Some companies have a Customer Care hotline. Actually, it is frustrating to call the hotline, due to the following:
a) Spend 1 to 2 minutes to listen to a voice recording
b) Have to press many buttons to get through
c) Have to wait for many cycles (3 to 5 minutes) for an agent to be available, before the caller gives up.
I gave up and sent the following e-mail to the company:
"I had a lot of difficulty in reaching your Customer Care. If you really care about your customers, how about making it easy for them to get through and talk to someone?"
Sunday, April 20, 2008
Cancel a high cost ILP
Many people were shocked when they learn that the investment-linked policy (ILP) that they bought from the insurance agent (who is usually their friend) can take away up to 2 years of their savings.
They feel let down by their friend, who offered a policy that give so poor value, and lock them up for a lifetime.
What can they do?
It is best to terminate the policy early (say within the first two years) and take a loss. As the high cost is usually spread over the the first five years, the policyholder will only bear part of the full cost by early termination. The policyholder can save on the high charges on the future premiums.
What is the alternative?
a) Save in a bank account for the time being. When you accumulate more than $3,000, you can buy 1,000 shares of STI ETF or other low cost ETFs on the Singapore Exchange.
b) Buy a low cost investment fund with no upfront spread, and low expense ratio. This will be available soon.
They feel let down by their friend, who offered a policy that give so poor value, and lock them up for a lifetime.
What can they do?
It is best to terminate the policy early (say within the first two years) and take a loss. As the high cost is usually spread over the the first five years, the policyholder will only bear part of the full cost by early termination. The policyholder can save on the high charges on the future premiums.
What is the alternative?
a) Save in a bank account for the time being. When you accumulate more than $3,000, you can buy 1,000 shares of STI ETF or other low cost ETFs on the Singapore Exchange.
b) Buy a low cost investment fund with no upfront spread, and low expense ratio. This will be available soon.
Earn more than the rate of inflation
Hi Kin Lian,
Many people buy life insurance policies to save for their future needs. For most of them, these policies takes most of their long term savings. Why does the policies give a poor return, which is sometimes not enough to cover the rate of inflation? What can ordinary people do, to get a return that can beat inflation?
REPLY
You can read this FAQ to understand the true cost of life insurance. It is quite high, and represents a reduction of more than 4% from the actual yield. After taking this reduction, the net yield is not sufficient to cover the rate of inflation:
http://www.tankinlian.com/faq/true.html
To beat inflation, it is better to buy Term insurance and invest in a low cost investment fund. This is explained in these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/low.html
Many people buy life insurance policies to save for their future needs. For most of them, these policies takes most of their long term savings. Why does the policies give a poor return, which is sometimes not enough to cover the rate of inflation? What can ordinary people do, to get a return that can beat inflation?
REPLY
You can read this FAQ to understand the true cost of life insurance. It is quite high, and represents a reduction of more than 4% from the actual yield. After taking this reduction, the net yield is not sufficient to cover the rate of inflation:
http://www.tankinlian.com/faq/true.html
To beat inflation, it is better to buy Term insurance and invest in a low cost investment fund. This is explained in these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/low.html
Benefit Illustration
1. What is a benefit illustration?
A life insurance agent is required to provide a benefit illustration for the life insurance policy that they want to sell to you. This benefit illustration is mandatory, as a life insurance policy is a long term commitment. The format of this benefit illustration is approved by the Monetary Authority of Singapore. It can comprise of more than 10 pages and contain essential information about the policy.
The insurance agent is required to explain to you the key facts in the benefit illustration. In practice, the insurance agent is likely to avoid the key points that are important to the consumer, such as the yield on the policy and the commission earned by the agent.
2. What should the consumer look for in the benefit illustration?
You should ask the following questions to the agent:
a) What is the total premium paid, cash value and the net yield to the policyholder after 5, 10, 15 and 20 years
b) What is the amount paid as commission to the agent and the agency managers?
c) What is the gross yield expected from the insurance fund?
If you find the reduction in yield, i.e. difference between (c) and (a), to be more than 2%, then the life insurance policy is too expensive and give poor value to the consumer.
3. What yield should the consumer expect from the life insurance policy?
If you expect to pay premiums for 20 years in a savings type product (such as a whole life, endowment, critical illness or investment linked policy) , you should look for a net yield of at least 4% per annum. If you do not get this yield, the insurance policy gives poor value.
You should ask the agent to point out to you the paragraph in the benefit illustration that covers this point.
4. What is a fair rate of commission that should be earned by the agent?
As the consumer, you are paying for the commission earned by the agent and the agency managers. This is stated under the item of "distribution cost". You should ask the agent to point out this paragraph to you.
If you save a premium of $300 a month, the distribution cost can be more than $6,000. This is the money taken from you to pay the agent and the agency manager. This is too expensive. A fair rate of commision to the agent should be $200, and not a few thousand dollars.
If the agent cannot provide the information or a clear explanation to you, you should avoid the agent as he or she is incompetent or dishonest.
End of FAQ
A life insurance agent is required to provide a benefit illustration for the life insurance policy that they want to sell to you. This benefit illustration is mandatory, as a life insurance policy is a long term commitment. The format of this benefit illustration is approved by the Monetary Authority of Singapore. It can comprise of more than 10 pages and contain essential information about the policy.
The insurance agent is required to explain to you the key facts in the benefit illustration. In practice, the insurance agent is likely to avoid the key points that are important to the consumer, such as the yield on the policy and the commission earned by the agent.
2. What should the consumer look for in the benefit illustration?
You should ask the following questions to the agent:
a) What is the total premium paid, cash value and the net yield to the policyholder after 5, 10, 15 and 20 years
b) What is the amount paid as commission to the agent and the agency managers?
c) What is the gross yield expected from the insurance fund?
If you find the reduction in yield, i.e. difference between (c) and (a), to be more than 2%, then the life insurance policy is too expensive and give poor value to the consumer.
3. What yield should the consumer expect from the life insurance policy?
If you expect to pay premiums for 20 years in a savings type product (such as a whole life, endowment, critical illness or investment linked policy) , you should look for a net yield of at least 4% per annum. If you do not get this yield, the insurance policy gives poor value.
You should ask the agent to point out to you the paragraph in the benefit illustration that covers this point.
4. What is a fair rate of commission that should be earned by the agent?
As the consumer, you are paying for the commission earned by the agent and the agency managers. This is stated under the item of "distribution cost". You should ask the agent to point out this paragraph to you.
If you save a premium of $300 a month, the distribution cost can be more than $6,000. This is the money taken from you to pay the agent and the agency manager. This is too expensive. A fair rate of commision to the agent should be $200, and not a few thousand dollars.
If the agent cannot provide the information or a clear explanation to you, you should avoid the agent as he or she is incompetent or dishonest.
End of FAQ
Avoid buying life insurance on the street
Dear Mr. Tan,
I need your advice. I was hard sell into buying an insurance policy outside a MRT station. The agent was hard sell, giving me a lot of attractions of the product, such as cash back and unemployment benefit. When I returned home, my family told me that this policy gives a bad return. What can I do?
REPLY
You can write to cancel the policy within 14 days and ask for a full refund of the premium.
Do not buy any insurance or financial product from sales people on the street. As a life insurance policy is a long term commitment, you need to understand it clearly. You cannot get a clear picture by listening to a presentation on the street.
Lesson: Do not buy a life insurance policy on the street
I need your advice. I was hard sell into buying an insurance policy outside a MRT station. The agent was hard sell, giving me a lot of attractions of the product, such as cash back and unemployment benefit. When I returned home, my family told me that this policy gives a bad return. What can I do?
REPLY
You can write to cancel the policy within 14 days and ask for a full refund of the premium.
Do not buy any insurance or financial product from sales people on the street. As a life insurance policy is a long term commitment, you need to understand it clearly. You cannot get a clear picture by listening to a presentation on the street.
Lesson: Do not buy a life insurance policy on the street
Opportunities in a Life Insurance Company
Policy Administration Executive/Senior Executive
The Policy Administration Executive/Senior Executive plays an important role to ensure smooth and efficient support for our group and individual business. This includes administration of new business and renewal of existing business, ensuring policies are issued and membership databases updated in a timely manner, followed by generation of accurate invoices.
The ideal candidate should have at least 1-2 years of relevant working experience, be matured, independent and self-driven. He/she should be meticulous, possess leadership qualities and be able to work with internal and external customers. A degree in Insurance, Finance or Business will be an advantage but Diploma holders with relevant working experience will be considered.
Policy Administration Supervisor/Administrative Assistant
The Policy Administration team is responsible for upkeep and maintaining policies and membership database of new and existing clients. Duties will include management of new business and renewals of existing clients, change in client database, premium adjustments and generating policy documents.
As a member of a dynamic and fast-growing organization, you should be meticulous, self-motivated and have an analytical mind. You will report to the team leader of the Policy Administration department.
A supervisor should possess a Diploma, ideally in Business, Finance or Insurance, preferably with at least 1 year’s working experience. However, fresh graduates who are willing to learn and work hard are welcome.
Interested? Send your resume to kinlian@gmail.com
The Policy Administration Executive/Senior Executive plays an important role to ensure smooth and efficient support for our group and individual business. This includes administration of new business and renewal of existing business, ensuring policies are issued and membership databases updated in a timely manner, followed by generation of accurate invoices.
The ideal candidate should have at least 1-2 years of relevant working experience, be matured, independent and self-driven. He/she should be meticulous, possess leadership qualities and be able to work with internal and external customers. A degree in Insurance, Finance or Business will be an advantage but Diploma holders with relevant working experience will be considered.
Policy Administration Supervisor/Administrative Assistant
The Policy Administration team is responsible for upkeep and maintaining policies and membership database of new and existing clients. Duties will include management of new business and renewals of existing clients, change in client database, premium adjustments and generating policy documents.
As a member of a dynamic and fast-growing organization, you should be meticulous, self-motivated and have an analytical mind. You will report to the team leader of the Policy Administration department.
A supervisor should possess a Diploma, ideally in Business, Finance or Insurance, preferably with at least 1 year’s working experience. However, fresh graduates who are willing to learn and work hard are welcome.
Interested? Send your resume to kinlian@gmail.com
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