guard against overselling of insurance products

 

 
on January 01, 2015, there was a letter published in the straits times from a ms elizabeth tan boon kwan (ms) recounting her experience of taking up an Axa Life Platinum 5 policy in 1997.

she added that her agent sold her the policy with a projection to pay premiums for just 14 years (based on the critical year option) because of its unique bonus utilisation scheme (to pay further premiums) and that Axa Life had a solid record of paying out bonuses.

ms elizabeth tan recently found out, after calling Axa Life's customer service hotline that the policy had been doing poorly and the projected critical year had been pushed back to 2021 - by which time, she would have paid premiums for 24 years.

she ended her letter by calling on the authorities, be it the insurance companies or the Government to enforce strict regulations to stop agents from overselling the benefits of policies in order to close a sale.

note: for more information on life policies with critical year option:

http://www.lia.org.sg/node/1652

my comments:

the call by ms elizabeth tan has not gone unheeded by both the insurance companies and our Government and in the case of policies with critical year option has been totally disallowed as in the following notice from the LIA (Life Insurance Association of Singapore) issued by Mr Raymond Kwok, the then president of the LIA Singapore:

"Since 1 July 2002, the life insurance industry has decided to remove the illustration of Critical Year. This was done to remove any possibility of misunderstanding on this issue."

prior to this date, the selling of life policies with critical year option is not confined to Axa Life alone.

the other good news is that there is now a proliferation of life policies offered by many life insurers priced with limited premium payment. in other words, these life policies have a defined premium payment term, be it for example, a single premium (or single payment) or for 5, 10, 15, 20 or even 25 years. these policies are entirely dissimilar to those with critical year option and once the customer has completed full premium payment of the premium term, there is no further obligation to continue paying premium(s).

ms elizabeth tan also laments that her servicing agents kept changing and is at a loss as to who to turn to when she needed information. she also disclosed that for the last few years, no agent has been assigned to her.

ms elizabeth tan will be pleased to know there are many advisers who will be more than pleased to assist her, not only to keep her informed but can also serve her in servicing her existing policies as well as serving her financial needs and goals.

i shall be more than happy to be able to serve her as well.