Saturday, May 2, 2015

In conversation with my sister, an insurance agent

My sister is in the insurance line, today, we had a good talk after visiting my mum at the hospital.

She is my sister, so my view is biased, and be kind in your comments even if you disagree.

I: There seems to be many black sheep in the industry, with mis-selling rampant.

S: What do you mean by rampant? Maybe years ago when the industry in not regulated. There is a new exam for all ongoing agents to clear, and if you can't do it, you are out.

I: Is the new DIY insurance scheme eating your market share?

S: No, at least not that I can feel it. People who can really understand and D.I.Y are few. I am totally comfortable with them not buying anything from me. But there are elderly, and people who are not even covered under H&S, and even if they understand the product, they might not understand the details.

I: What do you think of term insurance over life insurance?

S: Those that advocate this, did they do a comparison of premiums? I have client who bought term insurance till 75 years old. Had they bought a life insurance that becomes premium free in 25 years, in the long run, at 75 years old, he will have problem renewing the term insurance, and there is no cash value, and the total premium pay will roughly equals that of life insurance.

I: How about mine? When I convert my life insurance into payout, will I still get those riders that increase death benefits?

S: Your A** plan is lau sia one. Depending on the clause, some might have riders dropped once the life plan is converted into paid out.

I: My family will get both the death benefits and cash value even it is a paid out?

S: I already said your plan LS, so you will get only your cash value.

I: So, basicially I am surrendering my plan for cash lor,

S; You can say that.

**I forget to ask for those paying 25 years premium for life long coverage, will the cash value keep decreasing after a certain age. I will check and add in comment section

I: Many bloggers I know are quite against ILP and endowement as the returns is pathetic, which I agreed.

S: Not many can invest DIY, if you can, please go ahead. Do you know someone actually ask me why he should pay me. I didn't follow up on him as I do not want him as my client. I told him very nicely that I provide a service where I advise on the various products on the market, I am making a honest living.

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OK. Think the blogger-sphere need  some balance from anti-insurance sentiments.

21 comments:

  1. Sillyinvestor,

    What's your thoughts on that agent who sold you that lau sai policy?

    ReplyDelete
    Replies
    1. SMOL,

      I do not think that agent mis-sell it although it might not be the best available product.

      First of all, unlike my sister who is independent and can compare products from several companies, that agent can only sell from her company. And my sister said that company products are rather uncompetitive.

      She mentioned traditional life policies are like that, so I am not sure if 15 years ago, is there already 25 years premium life plan in the market and if I could afford it.

      So, I have not hard feelings for that agent.

      After I blog about this. 2 thoughts ran in my mind, if there are volunteers who actually help people understand the products of insurance FOC, so that they can get better yield and lower cost from their insurance. Wouldn't that be a great "charitable art" that is poison to agents.

      However, a charitable act is only charitable when it goes to the needy, the giam gana who know how to call hotline to access these info are most prob smart enough and well-off enough ...

      So I still stinks in my thoughts?

      Delete
    2. Sillyinvestor,

      Well, your sis has already said that company products are not competitive. Your sis' words should carry some weight as I think she would not be recommending the products from that insurance company of yours to her clients as 1st choice ;)


      There are 3 possibilities that you have no hard feelings for that agent of yours::

      1) You take full responsibility for your own inaction in not doing a simple price comparison between three shops before buying.

      2) Ownership bias - you "believe" the policy you bought is the "best" there is at that time.

      3) To say otherwise would be admission of being "sold to",


      :)

      Delete
    3. Hi SMOL,

      I think there is a 4th possibility.

      I am "bleeding heart"
      LOL ;)

      It never cross my mind to compare, and I must admits I am being "sold to".

      But I have no hard feeling whatsoever for being sold to.

      Delete
    4. When I buy something, I want to know I didn't get chopped in the head.

      After that, if there are price differences of some %, I am usually ok

      I never believe in getting the best deal, just a honest deal.

      Lazy perhaps. But weird we compare so much when we buy stock.

      Consumer attitude towards insurance might be a bad call and u might well be right to remind others to take a investment attitude towards it.

      Delete
    5. Sillyinvestor,

      Good for you!

      If your original intention was to help out a friend, then true.

      义气 is more important than $ :)

      Delete
    6. Oh no SMOL,

      You mistaken, is not a friend. What I mean is I dun get upset over such things. She is making a living too

      Delete
    7. 3 part series for you.

      http://littletoybrush.blogspot.sg/2015/02/saving-my-ilp.html

      Delete
    8. LOL... Sorry SMOL for being "out of point"

      SMK, thanks for the link.

      Personally, I would like to keep insurance and investment separate. I do have endowements as forced savings which also act as some sort of last resort cash, but I would not consider Endowement as investment plans. At least not the 2 I had.

      I had one for retirement plan. A long 30 years endowement plan that required me to pay premium for only 20 years. It is out of market already and the yield is about 3-4%. Very good if you ask me. They have high gurannteed component that is much higher than the bonus component

      Delete
    9. not suggesting you to start a insurancecuminvestment plan.
      but showing you the thought of ANOTHER blogger who is going through the process of deciding to kill/keep his/her plan and how.

      by the way, ever thought of how endowment plans are structured? ;)
      if you knew, you would go "cheyyy...."

      Delete
  2. i can only insurance, insurance hard to be understand..

    my hubby bought a lot insurance, i only know that he one month pay about 2k...

    and he is prudential prestige member.

    some insurance, i think it is rubbish . but he insists to buy, what to do.

    ReplyDelete
    Replies
    1. 1 month 2 k insurance is quite big to me. But it depends too.

      Anyway... With no details, hard to know if it is rubbish or not LOL

      Delete
  3. Pardon me but I don't quite get your sis's reply on the last Q on ILPs. Unless she's able to advise on which fund to purchase in the ILP based on good analysis plus constant follow up with the client whether to switch funds or not (since most of the time in ILP, fund switching is FOC), how is she "providing a service" to the client? Just showcasing the range of products one is selling is not exactly value adding in anyway don't you think?

    ReplyDelete
    Replies
    1. Hi Philip,

      I think my message might not come across as clearly as I wanted.

      My sister is saying for those who are able to DIY, they do not need her as a advisor.

      I am not sure if she sell ILP, but I think she do not really believe in it. I comment that ILP is FOS, she didn't really rebutted me. But when I say with the new medishield life, private plan is unnecceseary, she gave me a piece of her mind with robust conviction.

      Hence, I do not think she actively peddle ILP.

      In fact, every time we talk, she is always about H&S, not enough coverage, uni saving plan, etc...

      Never heard her talk about investment.

      Although we might think over-coverage is a mis selling, I do have a colleague telling me her 60k coverage which is a big deal when she is young is like uselsss now.

      If u ask me, 60k is still good money now ..

      Delete
  4. One thing good about having a relative in the insurance business is that she can never run away. And she needs to extract the best compensation when something happens. (touch wood)

    ReplyDelete
    Replies
    1. Hi Cory,

      Actually, I think sister can also "run away" in the sense that she can always quit her job. But the policy sold should be of genuine interest.

      Of course, if it is to help with sales, it can be upfront too, but at least I didn't get that from my sister.

      I was told to help a friend donkey years back to buy a UOB insurance for him to hit quota, he told me to terminate it after 3 months, and will pay me back the money... LOL

      Delete
  5. In my humble opinion,

    Sister must not under estimate how young people will become savvy with DIY insurance in the future.

    DIY will be a trend when main stream media decided to report largely on it.

    DIY website does gave a good idea on what one person should be covered sufficient with and there are free events where they share how to go about using their website.

    The Question on "Why she should be paid" is a common Question asked by people who wants to know whether the person they engage know their stuffs.

    Sister will grow stronger when she knows how to handle such Questions.

    When I ask my interviewee why I should hire them, it won't be nice if the interviewee is not happy about the Question.

    ReplyDelete
    Replies
    1. Indeed, Kenji,

      Thank you for weighing in for this matter, just like print news, it will be a painful low drawn out process instead of the Koda film shock and awe obsoletation

      But the FA sector is fragmented and not a monopoly like Media Business, so I do foresee painful adjustment by individuals.

      Point Taken about able to handle tough questions.

      Will talk to my sister when I have the chance

      Delete
  6. I agreed that anti insurance sentiments among bloggers are too strong. I actually reviewed my policies more than 10 times these 2 years to do sanity check. I felt they are as good as any bond investment average investors can find today. I only have 2 limited pay life insurance and the premium paid will be similar to most term insurance over 40 years. I will get cash back as bonus. This can also form as part of asset rebalancing as we do not only want 100% equity exposure.

    ReplyDelete
    Replies
    1. Hmm.. Anon,

      I do not think they are same as bond investment average, they only are bond "alike" after break even years of 10-15 years. But they are great forced saving plans that are compounded at reasonable rate.

      regards

      Delete