Tan Kin Lian's Blog: Term insurance

Monday, January 11, 2010

Term insurance - buy directly

Many consumers find it difficult to buy Term Insurance directly in Singapore. When they call the hotline of the insurance company, their case is passed to an agent who quotes them an unrealistic high price for term insurance and pushes Investment Linked Policies or Critical Illness policy as a consumer, giving misleading advice that these savings policies give better value (which they do not!).

If you insist and do get a quotation for Term Insurance, you can compare it with the rates quoted in this website, which offers the term insurance in America. I am not suggesting that you buy from America, as there are other issues that you need to consider. But, at least you can find out if the rate for Term Insurance quoted in Singapore is fair.

For example, in my website, I gave a "benchmark" premium of $541 for a male age 30 insuring $200,000 for 20 years. If you find a better offer from a Singapore company, it is acceptable. However, if you are offered a much higher premium, you know that the agent is trying to mislead you with an unrealsitic quote.

I tried the above website and found rates (for a non-smoker in regular good health) to range from $327 to $506 for the 9 companies listed. So, it is possible to get lower premium compared to my "benchmark".

Tan Kin Lian

17 comments:

Robert Tan said...: There may be a few reasons, including (possibly) some constructive or contractual obligations that insurers may have to sell their products through their agents.

Many potential clients may also need "advice" for which an agent(assuming he/she is competent and objective) can give.

Other reasons may include increasing overhead costs for insurers if they were to sell direct but in the long run, the "savings' are likely to outweigh initial costs.

By selling direct, the insurer actually "saves" on agents' commissions and perhaps a significant part of this could be passed on to the prospective policyholder.

There must be something hindering local insurers from moving more of their business to direct sales. (maybe it's also inertia) and in order for more products to be moved to direct sales channel, one needs to study what the potential issues are and try to address them first.

I am quite sure that the issues have been examined before but maybe it's time to re-examine them again. The outcome may mean less income/jobs for insurance agents....; January 11, 2010 8:32 AM
C H Yak said...: Hi Mr Tan

The said Spectrum Group Term Life Insurance is an insurance agent licensed to sell insurance products in US. But why are they putting "AIG" right on top of this web-page?

AIG is high-risk and will any quotations linked to them be true and helpful?; January 11, 2010 8:33 AM
Anonymous said...: MAS should force insurers to set up a portal for savvy consumers to buy no load insurance directly. It is only fair as these consumers don't need advice.In US consumers can and they don't pay any commission to any insurance agents.
In Singapore the agents will waylaid you and pitch you wholelife products.
This is disgusting as these agents don't know what they are selling.
MAS should stop agents from product pushing and must insist that they do need analysis.They are not fit as financial consultants. They are better known as koyok man.; January 11, 2010 8:56 AM
Anonymous said...: if you go to ntuc agents they only have 3 products to recoomend from---revosave and vivolife or growth, maybe incomeshield from agents who are a bit conscience pricked. They focus on these products until they are so good at convincing and confusing you and closing is by conning. It seems risk management or wealth management is being addressed by these products. Can they ? can never is the answer......but these products earn them good and big commission is a fact.
Financial planning? maybe psuedo planning to give you a false sense of security to hide product peddling.
On top of this they are so good too at telling you the bad points about term products and without batting an eyelid.; January 11, 2010 9:30 AM
Anonymous said...: The only reason why term is not keenly sold by insurance agents is low commission. The same goes to the insurer. Not much money comes in from term products whereas wholelife premiums come in constant and regular streams so that they can make use of this cheap capital to invest to pay themselves fat salaries, especially ceos .
From this you can see whether the insurers and the insurance agents are for you consumers or for themselves. They are bunch of vipers with biforked tongue. They say one thing and do another thing.
Don't trust them. Have you heard of any insurers or agents saying anything that their products are lesser or not better than another? They always say theirs are the best. This is a lie, right? Where is the honesty? Can't blame them? Look , they are financial products like drugs and medicine and if the side effects are not told the cumulative effect can be disastrous over the long term.This has already happened to baby boomers. They are unable to retire. Many single parents out there are unable to cope financailly becuase they were left single by spouse who left not much insurance proceeds.
They happen becuase insurance agents are lacking conscience and greedy and incompetent and dishonest.
Consumers must clamour for change, for regulator to force the vendors of these products to offer direct without the load of commission to agents.
This so called 'noble profession' has more crooks and charlatans than other trades.; January 11, 2010 10:57 AM
Anonymous said...: Dear Mr Tan,

You may wish to take a look at the term insurance offered by NTUC income for Home Team NS members (i.e. civil defence and police officers). I think it's not bad a deal. http://www.income.com.sg/insurance/hometeamNS/index.asp

I think Safra has some equivalent plan offered through income as well?

regards.; January 11, 2010 2:20 PM
Tan Kin Lian said...: Hi, 2:20 PM
Please leave a name, so that it is easy to reply to you.
The term insurance rates from NTUC Income is attractive, but it is reserved for certain categories of people. If you ask for a Term Insurance quote from NTUC Income, you can compare with these rates and make sure that it is not too far off. It is all right to pay say 20% more, but should not be much higher. You can use these rates as a benchmark also.; January 11, 2010 2:34 PM
Anonymous said...: Hi Mr Tan,
Term insurance is cheaper at safra,home team NS member and other organisation but once you left your job or not a member you are not insured anymore.
I would like to know whether any Insurance company offer portable term policy; January 11, 2010 7:41 PM
Anonymous said...: You know LIA release reported that the sum assured sold for 2009 averaged only $45K and the death claim was only $40K. Why do think the figures are so small? Can the amounts help any policyholders or their dependents to live on?
You see how despicable these insurance agents have been. They must have sold or dumped on their policyholders only wholelife or endwoment products otherwise the figures won't be so small. Do you think the agents cared about the interest of their policyholders?
I beleive their motto is 'die is the policyholders' business'.
Wake up , consumers, buying insurance is about addressing your protection needs FULLY so that your family and children need not suffer when you are not around.It is not about your want or wants. It is about your NEED to protect your loved ones.Let a competent and honest advsier help you.; January 11, 2010 8:55 PM
k1478 said...: To keep it short:

1. The underlying cause of all these issues is in the way the salary of these agents or 'advisers' are being administered.

2. I use Aviva's SAF Group Term Life Insurance as benchmark. Maybe you guys can take a look. $12/mth for $100k.; January 12, 2010 1:29 AM
Anonymous said...: MR Tan,

What is the risk of Overseas term insurance? Afterall, it is cheaper. Why not recommend them?

Tax implication?

Jm; January 12, 2010 2:32 AM
sctan said...: Dear Mr Tan,

I'm anon "2:20pm". Sorry for not leaving my name. I'll call myself sctan henceforth when I leave comments on your blog.

It's true that the group insurance schemes are reserved for certain categories of people. However, this category is not a small category. It should include most Singaporean men and their wives. As long as you're a member of HomeTeam NS or Safra, you'd be eligible for the insurance. Spouses of members are eligible too.

Membership cost (at least for Hometeam NS) is negligible, at $70 for 10 years, and $20 for 10 years for spouse.

I think it's a term insurance worth considering, if one is eligible.

sctan; January 12, 2010 3:30 PM
Anonymous said...: If you people buy group insurance then the insurance agents will have to eat grass. This insurance is good for you but not good for the agents. They earn nothing. This is the reason why they hide from you and only push wholelife and endowment products. But be careful , if they tell you no money back you ask whether car insurance got money back or not.This group term they are dirt cheap and for same sum assured they cost 1/20 of the wholelife premium.
Can complain or not? Don't trust the insurance agents. They are not truthful and honest and worse not competent and qualified.; January 12, 2010 5:58 PM
Anonymous said...: I work in ntuc's business centres, and you can bet your last dollar that no insurance consultant there will recommend any of the group term plans on their own accord. Why? Because even though those consultants earn mainly (90++%) from a fixed monthly salary, but they also need to meet sales quota in the amount of premiums and annualised-first-year-commissions. This quota is about 3 times the amount as compared to the commission-only ntuc agents.

The group term plans don't contribute to the sales quota, on which their job security depends. So if you mention these group term plan to the business centre consultants, chances are they'll tell you it is lousy, no cash value, only cover till 65 or 70 yrs old etc etc. And they'll promote vivolife as a marvelous solution to you --- they have to, if they want to hit their quota and keep their jobs.

But ntuc is supposed to be social enterprise. So how? So the mgmt says ok, if you sell LUV plan (group term for union members) you get $5. But $5 at most only 2 plates of chicken rice. And cannot preserve job security.

That's why most customers are not informed of group term plans. They are persuaded to buy vivolife, revosave, SAIL, or at most I-Term, which is also expensive becoz the consultants convince the customers to cover until ntuc's maximum of 79 yrs old.; January 12, 2010 9:54 PM
Anonymous said...: I respect your frank revelation .
Your ceo talked through his ass hole when he lied through his teeth about being a social enterprise and giving value for money products when actually he was pushing for sales of products with high commission, with high APIs, to meet his personal agenda to prove to somebody that he is better than his predecessor and to justify the high salary he and his cronies get.The agents or the salesmen are called super duper sales champions and by all sort of names to inflate their egos when they don't know they are a bunch of product pushing salesmen insulting the title on their name card, Financial CONsultant.
He is obssessed with being #1 and I wonder what he is trying to prove. Are you aware NTUC has the infamous record of having the highest product pushing KYC submission? Is it wonder your ceo called the agents super duper sales champions?; January 13, 2010 9:30 AM
indexfundfan@gmail.com said...: Actually the best quote for US term insurance is

http://www.term4sale.com/; January 30, 2010 4:03 PM
Sakhi Sawant said...: Thank you for sharing such great information.It is informative,can you help me in finding out more detail onTerm Plans,i am interested and would like to know more about this field and wanted to understand the basics of Term Insurance Policy; September 26, 2016 8:50 PM