on ms elizabeth tan boon kwan's letter; "guard against overselling of insurance policies", published in the straits times last thursday, mr wilfred ling's follow up letter appeared in the straits times on Jan 03, 2015.
mr ling pointed out that there are several insurance advisers who continue to oversell insurance policies even today, even after the passing of the financial advisers act in 2002.
mr ling also highlighted investment-linked policies which have often been marketed as having the benefits of both insurance and protection.
but on both of these and i quote mr ling;
"many of these policies' insurance charges rise in exponential fashion as one ages, resulting in these policies lapsing because the policyholders are unable to continue paying the premiums and the cash values are insufficient to cover the shortfall."
there's a more significant point on the requirement of financial advisers' recommendation of products which is based on a 'reasonable basis' and hence, there is no fiduciary requirement.
mr ling concluded that our government should consider adopting the model of the united states, where a registered investment adviser has a fiduciary duty to look after the interest/s of the client.
my comments:
yes, who can disagree that in any industry, there will always be the proverbial black sheep indulging themselves at the expense of their clients.
on investment-linked policies, this was the response of the insurance industry to compete against collective investment schemes (prior to the introduction of the fa act) as the very first regular premium ilp product was launched way back in the 3rd quarter of 1992.
mr ling is correct to emphasise that insurance (or assurance) charges rise exponentially as the life assured ages, often after attaining his/her golden years and cash values may not be sufficient to keep the policy in-force. and there is even a 'double whammy' when the market enters into a bear phase and more investment units are cancelled to pay off the assurance charges.
and finally, i repeat mr ling's call on the MAS (monetary authority of Singapore) to look into more measures to protect the interests of our consumers, notwithstanding the implementation of the FAIR* recommendations already in place.
*FAIR = Financial Advisory Industry Review.
The 5 Key Thrusts of FAIR:
- Raise the competence of financial advisory representatives
- Raise the quality of financial advisory firms
- Make financial advice a dedicated service
- Lower distribution costs of insurance products
- Promote a culture of fair dealing
n
reality, many of these policies' insurance charges rise in an
exponential fashion as one ages, resulting in these policies lapsing
because the policyholders are unable to continue paying the premiums and
the cash values are insufficient to cover the shortfall. Many young
policyholders will realise this problem only after 40 years. - See more
at:
http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/insurance-sales-more-info-less-understanding-20150103#sthash.bFuy33X5.dpuf
Ms
Elizabeth Tan Boon Kwan ("Guard against overselling of insurance
products"; Thursday). - See more at:
http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/insurance-sales-more-info-less-understanding-20150103#sthash.bFuy33X5.dpuf
Ms
Elizabeth Tan Boon Kwan ("Guard against overselling of insurance
products"; Thursday). - See more at:
http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/insurance-sales-more-info-less-understanding-20150103#sthash.bFuy33X5.dpuf
Ms
Elizabeth Tan Boon Kwan ("Guard against overselling of insurance
products"; Thursday). - See more at:
http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/insurance-sales-more-info-less-understanding-20150103#sthash.bFuy33X5.dpuf
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