranteed surrender value of the new policy at e.g. age of 65 yrs is $20k more than my 2 existing policies added up, which means this new policy break even much earlier than my existing policies. Prima facie, the economic analysis seems to make alot of sense to switch to this new policy.
However, to terminate my 2 existing policies, i will lose $6k in total because both are less than 5 years. It is a dilemma now, whether to take the short term hit losing $6k vs the longer term benefit which are in tens of thousands.
I hence spoke to a friend who was an ex insurance agent for an independent advice. This is what he told me:
1) When I terminate policies, some items will lose coverage for a period eg cancer which kicks in only a few months after a new policy is bought. So I will have an 'exposure' period.
2) Insurance products are always improving, so I am never gonna be getting the best
3) Returns from insurance policies are just nominal, so the returns doesnt matter that much. I should focus my attention on seeking returns from investments, rather than 'optimising' the returns from my insurance policy.
I hope to seek your expert advice on this topic, whether switching to the new product is indeed beneficial for me.
REPLY
You can send the benefit illustration for the three policies to me.
Generally, it is bad idea to terminate an existing policy to take up a new policy, as you will be incurring the upfront cost (1 to 2 years of your premium) all over again. When an agent advise you to take up a new policy to replace an existing policy, the agent is "twisting" the policy. This is almost always at the expense of the consumer. Some agents can make a good living by adopting this type of predatory practice. It is easy to mislead the consumer by pointing out some half truths. It is considered to be illegal in some countries, but not the case in Singapore, due to our lax regulations.
Sunday, September 12, 2010
Twisting a Life Insurance Policy
A life insurance agent will get a consumer to stop an existing policy and take up a new policy for its "better benefits". This is an unethical practice called "twisting". The consumer is usually fooled by the agent and suffers a large loss in taking this bad decision. Read this FAQ to learn how to avoid being fooled.
Saturday, February 13, 2010
Achive top position in life insurance sales
Life insurance companies compete yearly to achieve the top position in life insurance sales. This is an indicator of success and the productivity of the sales force. Several decades ago, the competition was based on annual premium on new policies, but in recent years, 10% of the single premiums are added to the annual premium to get the weighted premium as a measure of the sales.
To achieve sales and energize the sales agents, the life insurance companies introduce new and innovative products every year. These new products are variations of the old products, but have some changes to allow the agents to market the product. The variations may take the following forms:
a) a shorter period to pay the insurance premium
b) additional risks that are being covered
c) change from guaranteed to investment-linked payouts or back
As each new product is launched, the insurance agents have the chance to go back to the old customers and get the customers to terminate an existing policy and buy a new policy under the new product with the special features.
The customers are taken for a ride. They are not aware that the existing products give better value and that replacing the products is costly and against the interest of the consumer. In most cases, the consumer has to give up two years of premiums as upfront cost. The customers were also not aware they can buy separate insurance, at low cost, to cover any new needs. (I shall write separately on these matters).
Some insurance agents make a good living by replacing the existing policies of their customers every few years with the new "better" products, but making their customers poorer in the process. With the huge loses on the replaced products, the consumers are never able to accumulate sufficient savings for their retirements, even if they had been frugal.
An insurance agent can achieve the top sales position by making it possible for the sales agents to exploit the ignorance of their customers through the replacement of existing policies. The sales agents are happy with this arrangement, as they can earn high commission by selling the new policies, and it is easier to replace existing policies than to find new customers.
This bad practice of replacing policies, also known as "twisting" is made illegal in some countries. It is discouraged in Singapore, but the enforcement is weak.
An ethical insurance company will protect the interest of its customers by disallowing replacement of existing policies. An unethical company will make it easy for the sales agents to explot the ignorance of the existing customers to make new sales by replacing existing policies, and achieve the top sales position.
Tan Kin Lian
To achieve sales and energize the sales agents, the life insurance companies introduce new and innovative products every year. These new products are variations of the old products, but have some changes to allow the agents to market the product. The variations may take the following forms:
a) a shorter period to pay the insurance premium
b) additional risks that are being covered
c) change from guaranteed to investment-linked payouts or back
As each new product is launched, the insurance agents have the chance to go back to the old customers and get the customers to terminate an existing policy and buy a new policy under the new product with the special features.
The customers are taken for a ride. They are not aware that the existing products give better value and that replacing the products is costly and against the interest of the consumer. In most cases, the consumer has to give up two years of premiums as upfront cost. The customers were also not aware they can buy separate insurance, at low cost, to cover any new needs. (I shall write separately on these matters).
Some insurance agents make a good living by replacing the existing policies of their customers every few years with the new "better" products, but making their customers poorer in the process. With the huge loses on the replaced products, the consumers are never able to accumulate sufficient savings for their retirements, even if they had been frugal.
An insurance agent can achieve the top sales position by making it possible for the sales agents to exploit the ignorance of their customers through the replacement of existing policies. The sales agents are happy with this arrangement, as they can earn high commission by selling the new policies, and it is easier to replace existing policies than to find new customers.
This bad practice of replacing policies, also known as "twisting" is made illegal in some countries. It is discouraged in Singapore, but the enforcement is weak.
An ethical insurance company will protect the interest of its customers by disallowing replacement of existing policies. An unethical company will make it easy for the sales agents to explot the ignorance of the existing customers to make new sales by replacing existing policies, and achieve the top sales position.
Tan Kin Lian
Tuesday, February 09, 2010
Existing Life Insurance Policies
A few people have asked for my views on whether they should continue their existing life insurance policies, as the return is rather poor. I asked them to read this FAQ and get the relevant figures to make a decision.
Generally, it is better to continue with the existing policy. You have already incurred a high upfront cost during the first few years of the policy, which gave you a bad start. But, excluding the upfront loss (which you have to write off), the going-forward return should be better, maybe 3% to 4% per annum, compared to alternative investments.
Never give up an existing policy to buy a new life insurance policy. You will incur the upfront cost again. My insurance agent will tell you that a new policy is better. This is bad advice. It is also unethical, as they are earning a large commission again, at the expense of the client. This is called "twisting" and is illegal in some countries.
Tan Kin Lian
Generally, it is better to continue with the existing policy. You have already incurred a high upfront cost during the first few years of the policy, which gave you a bad start. But, excluding the upfront loss (which you have to write off), the going-forward return should be better, maybe 3% to 4% per annum, compared to alternative investments.
Never give up an existing policy to buy a new life insurance policy. You will incur the upfront cost again. My insurance agent will tell you that a new policy is better. This is bad advice. It is also unethical, as they are earning a large commission again, at the expense of the client. This is called "twisting" and is illegal in some countries.
Tan Kin Lian
Sunday, February 07, 2010
Twisting of Life Insurance Policies
Twisting occurs when an insurance agent ask the consumer to give up an existing life insurance policy to buy a new policy by stating that the new policy has some useful features. This is usually misleading and bad for the customer. It has been a rampant practice in many countries, including Singapore, for many years. By switching insurance, the consumer has to incur the upfront cost (of two years premium) again. This is how insurance agents continue to make a big income at the expense of the consumers.
Many consumers are not aware that they are being skimmed. Those who are, felt embarrassed and prefer to overlook it, rather than bring the agent to account. This is how the bad practice has continued for so long.
If consumers allow this type of practice to continue, they will have very poor return on their hard earned savings that they put into life insurance. They will not get a fair return. What a pity!
Tan Kin Lian
Many consumers are not aware that they are being skimmed. Those who are, felt embarrassed and prefer to overlook it, rather than bring the agent to account. This is how the bad practice has continued for so long.
If consumers allow this type of practice to continue, they will have very poor return on their hard earned savings that they put into life insurance. They will not get a fair return. What a pity!
Tan Kin Lian
Monday, October 05, 2009
Insurance agents can play a positive role
I wish to say a few positive words about insurance agents; I know many of them personally over the past years. They sincerely believe in providing a valuable service to protect the financial security of their clients. They work hard to make a living and earned a modest income.
The commission rates earned by the agents of NTUC Income are lower than the market rates. This helped to reduce the cost to the consumers. This was the case in past years; I believe that it is still the case today.
Some people have regulary posted anonymous comments to attack insurance agents, particularly the agents of NTUC Income. These comments were unfair and malicious; I have blocked them.
While most insurance agents act honestly, there are some agents that take advantage of the ignorance of their clients. These bad agents resort to twisting and gave bad advice to earn more commission. They are the minority, but they gave a bad name to the other agents. The insurance companies have to share the blame for the bad practices also.
Insurance companies can play a positive role by designing products that are fair and give good value to consumers, while providing a fair of remuneration to the agents. The correct approach is to simplify the product, improve transparency, increase the productivity of agents and reduce the distribution cost. This will create a positive environment and benefit all the parties.
Tan Kin Lian
The commission rates earned by the agents of NTUC Income are lower than the market rates. This helped to reduce the cost to the consumers. This was the case in past years; I believe that it is still the case today.
Some people have regulary posted anonymous comments to attack insurance agents, particularly the agents of NTUC Income. These comments were unfair and malicious; I have blocked them.
While most insurance agents act honestly, there are some agents that take advantage of the ignorance of their clients. These bad agents resort to twisting and gave bad advice to earn more commission. They are the minority, but they gave a bad name to the other agents. The insurance companies have to share the blame for the bad practices also.
Insurance companies can play a positive role by designing products that are fair and give good value to consumers, while providing a fair of remuneration to the agents. The correct approach is to simplify the product, improve transparency, increase the productivity of agents and reduce the distribution cost. This will create a positive environment and benefit all the parties.
Tan Kin Lian
Wednesday, September 23, 2009
Use "funny language" to confuse the policyholder
In April, a policyholder was advised by the agent to "lock in" his investment linked policy and wait for a higher price to "lock out" his policy. He was assured that he would not be adversely affected by this transaction. He trusted the agent and took the advice to "lock in" his policy, although he was not clear about this concept.
Later, he discovered that "lock in" meant that he sold his investments to prevent further loss, if the market falls further. Instead of protecting against further losses, he missed the rally in the market and lost a lot of money due to this bad advice.
Why did the agent use "funny language" to confuse the policyholder? Why not advise the policyholder in direct language, i.e. sell the investments to avoid further losses from a falling market?
If the policyholder sells the investments and buy them back later, will the agent earn commission on the new purchase? I do not know the practice of this company and the terms on which the units are sold and bought back. Is this another form of twisting?
I wonder if the agent was giving bad advice, or have an ulterior motive in getting the client to churn the investment? I am very sad that some agents take advantage of policyholders to earn more commission.
Later, he discovered that "lock in" meant that he sold his investments to prevent further loss, if the market falls further. Instead of protecting against further losses, he missed the rally in the market and lost a lot of money due to this bad advice.
Why did the agent use "funny language" to confuse the policyholder? Why not advise the policyholder in direct language, i.e. sell the investments to avoid further losses from a falling market?
If the policyholder sells the investments and buy them back later, will the agent earn commission on the new purchase? I do not know the practice of this company and the terms on which the units are sold and bought back. Is this another form of twisting?
I wonder if the agent was giving bad advice, or have an ulterior motive in getting the client to churn the investment? I am very sad that some agents take advantage of policyholders to earn more commission.
Friday, March 06, 2009
Twisting a policy
Dear Mr Tan,
I was deeply troubled by a 20 year limited premium policy that bought from NTUC Income 2 years ago. I bought the policy for my daughter to provide her with lifetime coverage by paying the policy premium for 20 years.
Recently, NTUC Income no longer accept new policy for the product and was replaced it with a similar limited premium product called Revo Life. My agent said that my existing policy is inferior to the new Revo Life:
1. My existing policy is more costly for the same amount of coverage
2. Revo Life took a much shorter period to breakeven
3. Revo Life provides extra benefit of 3X payments on accident coverage.
Why is the original product more costly with less coverage, where the contract already specified the % of premium that represented the distribution cost in maintaining the policy.
Could this be due to some miscalculation that caused the higher cost in initial policy?
As the consumer has not been notify of this difference, people who purchase the original 20 years limited will continue to pay more for less for the remaining year!
Do you think the consumer have the right to ask for some kind of bridging arrangement to the newer policy with minimum loss? I was suggested by the underwriter (through my agent) that I should cancel my policy (with a huge loss of course) and buy the new policy. Do you think this is a fair suggestion?
REPLY
You should ask the agent to present a detailed comparison of the cash value of the old policy and the new policy after 5, 10, 15, 20 years and the premium. You can read the FAQ in my website, www.tankinlian.com/faq
You should also consider this point. By stopping the old policy and taking a new policy, you are suffering the high front end charge again (which can take up more than one year of your savings).
Normally, it is unethical for an agent to advise a client to stop an old policy and take up a new policy, as it is against the interest of the client. This is called "twisting a policy". You can lodge a complaint to NTUC Income against this unethical practice.
It is not correct for an insurance company to introduce a new product that offer a better return compared to an old product. This is unfair to existing customers. It is their duty to ensure that existing customers are given a fair return, through higher bonus, compared to new customers. You can ask NTUC Income's management to give their comment on this point.
I was deeply troubled by a 20 year limited premium policy that bought from NTUC Income 2 years ago. I bought the policy for my daughter to provide her with lifetime coverage by paying the policy premium for 20 years.
Recently, NTUC Income no longer accept new policy for the product and was replaced it with a similar limited premium product called Revo Life. My agent said that my existing policy is inferior to the new Revo Life:
1. My existing policy is more costly for the same amount of coverage
2. Revo Life took a much shorter period to breakeven
3. Revo Life provides extra benefit of 3X payments on accident coverage.
Why is the original product more costly with less coverage, where the contract already specified the % of premium that represented the distribution cost in maintaining the policy.
Could this be due to some miscalculation that caused the higher cost in initial policy?
As the consumer has not been notify of this difference, people who purchase the original 20 years limited will continue to pay more for less for the remaining year!
Do you think the consumer have the right to ask for some kind of bridging arrangement to the newer policy with minimum loss? I was suggested by the underwriter (through my agent) that I should cancel my policy (with a huge loss of course) and buy the new policy. Do you think this is a fair suggestion?
REPLY
You should ask the agent to present a detailed comparison of the cash value of the old policy and the new policy after 5, 10, 15, 20 years and the premium. You can read the FAQ in my website, www.tankinlian.com/faq
You should also consider this point. By stopping the old policy and taking a new policy, you are suffering the high front end charge again (which can take up more than one year of your savings).
Normally, it is unethical for an agent to advise a client to stop an old policy and take up a new policy, as it is against the interest of the client. This is called "twisting a policy". You can lodge a complaint to NTUC Income against this unethical practice.
It is not correct for an insurance company to introduce a new product that offer a better return compared to an old product. This is unfair to existing customers. It is their duty to ensure that existing customers are given a fair return, through higher bonus, compared to new customers. You can ask NTUC Income's management to give their comment on this point.
You can also raise this matter with the Monetary Authority of Singapore. They will ask NTUC Income to give you an explanation. If you are not satisfied with the reply, you can discuss with MAS.
Tuesday, November 18, 2008
Revosave and Vivolife
Someone continues to post comments to attack the new products- Revosave and Vivolife, launched by NTUC Income. I have blocked these comments.
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
Friday, October 03, 2008
For defensive investors
Hi Mr. Tan,
I refer to the letter "High Notes 2 Not a Low-risk product" from Ms Janet Mohan, a V.P. of DBS. This letter was published today (2.10.08) on the forum page of the straits times.
In her letter, Ms Mohan stated that "DBS High Notes 2 (HN2) is a five-year, structured, credit -linked note designed for investor seeking enhanced yield by providing exposure to a basket of highly rated entities....."
She went on to state that "HN2 is not a low-risk product nor principal-protected".
However, according to the Pricing Statement (page 14), High Notes 2 is described as “…5-year structured first-to-default credit linked notes designed for defensive investors seeking enhanced yield by providing exposure to a basket of highly rated regional and international banks……”. The description implies that High Notes 2 is a safe investment for "defensive" investor. The word “defensive” was omitted in Ms Mohan’s letter, probably intentionally.
This shows how the bank is twisting its words to defend itself from alleged misrepresentation.
Kindly post this email in your blog as I wish to share my observation with others who could lose their money in HN2.
Thank you.
Wilson Tan .
I refer to the letter "High Notes 2 Not a Low-risk product" from Ms Janet Mohan, a V.P. of DBS. This letter was published today (2.10.08) on the forum page of the straits times.
In her letter, Ms Mohan stated that "DBS High Notes 2 (HN2) is a five-year, structured, credit -linked note designed for investor seeking enhanced yield by providing exposure to a basket of highly rated entities....."
She went on to state that "HN2 is not a low-risk product nor principal-protected".
However, according to the Pricing Statement (page 14), High Notes 2 is described as “…5-year structured first-to-default credit linked notes designed for defensive investors seeking enhanced yield by providing exposure to a basket of highly rated regional and international banks……”. The description implies that High Notes 2 is a safe investment for "defensive" investor. The word “defensive” was omitted in Ms Mohan’s letter, probably intentionally.
This shows how the bank is twisting its words to defend itself from alleged misrepresentation.
Kindly post this email in your blog as I wish to share my observation with others who could lose their money in HN2.
Thank you.
Wilson Tan .
Friday, September 05, 2008
Twisting of existing life policies
Dear Mr Tan,
I am a young, single working adult. I've met up with two financial planners. One is from a reputatble affliated insurance company (X) and another is a independent financial advisor (Y).
X recommends me to buy a limited whole life plan (coverage of 100K) and a private hospitalisation plan and some other riders such asdiability income. The total premiums payable per month is around 250. Previously I've already bought a ILP ffrom X (100k coverage) and I have another 50K coverage from a whole life plan that my parents bought for me since young ($50 per month).
Y recommends me to cancel the 50K whole life plan that my parents bought for me and buy a term plan including HnS for only 100 (coverage of 250k), and invest the rest.
I understand this is in line with your "buy term, and invest the rest" strategy. But do I have to cancel the plan that my parents have been paying since 13 years ago?
And what is your opinion on limited whole life plan?
REPLY
You should continue your existing policies. Do not terminate them to buy the recommended new policy.
The agents X and Y are trying to "twist" your policy. Read this blog to understand what is "twisting": http://tankinlian.blogspot.com/search?q=twisting
If you wish to "but term and invest the difference", you should choose a 20 or 30 year term and not term to 100 years - which is like whole life insurance. The agent is cunning, and is trying to make a sale at your expense.
Avoid the whole life limited payment plan. It is expensive and give poor values. Do not cancel any existing policy to buy a new policy with high charges.
I am a young, single working adult. I've met up with two financial planners. One is from a reputatble affliated insurance company (X) and another is a independent financial advisor (Y).
X recommends me to buy a limited whole life plan (coverage of 100K) and a private hospitalisation plan and some other riders such asdiability income. The total premiums payable per month is around 250. Previously I've already bought a ILP ffrom X (100k coverage) and I have another 50K coverage from a whole life plan that my parents bought for me since young ($50 per month).
Y recommends me to cancel the 50K whole life plan that my parents bought for me and buy a term plan including HnS for only 100 (coverage of 250k), and invest the rest.
I understand this is in line with your "buy term, and invest the rest" strategy. But do I have to cancel the plan that my parents have been paying since 13 years ago?
And what is your opinion on limited whole life plan?
REPLY
You should continue your existing policies. Do not terminate them to buy the recommended new policy.
The agents X and Y are trying to "twist" your policy. Read this blog to understand what is "twisting": http://tankinlian.blogspot.com/search?q=twisting
If you wish to "but term and invest the difference", you should choose a 20 or 30 year term and not term to 100 years - which is like whole life insurance. The agent is cunning, and is trying to make a sale at your expense.
Avoid the whole life limited payment plan. It is expensive and give poor values. Do not cancel any existing policy to buy a new policy with high charges.
Thursday, September 04, 2008
Whole life Limited Payment
Hi Mr. Tan,
My friend, an insurance agent advised me that there is a new life policy where I only need to pay premium for 15 years. My present policy (which I bought from another agent before) needs the premium to be paid until I am 85 years old. She said that it is better to pay more and have the premium stop after 15 years. Should I stop the old policy and take the new one? I find the premium for the new policy to be quite expensive.
REPLY
Your agent is trying to "twist" your policy. Read this blog for an explanation about twisting:
http://tankinlian.blogspot.com/2008/09/twisting-is-bad-for-customer.html
You should lodge a complaint against the agent for this unethical product. Did the agent tell you that she is earning commission by selling the new policy to you? Did she tell you how much is the commission?
My friend, an insurance agent advised me that there is a new life policy where I only need to pay premium for 15 years. My present policy (which I bought from another agent before) needs the premium to be paid until I am 85 years old. She said that it is better to pay more and have the premium stop after 15 years. Should I stop the old policy and take the new one? I find the premium for the new policy to be quite expensive.
REPLY
Your agent is trying to "twist" your policy. Read this blog for an explanation about twisting:
http://tankinlian.blogspot.com/2008/09/twisting-is-bad-for-customer.html
You should lodge a complaint against the agent for this unethical product. Did the agent tell you that she is earning commission by selling the new policy to you? Did she tell you how much is the commission?
Wednesday, September 03, 2008
Twisting of ILP to Revosave
Dear Mr Tan,
I sign on a ILP in 2005. I paid $100 every month through Giro. The agent told me I can only withdraw after six years. So far I had invested $36,000 but the return is $27000.
Today another agent explained to me that this ILP will not make any gain for the next three years. Since I have a living policy which muture at 65, he reconmented a RevoSave Policy, which can earn bonus and insure for permenent disablity and death.
I am 58 year old and want to save for my retirement. I found that I rather pay the similar amount to the RevoSave. He told me I can withraw the ILP anytime, it is true? Shall I terminate the ILP and take the RevoSave?
REPLY
The Revosave is not suitable to save for retirement, especially for someone at your age. It gives a poor return. You should continue with your existing ILP.
The new agent is trying to "twist" your policy, but getting you to terminate an existing policy and take up a new policy (i.e. Revosave) so that he can earn a high commission on the new policy. You should ask the agent to explain how much commission he can earn from the new policy.
Here is an explanation about twisting:
http://tankinlian.blogspot.com/2008/08/understanding-twisting-and-churning.html
You should lodge a compliant with the insurance company or Monetary Authority of Singapore about the unethical advice given by the agent.
I sign on a ILP in 2005. I paid $100 every month through Giro. The agent told me I can only withdraw after six years. So far I had invested $36,000 but the return is $27000.
Today another agent explained to me that this ILP will not make any gain for the next three years. Since I have a living policy which muture at 65, he reconmented a RevoSave Policy, which can earn bonus and insure for permenent disablity and death.
I am 58 year old and want to save for my retirement. I found that I rather pay the similar amount to the RevoSave. He told me I can withraw the ILP anytime, it is true? Shall I terminate the ILP and take the RevoSave?
REPLY
The Revosave is not suitable to save for retirement, especially for someone at your age. It gives a poor return. You should continue with your existing ILP.
The new agent is trying to "twist" your policy, but getting you to terminate an existing policy and take up a new policy (i.e. Revosave) so that he can earn a high commission on the new policy. You should ask the agent to explain how much commission he can earn from the new policy.
Here is an explanation about twisting:
http://tankinlian.blogspot.com/2008/08/understanding-twisting-and-churning.html
You should lodge a compliant with the insurance company or Monetary Authority of Singapore about the unethical advice given by the agent.
Tuesday, September 02, 2008
Twisting is bad for the customer
Insurance agents are provided with a range of complex products, such as whole life, endowment and investment-linked plans. There are many variations of these products, including the cash back features. Some have guaranteed returns, some have bonuses, and some products have values that are linked to a fund.
It is easy for an agent to confuse a customer to stop an existing insurance policy to buy a new policy. The agent can easily point out a different feature and explain why it is good for the customer. This is not true, but the agent is trained on how to make the customer believe in the statement.
The agent can earn a high commision on the new policy. This commission can take away newly two years of the premium. If the premium is $300 a month, the customer can lose up to $7,200 of premium as charges taken away from the new policy, mainly to pay commission to the agent.
This practice is called "twisting" and is illegal in many countries. It is quite rampant in Singapore. Many consumers are taken for a ride. If you find that an agent has "twisted" your policy, you should lodge a complaint with the insurance company or with the Monetary Authority of Singapore.
The insurance companies should also be blamed for this bad practice. They introduce new products, which gives the opportunity for the agent to twist the policy of other agents, from the same company or a new company.
How is the customer twisted?
1. If you have a whole life or endowment policy, the agent will tell you that it is better to buy an investment-linked policy by showing the projected returns assuming a high yield
2. If you have an investment-linked policy, the agent will tell you that it has lost money (which it has in the recent market down-turn) and move you back to a whole life or endowment or cash back policy.
Remember: the agent always gains from the high commission when you stop a policy and buy a new policy. This is always done at the expense of the customer.
It is easy for an agent to confuse a customer to stop an existing insurance policy to buy a new policy. The agent can easily point out a different feature and explain why it is good for the customer. This is not true, but the agent is trained on how to make the customer believe in the statement.
The agent can earn a high commision on the new policy. This commission can take away newly two years of the premium. If the premium is $300 a month, the customer can lose up to $7,200 of premium as charges taken away from the new policy, mainly to pay commission to the agent.
This practice is called "twisting" and is illegal in many countries. It is quite rampant in Singapore. Many consumers are taken for a ride. If you find that an agent has "twisted" your policy, you should lodge a complaint with the insurance company or with the Monetary Authority of Singapore.
The insurance companies should also be blamed for this bad practice. They introduce new products, which gives the opportunity for the agent to twist the policy of other agents, from the same company or a new company.
How is the customer twisted?
1. If you have a whole life or endowment policy, the agent will tell you that it is better to buy an investment-linked policy by showing the projected returns assuming a high yield
2. If you have an investment-linked policy, the agent will tell you that it has lost money (which it has in the recent market down-turn) and move you back to a whole life or endowment or cash back policy.
Remember: the agent always gains from the high commission when you stop a policy and buy a new policy. This is always done at the expense of the customer.
Saturday, August 30, 2008
Avoid being twisted
A reader of my blog asked my advice about terminating his investment-linked policy. His friend advised him that the policy has a "time bomb" and give a poor return. I learned later that the friend was an insurance agent, trying to sell him a whole life policy with premium payable for 25 years.
The conduct of the insurance agent "friend" is considered to be unethical. This practice is called "twisting" and is to the disadvantage of the customer. The distribution cost of the whole life policy is about two years of the premium, amounting to about $3,000. This is an additional cost to be incurred by the customer in switching the policy.
In the USA, this practice is considered to be illegal. In Singapore, there is a warning in the benefit illustration to warn consumers about "twisting" but many consumers are not aware that they are being "twisted".
The conduct of the insurance agent "friend" is considered to be unethical. This practice is called "twisting" and is to the disadvantage of the customer. The distribution cost of the whole life policy is about two years of the premium, amounting to about $3,000. This is an additional cost to be incurred by the customer in switching the policy.
In the USA, this practice is considered to be illegal. In Singapore, there is a warning in the benefit illustration to warn consumers about "twisting" but many consumers are not aware that they are being "twisted".
Thursday, August 28, 2008
Understanding Twisting and Churning
http://ezinearticles.com/?Life-Insurance-Fraud---Understanding-Churning-And-Twisting&id=782681
There are two types of life insurance fraud carried out by unscrupulous agents you should be aware of. The two closely related types of insurance scams are known as churning and twisting.
How do those agents carry them out and what do you do if you're a victim? Make sure you know these before you get scammed!
The fraudulent practice of making an insured drain one life insurance policy in other to fund another new policy is called churning. Important information about the full consequence of their action is dishonestly withheld by the agent involved.
Closely related to this is twisting. In twisting the policy holder is tricked to drain funds to buy another policy from another life insurance carrier. Run; don't walk if an agent promises you a new policy that will give you more coverage without increasing your premium. It's a scam so beware!
It's only when they get bills for new premiums that victims find out that something really was wrong. For some it could take up to two years before they find out.
Now is there anything you can do if you've been so scammed? But can a person get more coverage without increasing their premium?
For those who've been scammed there's help and for those who want more for less, there's a way. For those who've been ripped off, you can get help from your state's department of insurance or its equivalent. (In Singapore, you can complain to the Monetary Authority of Singapore).
Just a visit their website and you'll find resources that will help you. You can also call if you prefer that. Many reputable insurance companies will quickly compensate you once it's established that you were a victim of such fraud. You just have to contact their main office directly and not a branch.
There are two types of life insurance fraud carried out by unscrupulous agents you should be aware of. The two closely related types of insurance scams are known as churning and twisting.
How do those agents carry them out and what do you do if you're a victim? Make sure you know these before you get scammed!
The fraudulent practice of making an insured drain one life insurance policy in other to fund another new policy is called churning. Important information about the full consequence of their action is dishonestly withheld by the agent involved.
Closely related to this is twisting. In twisting the policy holder is tricked to drain funds to buy another policy from another life insurance carrier. Run; don't walk if an agent promises you a new policy that will give you more coverage without increasing your premium. It's a scam so beware!
It's only when they get bills for new premiums that victims find out that something really was wrong. For some it could take up to two years before they find out.
Now is there anything you can do if you've been so scammed? But can a person get more coverage without increasing their premium?
For those who've been scammed there's help and for those who want more for less, there's a way. For those who've been ripped off, you can get help from your state's department of insurance or its equivalent. (In Singapore, you can complain to the Monetary Authority of Singapore).
Just a visit their website and you'll find resources that will help you. You can also call if you prefer that. Many reputable insurance companies will quickly compensate you once it's established that you were a victim of such fraud. You just have to contact their main office directly and not a branch.
Subscribe to:
Posts (Atom)