Wednesday, May 07, 2008

Bad name to the life insurance industry

Someone attacked me for giving a bad name to the life insurance industry.

In my view, there are two segments of the industry:

1. Bad segment. This segment offers products that give poor value to consumers and pays high commission to agents to sell the products often through misleading means. This has been a problem of the life insurance industry for decades and continue to be a big problem today.

2. Good segment. This segment offers products that give good value to consumers, e.g. low cost term insurance. They give a good return to consumers on their long term savings, e.g. no load mutual funds. This segment represents a smaller share of the market. I hope that it will grow in the future.

In my articles, I wish to educate consumers on how to identify and avoid the bad segments. The agents involved in this market segment have caused disappointments to hundred thousands of policyholders over the years. These agents, and their insurance managers, have been giving a bad name to the life insurance industry.

I encourage consumers to find out and go to the good segment of the market. You need life insurance to provide financial security for your family. You need to grow your savings for your retirement.

I also encourage more insurance agents to move to the good segment of the market. You can earn an honest income (i.e. not at the expense of your customer) by selling good products in bigger volumes at lower margin.


Anonymous said...

Mr Tan, I am surprised that you are making such comments, in the like of a chief of some independent advisory firm some years back.

Sir, as a former Chief of NTUC Income, you rallied about par products especially the Living Policy & the Growth plan. You also jumped into the discussion & talked fondly about Income's ILPs when the ILP issue caused an uproar in early 2005. No recollection about you talking fondly about your Term products back then. FYI, the premium rates for Income's terms products were revised to super competitive rates only after you left Income.

Sir, I respect you as an insurance veteran and with this respect, I ask that you please do not assail your former business partners. I may have a myopic view in your eyes, and you are certainly entitled to your views, Sir. But Sir, I sincerely do not wish that you are being seen in the same light as some others, who left as insurance agents & became advisors (something like that), and had somewhat publicly "degrade" their peers - I guess you know what I am talking about.

人的生命恰似日落日出,花落花開。俗語說〝種瓜得瓜、種豆得豆〞,'精神' 是做任何事中最重要的條件。共勉之。

Anonymous said...

9.05am, check your "facts". The family insurance have been competitive already during Mr. Tan's time.There have been no change Don't try to pull a fast one on Mr. Tan's memory.
I wonder what is your agenda. Having a lot of goodies from new management.
Are you a " eat duck near duck and eat chicken near chicken"? It is very dangerous. You have an axe to grind.

Anonymous said...

Mr Tan

you talked about making an honest living by moving to the good segment of the market. Actually your good segment of the market does not need any financial adviser. There existence is redundant. If they are needed, they are there to offer free advice, just like you. It'll be people who have plenty of money and do not need to work for a living, just like you.

Well, face it. Maslow's theory still works. Financial advisers are humans, they work for a living. Every cent they earn always appear to be at the expense of the customer, because customers in Singapore do not value their service. Which is why they buy simple term products and low cost fund that you advocate.

I don't think a lot of rational financial advisers will join your good segment.

Anonymous said...

Yes, money is the motivator. It is true as you said every cent is at the expense of the customer because you give nothing in return. You expect to 40% , 50% of the premium by filling forms For your customers or by visiting them? What values have you added? You read out the features and benefits and expect to get paid a lot?
Let's hear from you what you do that you expect to be paid a high commission, Mr. 5.16PM
You don't make your living by robbing other's living. If you do , leave all the poor old people and innocent aunties and uncles alone.Go and rob the the rich.
Mr.5.16pm, the rich don't want to see you. They have better and qualified advisers.

Tan Kin Lian said...

To anonymous 5:16 pm

The good segment of the market requires salaried advisers. They can earn an adequate salary, like marketing officers of banks.

I hope that they can be more productive, if customers visit the office to buy insurance. The higher productivity means lower cost to customers and good pay for the salaried advisers.

(But the salaried advisers cannot get super-rich). Insurance sales should not be a "get rich quick" opportunity. said...

I think the most problematic thing is actually that some people are more motivated to give better advises and services depending on commissions, due to better due diligence, and less people are likely to buy simple term products.

Simply put, Singaporeans are now generally more educated.

And cheap Term Insurance is not the 'Cheap Answer' to Insurance.

While it must have seemed horrible to most people, highly paid BUT honest financial advisers do represent the top segment, but most people doesn't recognise them and criticize them for providing OVERPRICED service. Talk about taking things for granted.

And these days if anybody want to earn an adequate minimum salary to your specifications, either they must be 1) Having certain degree, 2) Doing alot of sales with low commissions. Try getting new young blood to fulfill both obligations.

These days even Banks have problems with sales.

Nobody, I mean little to few Singaporeans would want to become an Insurance Agent, unless they are willing to sell overleveraged products at undermarket commissions, and still seen as 'ripping people's money off' from 'risking their lives'.

So what now, suggesting we import cheap labour to help Singapore sell Insurance to Singaporeans?

Please do consider the impact of your statement, that is overall generic and irrealistic.

As I'm speaking as a young naive Singaporean, only 23! Feel free to correct me.

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