Tan Kin Lian's Blog: Bonus should be based on actual experience

Saturday, June 21, 2008

Bonus should be based on actual experience

Dear Mr. Tan,
Sorry if my posting seem to attack you, but i just want to clear the issue of the statement you said about me of " taking consumer for a ride".

I did mention that as a consumer, if the insurance company can provide me the projected maturity return at the end, I will be happy. (Higher return seem like a dream, lower return I will not trust that company anymore).

I do not support the insurance companies but accept that it thing we can't change. I never bought growth plan from ntuc income before, therefore want to find out whether did you previously as CEO of NTUC provide consumer higher than the projected return. (I know you gave good return for regular endowment).

Finally, I'm not an agent or manager from Income, but ex-agent from your competitor.
vfocus

REPLY
During my 30 years as CEO, Income give a good return to policyholders as follows:
> expenses are kept low
> 98% of the surplus are distributed as annual and special bonus to policyholders

During the 1980s and early 1990s, the bonus rates were increased every few years - made possible by the good investment yield. From 1998 to 2003, the bonus rates were reduced due to the low interest rate environment and two financial crisis.

Since 2004, the investment yields have been exceptionally good. In my view, the surplus is more than adequate to restore the bonus cuts in recent years.

This approach should be applied to all participating policies, i.e. regular and single premium policies. All participating policies should be treated fairly.

10 comments:

Crazy Aries said...: Dear Mr Tan, thanks for the reply.

Maybe i never phase my question properly in the first place, sorry about that.

But i stick to my belief, give me what i expected to get is more than enough, anything less, bye bye, no more new biz from me anymore.

hope u can gain victory in getting better return for poliyholder of the growth plan, i'm happy with my flexicash.; June 21, 2008 7:41 PM
siewkhim said...: Dear Kin Lian,

Before a participating policy is sold, the money is in our hand. When it is hold via misleading sales illustration, advertisement, high powered salesmanship and promises, our money is in their hand.

Once that happened, we are at the mercy of these people. They will take all leaving us the crumbs.

We can continue to preach "equity" and "policyholders' reasonable expectations" regarding the distribution of bonuses in participating policies. At the end of day these are just academic exercises because these insurers are only interested in protecting the interest of their top management and shareholders. These people enriched themselves by sucking the blood of the poor innocent and ignorant public.

Let's get together to prevent more of our love ones, friends and citizens being taken for a ride with those crapy participating policies.; June 22, 2008 11:46 AM
zhummmeng said...: It is not easy to do it. The consumers are as blur as sotong and insurers and thier unethical agents exploit and capitalise on it.That is why history is repeated again and again.
Regulation is not possible and something the aurthority is not willing to do because they want market forces to have a free play.Consumers especially the man in the street always get trampled by this free play.They need protection and instead they end up working with wolves in sheep's clothing.
A better way, if you agree, is to educate them. How? Direct consumers to Financial Planning Association of Singapore (FPAS) website http;//www.fpas.org.sg to learn about financial planning and their rights to ethical and competent advice.(Please note i have no vested interest in the website).
This might be a good start in the right direction. This will equip them with some ideas of financial planning and what to expect of the advisers and not at the mercy of the unscrupulous insurance agents.; June 22, 2008 6:02 PM
Falcon said...: Since NTUC Income has cut the annual bonuses, the policies have not met the projected returns. So is Vfocus meeting his expectations? If not, then what is he talking about?; June 23, 2008 1:30 AM
Crazy Aries said...: falcon, my question to Mr Tan is that did his wife's Growth policy maturing value met projection return.

As for myself, it met projected return, however, not with ntuc income.

What i talking, i said that at the end of term or maturity, getting back projected value is what i ask for, better is seldom possible.; June 23, 2008 1:20 PM
Falcon said...: Sure vfocus,
Now that NTUC Income has cut its annual bonus leading to projected value not met, by your criteria then, is NTUC Income policyholders justified to be unhappy with it? Do we then have a right to denounce NTUC Income for not meetings its obligations?

Thanks; June 23, 2008 3:53 PM
Crazy Aries said...: Hi Falcon, for your info, the only plan i take up from ntuc income are ID7 & Flexicash.

Yes, if the annual bonus with the so-called special bonus failed to meet the projected return, it will be really bad.; June 24, 2008 11:05 AM
Falcon said...: Thanks Vfocus,
Unfortunately all my policies, and I have more than 10 did not even come close to its projections. I have two policies maturing end of this year and they are way off its initial projections, in spite of Income making 10.7% last year and an average of 7.8% the last ten years. They cannot meet projections which were projected at 5.5%. Now you know why we are so angry?; June 24, 2008 10:49 PM
Crazy Aries said...: I believe the reason why it did not meet the projection is due to the bonus cuts (From 1998 to 2003).

The recent change in bonus system by income is to prevent such thing from happening again, hope so.

But, Mr Tan is right to request income to restore the bonus cuts during that time since the average investment yield is 7.8% for the past 10 yrs.

I know why policyholder are angry, but as Mr Tan mention, it not advisable to surrender existing policies since incurred up-front charge already.; June 25, 2008 9:11 AM
siewkhim said...: The projections use in the sales illustration are bullshit. Most of the time, actual experiences fail to meet the projected values.

The projections are traps carefully laid and once you are not alert they zap you for next 10-20 years.

Show me which insurer(s) pay equal to or higher than projected values. Most of the time they pay below projected values.

It is a multi-million dollars con-job that has been going on for many years.

AVOID ALL FORMS OF PARTICIPATING POLICIES.; June 25, 2008 2:34 PM