PRUDENTIAL SAVINGS SAGA

[Perisher]

Thread under review.

edit:Thread re-open.

 

[Perisher]

Erm sounds fantastic until it falls apart.
The endowment if I understand it correctly is sold as a savings+investing plan, not a sick/protection plan?

That's already a controversial part. It seems to want to do a bit of everything without acing any. And sounds overly complicated.

Is there any reason why you avoid answering why insurance company can't put up a notice on their first page that states,
This policy may result in 0 capital gains or losses in the long term.
It's already on most investment products like stocks, bonds etc...

The riders are extras which over complicate the policy as can be seen in the fb posting so let's dismiss that. SSB doesn't have that. Makes it easier as a comparison no? See no reason to complicate it.

The agent's words quoted from below thread claims

The reason being although I believe in freedom of speech, I also equally believe this freedom should be exercised responsibly. So here goes my interpretation of the blog post, broken into 4 parts.

http://deluxeforums.hardwarezone.co...t-came-out-defend-endowment-saga-5599746.html

Why? Because these riders address a different need of wealth protection in the event of a claim being made. Whereas the endowment policy is for the purpose of wealth accumulation.

Yup, as I said before, these endowment plans are not sold as sick/protection plan but as this agent put it, wealth accumulation.

That's already a controversial part. It seems to want to do a bit of everything without acing any. And sounds overly complicated.
And again, the riders are causing all sorts of issues.
The disclaimer that insurance companies don't put on first page as per my suggestion is another point that Insurance companies fail in.
Guess $$ is more important to them but who can blame them?

 

[akwl88]

The agent's words quoted from below thread claims

http://deluxeforums.hardwarezone.co...t-came-out-defend-endowment-saga-5599746.html



Yup, as I said before, these endowment plans are not sold as sick/protection plan but as this agent put it, wealth accumulation.

That's already a controversial part. It seems to want to do a bit of everything without acing any. And sounds overly complicated.
And again, the riders are causing all sorts of issues.
The disclaimer that insurance companies don't put on first page as per my suggestion is another point that Insurance companies fail in.
Guess $$ is more important to them but who can blame them?

yes agreed

as i said before, endowments doesn't give:

1) adequate protection

2) adequate returns

resulting in it becoming a useless product

whole life, endowments and ilps have investing elements. they must put the disclaimer of investment risk to let consumers be aware

 

[soneat]

yes agreed

as i said before, endowments doesn't give:

1) adequate protection

2) adequate returns

resulting in it becoming a useless product

whole life, endowments and ilps have investing elements. they must put the disclaimer of investment risk to let consumers be aware

Actually in some of the whole life BIs I saw, I vaguely recall there's some disclaimer right on Page 1. But some agents might choose to print selectively or choose not to highlight the non guaranteed nature of the product.

 

[Perisher]

Actually in some of the whole life BIs I saw, I vaguely recall there's some disclaimer right on Page 1. But some agents might choose to print selectively or choose not to highlight the non guaranteed nature of the product.

Should just put it big big on first page like this for any policies with investment element,

Save everyone's trouble.

 

[soneat]

Should just put it big big on first page like this for any policies with investment element,

Save everyone's trouble.

Unless MAS classify all these as non-regulated products/investment schemes or order the insurers to pull these products off the shelves, this sort of "saga" will keep appearing as long as one or more of the following happens:
i) Customer don't read what is presented
ii) Customer read but don't understand exactly what is presented
iii) Agent print and present the BI w/o the warning page
iv) Agent print and present the BI w the warning page without emphasizing the non-guaranteed nature of the product.
v) Customer sign blindly on the "agreement" (know your clients etc kind of paper work) to acknowledge they have received financial advice about the product, and they agree with the product.
vi) Agent push for products using a std template method without truly understanding the protection needs as well as financial profile.

Btw, money sense website also have warning but how many people actually read?
http://www.moneysense.gov.sg/Understanding-Financial-Products/Insurance/Things-to-Watch-Out-for.aspx

Also, some life insurance policies build up cash values over time. If you terminate such policies prematurely, the cash value you receive can be substantially less than the premiums you paid.

Most people will hear and seek advise from friends, relatives, forums or agents rather than to put in effort to research and understand on the product.

 

[OngHuatHuat]

My point is being a lot of people underestimate the regular premium payable for term and fail to acknowledge most people die after 65 years old. In fact, the median now is around 80 year old, most people dying age will concentration around the mean or median. It kind of follow normal distribution curve for a decent size population.

Your argument is term very cheap up to 65 years old and everyone should get term for the huge protection, but the problem is you only look at it using dollar to dollar comparison numerically.
There is a very important factor that you overlook: how our body function.

As people gets older, higher tendency for cells to mutate or getting critical illness, that is the point you can claim for your critical illness coverage. Statiscally, most people get this after 65 years old, which means after your so called term plan expires.
Insurers are not stupid, there is a reason why they price their term up till 65 years old so cheap.

You may argue that if you die after 65 years old, nothing to be worried already, but most people don't just die like that. There is a very long dragging period between they get that illness and they actually die. You can argue you get medical insurance enough already, but once you get that critical illness, you will need someone to care for you too. And not to forget, medical insurance premium tend to rise exponentially as you age. Now you see the premium so cheap, that is because you are not paying for your parents. I am paying for my parents, so I can really feel the pain, but no choice, I have to get them covered.

If you get term up to 65 years old, most likely you won't get the chance to activate it at all. I believe insurers have the data on hand but they don't reveal only. If you get term up to 99 years old or even 70 years old, the premium will rise a lot. So how? Just suicide?

huh?

how come you expect to get something from term insurance?

protection

 

[Perisher]

Unless MAS classify all these as non-regulated products/investment schemes or order the insurers to pull these products off the shelves, this sort of "saga" will keep appearing as long as one or more of the following happens:
i) Customer don't read what is presented
ii) Customer read but don't understand exactly what is presented
iii) Agent print and present the BI w/o the warning page
iv) Agent print and present the BI w the warning page without emphasizing the non-guaranteed nature of the product.
v) Customer sign blindly on the "agreement" (know your clients etc kind of paper work) to acknowledge they have received financial advice about the product, and they agree with the product.
vi) Agent push for products using a std template method without truly understanding the protection needs as well as financial profile.

Btw, money sense website also have warning but how many people actually read?
http://www.moneysense.gov.sg/Understanding-Financial-Products/Insurance/Things-to-Watch-Out-for.aspx

Also, some life insurance policies build up cash values over time. If you terminate such policies prematurely, the cash value you receive can be substantially less than the premiums you paid.

Most people will hear and seek advise from friends, relatives, forums or agents rather than to put in effort to research and understand on the product.

Erm, actually, putting that page upfront big big will likely solve tons of cases.

 

[soneat]

My point is being a lot of people underestimate the regular premium payable for term and fail to acknowledge most people die after 65 years old. In fact, the median now is around 80 year old, most people dying age will concentration around the mean or median. It kind of follow normal distribution curve for a decent size population.

Your argument is term very cheap up to 65 years old and everyone should get term for the huge protection, but the problem is you only look at it using dollar to dollar comparison numerically.
There is a very important factor that you overlook: how our body function.

As people gets older, higher tendency for cells to mutate or getting critical illness, that is the point you can claim for your critical illness coverage. Statiscally, most people get this after 65 years old, which means after your so called term plan expires.
Insurers are not stupid, there is a reason why they price their term up till 65 years old so cheap.

You may argue that if you die after 65 years old, nothing to be worried already, but most people don't just die like that. There is a very long dragging period between they get that illness and they actually die. You can argue you get medical insurance enough already, but once you get that critical illness, you will need someone to care for you too. And not to forget, medical insurance premium tend to rise exponentially as you age. Now you see the premium so cheap, that is because you are not paying for your parents. I am paying for my parents, so I can really feel the pain, but no choice, I have to get them covered.

If you get term up to 65 years old, most likely you won't get the chance to activate it at all. I believe insurers have the data on hand but they don't reveal only. If you get term up to 99 years old or even 70 years old, the premium will rise a lot. So how? Just suicide?

Just a FYI - Average male and female mortality age of SG male and female has risen slowly over the years. The average is 83 for male and 86 for female according to the latest figures from Singstats. There's very detailed FREE stats available.

 

[OngHuatHuat]

I just think that they have more details compare to us. Like how many people actually suffer from certain critical illness etc coz I think most people don't just die like that, that's why term with critical illness is much more expensive than those without.

Just a FYI - Average male and female mortality age of SG male and female has risen slowly over the years. The average is 83 for male and 86 for female according to the latest figures from Singstats. There's very detailed FREE stats available.

 

[soneat]

Erm, actually, putting that page upfront big big will likely solve tons of cases.

There's a full page of disclaimer. Here's an example.

Introduction
Income believes that it is important that you fully appreciate the benefits of your policy. You should also understand how the cost of your insurance cover and the expenses of administration and sales affect the benefits that you will receive.

The illustration that follows shows how the value of your policy progresses over time and the sum(s) that would be payable. The methods used to derive the values shown follow guidelines established by the Life Insurance Association, Singapore, to ensure that a fair and consistent approach is used in preparing this illustration.
Please note that your policy provides a combination of (1) guaranteed benefits and (2) non-guaranteed benefits in the form of bonuses. The bonus rates used in this illustration are not guaranteed and may vary according to the performance of the Participating Fund.

Buying a life insurance policy can be a long term commitment. An early termination of the policy usually involves high costs and the surrender value payable may be less than the total premiums paid.

You are required to disclose all facts material to this policy truthfully without omission in the proposal form, failing to do so may render the policy null and void.

If you need clarification, please do not hesitate to ask your adviser.
This policy is protected under the Policy Owners' Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income or visit the GIA/LIA or SDIC web-sites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).

 

[soneat]

I just think that they have more details compare to us. Like how many people actually suffer from certain critical illness etc coz I think most people don't just die like that, that's why term with critical illness is much more expensive than those without.

Yes they have more details for sure. I won't go into details though....as its going to take up a lot of my time.

 

[Perisher]

My point is being a lot of people underestimate the regular premium payable for term and fail to acknowledge most people die after 65 years old. In fact, the median now is around 80 year old, most people dying age will concentration around the mean or median. It kind of follow normal distribution curve for a decent size population.

Your argument is term very cheap up to 65 years old and everyone should get term for the huge protection, but the problem is you only look at it using dollar to dollar comparison numerically.
There is a very important factor that you overlook: how our body function.

As people gets older, higher tendency for cells to mutate or getting critical illness, that is the point you can claim for your critical illness coverage. Statiscally, most people get this after 65 years old, which means after your so called term plan expires.
Insurers are not stupid, there is a reason why they price their term up till 65 years old so cheap.

You may argue that if you die after 65 years old, nothing to be worried already, but most people don't just die like that. There is a very long dragging period between they get that illness and they actually die. You can argue you get medical insurance enough already, but once you get that critical illness, you will need someone to care for you too. And not to forget, medical insurance premium tend to rise exponentially as you age. Now you see the premium so cheap, that is because you are not paying for your parents. I am paying for my parents, so I can really feel the pain, but no choice, I have to get them covered.

If you get term up to 65 years old, most likely you won't get the chance to activate it at all. I believe insurers have the data on hand but they don't reveal only. If you get term up to 99 years old or even 70 years old, the premium will rise a lot. So how? Just suicide?

My point being, most people even if they understand your point would still choose not to buy endowment if they know 20+ years of $$ put in will get back the same or worse, lose money.

That's exactly what most people are worried about, 20+ years buying a 'wealth accumulation' product but getting back break-even or losses.
That's where most controversies starts from.

A simpler term+SSB or whatever simpler products could save the controversy. Avoiding the riders that add on top of the main policy.

Is endowment gonna be better than a sure-fire guaranteed returns with protection until 65? Do most people wanna take that risk? As in do they really wanna take on that risk?

 

[Perisher]

There's a full page of disclaimer. Here's an example.

Introduction
Income believes that it is important that you fully appreciate the benefits of your policy. You should also understand how the cost of your insurance cover and the expenses of administration and sales affect the benefits that you will receive.

The illustration that follows shows how the value of your policy progresses over time and the sum(s) that would be payable. The methods used to derive the values shown follow guidelines established by the Life Insurance Association, Singapore, to ensure that a fair and consistent approach is used in preparing this illustration.
Please note that your policy provides a combination of (1) guaranteed benefits and (2) non-guaranteed benefits in the form of bonuses. The bonus rates used in this illustration are not guaranteed and may vary according to the performance of the Participating Fund.

Buying a life insurance policy can be a long term commitment. An early termination of the policy usually involves high costs and the surrender value payable may be less than the total premiums paid.

You are required to disclose all facts material to this policy truthfully without omission in the proposal form, failing to do so may render the policy null and void.

If you need clarification, please do not hesitate to ask your adviser.
This policy is protected under the Policy Owners' Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income or visit the GIA/LIA or SDIC web-sites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).

You are missing the point.
It's 20+ years for breaking-even. It's not even early redemption here.

Also, putting simple words big big on first page is far more effective than a whole page of small detailed and complicated explanation. It's so complicated that even you missed my point to hi-light and bold the wrong thing to show here.

 

[OngHuatHuat]

Actually this so called example, it is already clearly explained by most people, riders eat into return. Why keep harping on this? If that person remove all riders, I believe the return should be quite decent.

You are missing the point.
It's 20+ years for breaking-even. It's not even early redemption here.

Also, putting simple words big big on first page is far more effective than a whole page of small detailed and complicated explanation. It's so complicated that even you missed my point to hi-light and bold the wrong thing to show here.

 

[soneat]

You are missing the point.
It's 20+ years for breaking-even. It's not even early redemption here.

Also, putting simple words big big on first page is far more effective than a whole page of small detailed and complicated explanation. It's so complicated that even you missed my point to hi-light and bold the wrong thing to show here.

Not all WL policy takes 20+ year to break-even. Lousy ones can take 30+ years or more.

For WL, my fastest breakeven one was 7+ years. In terms of guaranteed surrender value, the best one I ever had, has around 2% yield (guaranteed).

For Term policies, for the same coverage and age profile, the premium can be drastically different isn't it? Would you consider some Term policies to be more value for money than the others?

Similarly, for whole life policies, there are crap policies and decent policies as well. I wouldn't say they are great because even decent policies are facing extinction as well.

Note: I am referring to WL policies, not endowment.

 

[Perisher]

Actually this so called example, it is already clearly explained by most people, riders eat into return. Why keep harping on this? If that person remove all riders, I believe the return should be quite decent.

Why keep harping? Because this thing often need repeated reminder to really get into most folk's mind. It's not something they remember off hand.
That's why there is so much controversy now.

Make it simple and upfront for them. The explanation is where it gets complicated.

 

[Perisher]

Not all WL policy takes 20+ year to break-even. Lousy ones can take 30+ years or more.

For WL, my fastest breakeven one was 7+ years. In terms of guaranteed surrender value, the best one I ever had, has around 2% yield (guaranteed).

For Term policies, for the same coverage and age profile, the premium can be drastically different isn't it? Would you consider some Term policies to be more value for money than the others?

Similarly, for whole life policies, there are crap policies and decent policies as well. I wouldn't say they are great because even decent policies are facing extinction as well.

huh? I'm not talking about WL here wor.
I'm talking about endowment. But even WL can be put with that disclaimer up front and big big.

the long term disclaimer, no need to put 20 years or 30 years.

And you are missing the point. It's not about which policy is good or bad. It's about telling all clients that long term doesn't equal profits.

 

[OngHuatHuat]

Most people don't reAlly understand how riders work unless they willing to spend sometime and really look through their policy

Your wording makes it seems like endowment without riders are bad too.
But I can tell you most endowment without riders, able to beat term + Ssb combo.

Why keep harping? Because this thing often need repeated reminder to really get into most folk's mind. It's not something they remember off hand.
That's why there is so much controversy now.

Make it simple and upfront for them. The explanation is where it gets complicated.

 

[Perisher]

Most people don't reAlly understand how riders work unless they willing to spend sometime and really look through their policy

Your wording makes it seems like endowment without riders are bad too.
But I can tell you most endowment without riders, able to beat term + Ssb combo.

Exactly, people don't understand without explanation and it needs repeated explanation to get into their mind.

It's not about bad or good. It's about telling them long term policies with investment element can result in break-even or losses.

Why are we talking about whether a policy is good or bad instead of avoiding such controversies?
The good or bad part should be explained by agents since they are selling it no?
The explanation in the policies is to help avoid controversies, not to sell a product.