I saw a benefit illustration given to a young man at age 30. The life insurance policy has many complicated features that baffle me. The consumer asked for my views. Frankly, it is a waste of my time to analyse these types of products that are designed to distract consumers from the poor yield and to benefit the insurance agents and the insurance companies.
Anyway, I looked at the benefit illustration and found that the cash value at the end of 25 years is less than 60% of the accumulated premiums, i.e. the deduction is more than 40%. The yield is only 1.4%, which is terribly low. The insurance agent distracts the consumer by talking about the monthly income during retirement. The agent pressurized the consumer to decide because the premium rate will increase after the next birthday.
I gave this advice to the consumer:
- Do not buy any insurance product that you do not understand
- Do not expect me to waste my time to analyse these complex products
- Do not buy because the premium rate may increase after your birthday.
- Avoid insurance agents who earn a large income selling poor life insurance policies to you.
Watch this video
If you wish to know how to manage your financial future, without being conned by a life insurance agent, you can start by trying this financial planning tool. You can also pay $50 to the experts to provide guidance to you on how to understand the statement. Do not waste $5,000 of your premium as commission to the agent who sell you a poor life insurance policy.
Tan Kin Lian
4 comments:
My advise for people approached by insurance agent:
Do bear in mind that insurance agent earns the most from life policies. It is in their interest to advise you to buy life policy.
If at anytime you feel pressured into buying, consider telling the agent that you wish to go back and reconsider properly. Its very important not to commit on the spot as its very hard to make a rational decision under the pressure of the agent.
Don't buy what you don't know, and don't assume you know.
Insurance companies should be required by law to indicate upfront to the consumer the profitability of each plan through an indicator which will compare to a benchmark return of say 7 percent. It is easier for consumer to compare each product by looking at this indicator which can be made mandatory to disclose. It is difficult for the ordinary people to work out the return and I strongly felt the government has the utmost responsibility in coming out a foolproof solution which is fair to Singaporeans.
Hahaha, TKK...insurance companies won't reveal the returns also let along year by year.
During Mr. Tan's time the BIs gave yearly yield which the buyers could see and decide even though they were projected.But these days the yields are concealed and it is left to the insurance agents to bullshit and lie freely.Some agent don't even know how to calculate but they call themselves Executive Financial Consultants..Walau, fierce title to con people especailly the poor people who are blur like sotong.
Insurance companies are rolling out convoluted products to let the agents con the consumers until comatose then go for the kill.This is the modus operandi.
Thanks for the informative article! waiting for your next post.- healthcare insurance
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