My friend and I visited an insurance booth at an exhibition. The insurance adviser promoted "buy term and invest the difference" (Good!).
They have good marketing materials. The adviser showed the performance of the different funds, and how they fit into the different risk profile. (Good!)
My friend asked about the cost of the funds. The brochure showed an upfront cost of 3% and an annual fee of slightly less than 1%. (Good!)
My friend asked, "What about the distribution cost?" The adviser pretended to be ignorant, and pointed to the investing cost shown in the brochure (ie 3% and 1%).
I asked, "what percentage of the regular premium is allocated for investment?"
The adviser reluctantly brought up another thick booklet (also nicely printed), turned to a page. It showed that 20% was invested in the first year, and other percentages were invested the next few years. The total deduction is more than 150% for the initial years. It is a costly product.
Lesson: It is quite sad that insurance companies design costly products and train their advisers to hide the fact. Indeed, the adviser give a misleading impression and show only part of the total cost.
Who is the blame? The insurance company? The adviser? The marketing system? The regulators?
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07/08 - 07/15
- Insurance company should set a good example
- Private medical practice
- Difficult to find a good law minister?
- Singapore system - good, bad and ugly
- Cycling on pedestrain walks
- Fuel economy
- Adviser gave misleading information
- Consumer information - from Australia
- Reduce offer for Excess and Loss of Use
- Profession or business?
- CASE to start a blog?
- Renewal fee on credit cards
- Questionable marketing practice
- Tribute to Dr Goh Keng Swee
- Get good value products from an adviser
- Voiding of warranty on car
- Insurance as a mutual arrangement to pool risk
- Invest in a low cost fund
- Ballet Under The Stars
- Buy a low cost product
- Liquidate 50% of your investments
- Higher interest rate in the future?
- Generic drugs
- Different types of Fat (in food)
- High distribution cost
- Structured products in a bear market?
- Computing a claim on a hospital bill
- Guaranteed renewable health insurance
- Poor return on capital guaranteed products
- Give good value to customers
- Interest rate linked structured deposit
- Cars under warranty
- Front end charge for regular premium ILP
- How the world has changed in a decade!
- Increase in air fares
- Find the right motor insurance
- Avoid high front end charge
- High expense to treat a premature baby
- Cost of insurance
- Talks and Interviews
- Buy term and invest the difference
- Express your views fairly
- Life cycle Fund
- The Madness of Crowds
- Expense ratio on long term savings
- Structured Investments
- Buy from NTUC Income
- My approach towards insurance
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