Always ask for the relevant facts to be put in writing. Do not take the verbal representations given by the seller. The seller may mislead you and later claimed that you had misunderstood the representations.
Always refer to the printed materials. If any important point is not covered in the printed materials, or is not explained in a transparent manner, you should be suspicious about the financial product. Most importantly, you should ask about the charges and commission earned by the product seller.
In the past, you could trust financial products to be transparent and fair as they were properly regulated. The standard of regulation and consumer protection has deteriorated in recent years, so you have to be careful and to do your own due diligence.
If you are not clear about the financial product, DO NOT INVEST IN IT. Do not ask somebody else (e.g. TKL) to explain the product to you.
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Tan Kin Lian
www.tankinlian.blogspot.com
--
Tan Kin Lian
www.tankinlian.blogspot.com
8 comments:
When insurance agents push you a limited pay wholelife product these are the questions you must ask..
1.What is your commission you earn from this product?
2.Why this product, why not other product?
3. Can I be covered adequately with this product?
4.Do I need to be covered adequately?
5.Is this a saving plan too.
6.What is the rate of return?
7.When is the breakeven point?
8.Is the return more than inflation?
9. What if I can't continue paying the premium?
10.Can I withdraw my saving without paying interest?
11. Why pay interest on my own money?
12.What is the rate of interest?
13.What are the charges for this product?
14. Why there is cash value after the 2nd year?
15. Is the total expense for this product 250% of my premium? Why so much?
16. Is the product risky?
17. How is my premium invested?
18. What types of portfolio?
19.Is my portfolio same as other people? Why?
20.What is the risk profile of this portfolio?
21.It may lose at times, right?
22. So it is not guaranteed, right?
23.What is the expected return of this investment?
24. What if I invest on my own in the same portfolio?
25.Why is the bonus growing so slowly after the break even point?
26.Why is the bonus concentrated at the 25th year?
27.Why did agents claim that the bonus can hedge against inflation when it is only a fraction of a percent? Do you know the rate of inflation?
28.WHY IS THE CASH VALUE NOT PAID WITH THE CLAIM?
29.Why does the protection coverage decrease over time and yet paying the same premium?
30.Are you telling me EVERYTHING, the truth and nothing but the whole truth?
Remember that wholelife and endowment products are INVESTMENT products too and NOT as what many insurance agents tell you.In other words they have risks too.
They can be low to high risk products depending how soon is the breakeven point and the rate of return.
Recently, risk for these products has significantly gone up becuase of bonus restructuring.
As an investment or saving plan, they are rotten product.
As protection products they are too expensive. For same coverage a term can be as cheap as 1/10th of the premium.
Verdict:: don't be fooled by these dubious products. They never get you anywhere as the agents.
To: Anno 1,
I can answer your questions without knowing what you are buying. Let me try the first 10 questions:
1.What is your commission you earn from this product?
A: It varies but I promise that it will not affect your plan one way or the other regardless of commission amount.
2.Why this product, why not other product?
A: This product is the best for you.
3. Can I be covered adequately with this product?
A: Yes, for the areas that it covers. I would be happy to give you another proposal if you wish to broaden the scope and depth of the coverage.
4.Do I need to be covered adequately?
A: Yes, you should. Our government also encourages everyone to cover themselves adequately.
5.Is this a saving plan too.
A: If it is, then the answer is "Yes". If not, I would say "No" but we have other products that are saving plans in nature. The pros and cons are ...
6.What is the rate of return?
A: 0% to 15%, depending on performance etc. Details are given in the fineprints.
7.When is the breakeven point?
A: Ok, based on your plan: maximum XX Years. But it can be much earlier if the bonus is good.
8.Is the return more than inflation?
A: Depends on the bonus you get and the inflation situation.
9. What if I can't continue paying the premium?
A: You would still be covered until your accumulated saving is depleted according to the schedule here.
10.Can I withdraw my saving without paying interest?
A: You don't have to pay interest. We pay you interest, and bonus, for the amount that is left in the account according to this schedule!
No worries, you are in good hand. Please sign here and give me a cheque of this amount :-D
Also remember that limited payment wholelife doesn't mean you stop paying the COST of insurance. You may have stopped paying the premium but the the cost continues until you die or surrender. This cost will become a bomb when you are old.
The limited payment products have many disadvantages..
1.You pay upfront all the future premiums squeezed into the term, eg 10 years. This results in even worse situation, eg you can afford lesser and inevitably you get lesser coverage. Buying insurance is about adequate coverage and is NOT about saving or how short is the paying term.These features are bogus features intended to lull you into false belief that that the quicker you pay and get a lifetime coverage. But the question is are you adequately covered. Is this why you buy ? Does this address my concern?
Limited pay whoelife product has another name...limited coverage plan.
Don't fall into this trap by creative insurers who fool you.The traditional wholelife products already had problems addressing your needs adeqautely. By tweaking the numbers or the premium they try to cover up the weaknesses of the products. They make them worse...less affordable and lower coverage. These rotten products are already bad for the ordinary folks who are fooled by insurance agents that they are 'good' becuase of the limited premium payment term. The truth is ordinary folks inevitably are under insured and ironically which these folks need protection badly and yet being short changed by agents becuase of self interest.
The recent statistics released by LIA confirmed that Singaporean are getting more under insured because of these dubious products promoted by the insurers and their agents.
Greed and dishonesty are behind these people who don't care for the very people who trust them.
It is a shame that today greed and dishonest have replaced ethics in the marketplace. Fellow humans being cheated by their fellow humans becuase of money and commission.There is NO FAIR DEALING. MAS must wake up to this fact.This zero sum game works against the consumers.
The Watchman
Do you know why more people are joining the life insurance business?
It is easy money and you can get rich quick.. No need specailised knowledge but need to pass tikam tikam exams which Ah meng can pass too.You only need glib tongue, ability to lie, manipulate truths and think of falsehoods and to deal with some emotional clients.
Having these skills will earn you a lot of money and qualfiy you for some great awards like mdrt or cot and wahtnot. Of course, thrown in to bolster your sales some companies provide you incentive trips to neverland .
Of course to guide you to achieve there is one person most interested in your welfare , he will egg you on by the minute in real time. If you achieve he achieves. He gets the satisfaction of beating his predesessor to make him look stupid. Not only that he proves that he is the right choice to the board and to his benefactor.
The winners are the agents but the greater winner is him.
The greateast losers are YOU and the victims of this well kept conspiracy.
The recruitment business opportunity talk offers get rich quick as a bait. Is it wonder why insurance agents have this mindset? Is it a wonder why insurance agents go for only products with highest commission? And the training they receive also reinforces this . The training focuses on short cuts to closing a sale. The rookies are taught to tell customers they like to hear and suppress the downsides of the products. They are taught to tell half truth and lies and never the whole truth.
What you get is insurance agents out to con customers and how best to con to earn the highest commission.
Needs of the consumers? never taught seriously and most of the time in passing.The focus is on how to cheat the consumers into buying the products with highest commission.
Hi TKL,
Your article can also be applied to ordinary stocks and shares.
Many people invest without getting the full facts on the shares they invest in.
If you have any doubt on the profitability or future of the business, management integrity, you should not invest in it.
Even governments con the people.
We have cons in every walk of life.
Face it man this is a world of con. You survive if you can con very well.
The biggest cons are:
(a) Politicians
(b) Lawyers
(c) Sales people
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