Tan Kin Lian's Blog: Ask the right questions

Sunday, August 17, 2008

Ask the right questions

A reader was given a Benefit Illustration for a life insurance policy (PayMyUni). He did not understand the product and asked for my advice.

The Benefit Illustration contained many pages of information. It is quite complicated to read through the details. Most of the information are not relevant to the consumer who has to make the decision.

The consumer should ask a few questions to the financial adviser:

1. What is the amount that I can get back at the end of the term, based on a projected yield of 3.75% and 5.25% p.a. ?

2. What is the amount that I can get by investing the same premium over the same period to earn 4% p.a. ?

If you buy Term insurance (and spend 5% of the premium) and invest the remaining 95% in a low cost investment fund, you should be able to earn a net yield of at least 4% p.a.

The insurance agent will tell you a lot of other information, that are usually irrelevant to your decision. You should not be distracted by the sales talk. You should focus on getting the relevant figures for your decision.

My advice is to avoid all life insurance products sold by insurance agents, as they have high expenses. To save for a child's education, you can follow the tips here:

http://www.tankinlian.com/faq/education.html

4 comments:

zhummmeng said...: It is not easy to ask the right questions especially when you are encountering the product for the first time.The agents themselves don't even know, so how to explain. The agents will tell you what you like to hear without the details and what he or she can sell you.That is what they are trained. It is basically selling and as you know selling is open to many abuses and malpractices and they inevitably happen with insurance salesmen whose objective is to make a sale and not interested whether the product meets your needs.
It is Caveat Emptor.If translated in plain singlish language it is "you die is your business".
Susse Orman's advice is to change your insurance salesman to an honest and competent adviser.; August 17, 2008 1:12 PM
siewkhim said...: Dear Kin Lian,

Can you please update us on the issue of NTUC Income bonus policy on our participating policies with them?

The next AGM is approaching. So what is next. As far as I know NTUC Income has not entertained all the issues raised by you in your letters etc to them.

Do you intend to plan for a protest at the next AGM? In fact I was a little disappointed that you withdrew your protest in the last AGM. I was looking to see Tan Kin Lian in action.

So what your plan for next AGM? We have to plan now and strategised our move.

Or have you been chicken out because big guns are on the side of NTUC Income.

In this shitty world, POWER > JUSTICE, don't you think so.; August 17, 2008 3:15 PM
zhummmeng said...: Therefore avoid the shitty wholelife and endowment products , right? We still have no news of the outcome of the AGM.
PayMyuni is another of the shitty products. Don't waste your money. There are much better products in the market. Compare with College Plus from TM Asia Life and you know what I mean and you may not want even to look at PayMyuni, which should be renamed aptly as PayMyAgent product because it pays the insurance agent hefty commission and the buyer poor return.
Best is to heed Mr. Tan's advice. Buy term and invest in ID7 ideal regular plan.For coverage just buy term.For $50K for 20 years it is about $15 per month . No big deal but it is better than what Paymyuni gives.But do you need coverage? Don't be confused. The focus is on accumulation for education fund and nothing else.Unless you yourself are under insured. This is terrible.The bread winner or the golden goose is not adequately insured.It will be putting the cart in front of the horse.; August 17, 2008 7:19 PM
Falcon said...: Yes, I actually went around canvassing for people to sign the protest in support of TKL. So I am also very disappointed when he withdrew the protest. Siew Khim is right by saying that we should strategise now.
I have cancelled my Giro payments for all my policies in protest and now paying by nets every month. If by the next AGM they still do not give me a satisfactory answer as well as still stick to their miserly bonus then I will have no choice but to cancel all my policies. But I want to protest as much as I can and ensure all possible avenues are exhausted before I do that. So what is your next step, Mr. Tan? I have promised all those strangers who are policyholders who bothered to sign the protest note that we will try our best to ensure justice is served to all policyholders.; August 20, 2008 1:12 AM