Tan Kin Lian's Blog: Buying Term Insurance from America

Thursday, January 14, 2010

Buying Term Insurance from America

Someone asked me about the risk of buying Term Insurance from America. They premium rate is much lower than the rates available in Singapore and it is easy to buy through the internet. Here is an example of a website.

I am not aware about any risk. I believe that it should be quite easy to make a claim, if the need arises. You should choose a financially strong and reputable company. I have asked two lawyers to give me their views. I will past the replies when I received them.

Of course, it is better to buy Term Insurance from an insurance company in Singapore, provided that the premium rate is competitive and they make it easy to buy directly through the internet. It is all right for you to pay up a higher premium for the convenience and assurance, but the difference should not exceed 20% compared to the best rates available in America. I hope that competition in Singapore should force the premium rate down to the same level as in America (as the life expectancy and health status in Singapore is better than in America.

Tan Kin Lian

9 comments:

Wu Song kills a tiger said...: Why can't Singapore Insurance be cheaper than USA?; January 14, 2010 2:04 PM
Anonymous said...: Possible reasons why Singapore insurance cannot be cheaper than USA.
1. Singapore likes to import foreign talent to head the insurance companies. USA use local talent.

2. Singapore insurance companies like to hold their meetings in posh hotels.

3. Singapore insurance companies chairs cost thousands of dollars each.

Anyone can add any more reasons?; January 14, 2010 11:46 PM
Anonymous said...: Why? good question....... Singapore insurance agents are greedy..They are salesmen and not financial advisers. They need bigger commission to get them to work and the bigger the commission they get more excited. Like wholelife,and endowment which carry high commission and that is why they put their mind and soul to specialise and to strategise how to con consumers into buying.It is big money and the only products that can make them qualify for the dubious MDRT , COT or TOT awards and incentive overseas trips.
Do you know what does the end letter 'T' of the awards stand for?
No prize to be won for guessing it right but the sooner you know the right answer the better for you.
Despite being more expensive than US the commission from these term products is still too paltry.
That is why Singaporean have only wholelife and or endowment policies.This also explains why Singaporeans are grossly under insured.Singaporeans cannot afford to address their needs all with wholeife or endowment. So there is always a 'gap' or shortfall left deliberately so that the agents can go back to 'review' the consumers' insurance needs. The word 'review' has a different meaning for insurance agents. It means to sell more wholelife or endowment to do a PARTIAL plugging of the gap or shortfall thereby provides further business opportunity for 'review'(partial plugging) in the future. Very clever, right? Similarly the wholelife products provide whole life revenue to the insurer. Do you know why wholelife is also known as permanent insurance? Silly, it is becuase they provide permanent income to the insurers .Do you see the link? Both the insurer' and the agents' interest are well served. Now you know why insurance companies also like to promote wholelife products and they get the greedy agents to execute their plan.
Does this explain why term cannot selll and only wholelife and endwoment product are favourites with the insurance companies and their insurance agents. For them Win-Win and the losers are the consumers who are like pigs sent to the abattoir without knowing their death is near.
Wake up and don't snore like pigs.

The Watchman; January 15, 2010 12:02 AM
John Tham said...: The premium of term insurance policy in US is lower could be due to the fact that US is a much bigger market and the hearsay that Americans prefer term over life insurance. So, the term insurance market is proportionally much bigger than that of Singapore where most Singaporean dislikes the idea that premium pay without return. The term insurance is quiet often a rider to the life policy here. I think the economy of scale is still the major factor in lower premium.; January 15, 2010 1:13 PM
Anonymous said...: The US consumers are getting smarter. They were once like their Singaporean counterparts kenna conned by insurance salesmen. Now they buy direct from manufacturers of insurance products without the commission.
Our Singaporean consumers are still pig-headed. They are poor in math. They pay so low premium and yet they want cash values. No wonder they kenna conned. Still sleeping and snoring. They don't know what is insurance and the purpose. They still think it is a saving plan and yet think they are well protected .
If they have their way they might shamelessly ask whether that their car insurance also must got cash value or not. This is the result of kiasuism and also many don't know that they don't know. If I tell them they know Fxxx about insurance they will unashamedly fight you back that they know alot. The worse thing is they don't know their trusted agents also know Fxxx. Put it in another way these consumers know as much as their trusted agents at best, ie. they don't know.
You can see from the postings people are still as clueless as the pig.; January 15, 2010 7:47 PM
Anonymous said...: Anon January 14, 2010 11:46 PM,

1.the agents are now greedier
2. need another few millions for Beijing
3.more advertisement that it is made different
4. now a social enterprise and not a cooperative
5.more commission for certain products
6.extra commission at last minute to whet the greed of agents so that they would raise more sales to become #1
7.dubious single premium to hoodwink the risk kiasi and kisau stupid policyholders
8. more printing after rebranding
etc etc; January 15, 2010 9:49 PM
Vincent Sear said...: For traditional whole life policies, US insurers usually use actuarial tables up to age 99, whereas Singapore (and UK) insurers usually do up to age 85. This may account for some difference in annualised premiums.

As for agent's compensation, US first year commissions have been in fact higher at average 70%, compared to those of Singapore at average 50%.

Since the 1980s, no-load term policies (along with accident and medical policies) become popular with direct mail marketing and 24-hour 1-800 toll-free service numbers. There're no agent advising and servicing, and therefore no commission to be deducted. This mode works quite well in the US as a big target market out there are comfortable with reading and filling forms, and sending out forms and cheques themselves, and ready to follow-up themselves when further enquiries arise or in event of claims.

In the 90s the internet came along and with the proliferation of credit cards and other electronic payment systems, afforded even cheaper, easier and faster ways of marketing insurance directly.; January 17, 2010 9:55 AM
Anonymous said...: Dear All,

Term assurance rates are likely to be higher in Singapore than in US because of three main reasons:

(a) Due to the larger insurance market in US, there is economy of scale in term of cost, hence the cost per unit in US is lower

(b) Again due to larger insurance market, law of large number makes it possible for US life insurers to experience lower mortality per unit cost

(c) The agency cost of selling life insurance in USA is lower than Singapore.

The price of term assurance mainly depends on expenses and mortality cost. The investment element is insignificant.

Hence since Singapore cost are higher, we have to pay higher term assurance premium in Singapore compared to the USA.; January 17, 2010 5:05 PM
M Lai said...: Nice blog,,
Does this explain why term cannot selll and only wholelife and endwoment product are favourites with the insurance companies and their insurance agents. For them Win-Win and the losers are the consumers who are like pigs sent to the abattoir without knowing their death is near.
Wake up and don't snore like pigs.
the agents are now greedier,need another few millions for Beijing,more advertisement that it is made different,now a social enterprise and not a cooperative,more commission for certain products,extra comm ission at last minute to whet the greed of agents so that they would raise more sales to become,dubious single premium to hoodwink the risk kiasi and kisau stupid policyholders,more printing after rebranding
etc...; December 29, 2010 9:39 AM