Things you should read before buying an endowment plan

[bibu00]

Actually there's nothing to discuss about in this thread anymore.
You can get quality financial advice and plan for your retirement (including insurance and investments) for just $8.) *definitely not enough for him to go for trips and afford another bmw/merc*
https://www.indiegogo.com/projects/rich-by-retirement-invest-smart-retire-wealthy-finance-book


If you can't afford this $8 (but can pay agents 4 digits in commissions), I'll paste $7.99 worth of his book content here. (pls don't sue me)

If you take only one thing away from this book, I want you to never, ever, ever buy any sort of
investment from an insurance company. No whole life policies. No endowment plans. No
investment-linked policies. Nothing. Ignore what the sales rep tells you about how you’ll be able to
access fancy funds and how great the returns have been in the past

 

[Perisher]

What is there to argue.
It's called non guaranteed for a reason. The company has no obligations to pay out this sum. If they give you $0, you have no case against them. You agreed that this sum that was stated was not guaranteed to you, by signing the policy booklet.

They can write as much non guaranteed portion as they like, you agreed that it can be reduced to 0 in the last policy year.

Only if guaranteed sum is not paid out as stated then you have a case to report to the authorities.

I think there is a part where it states that once the non-guaranteed portion is declared, it's yours. Dunno got such detail as last policy year the non-guaranteed that was declared yours already can be reduced to 0 wor.

Is there some misunderstanding?

 

[thekang]

What is there to argue.
It's called non guaranteed for a reason. The company has no obligations to pay out this sum. If they give you $0, you have no case against them. You agreed that this sum that was stated was not guaranteed to you, by signing the policy booklet.

They can write as much non guaranteed portion as they like, you agreed that it can be reduced to 0 in the last policy year.

Only if guaranteed sum is not paid out as stated then you have a case to report to the authorities.

This is misleading, insurance companies cannot do whatever they want. For participating policies, they can only take up to 1/9th of the value of bonuses declared. See following link:

http://www.moneysense.gov.sg/Understanding-Financial-Products/Insurance/Types-of-Insurance/Life-insurance/Types-of-Life-Insurance/Participating-Policies.aspx

Can not an insurance company up lorry? All that were paid in over the years gone and insured become uninsured.

This basically will not happen. MAS requires insurance companies to hold reserves sufficient to cover various extreme scenarios. SDIC also covers insurance policies (range from $50k to $500k). Lastly, if insurance company still manage to uplorry, MAS will step in and get another insurance company to take over.

 

[MikeDirnt78]

I think there is a part where it states that once the non-guaranteed portion is declared, it's yours. Dunno got such detail as last policy year the non-guaranteed that was declared yours already can be reduced to 0 wor.

Is there some misunderstanding?

I think he is talking about future non-guaranteed values.

Once bonuses declared, it becomes the guaranteed portion.

 

[akwl88]

still camping for insurance agents to enlighten me why they are peddling products with large decreasing NG returns

 

[henrylbh]

I think he is talking about future non-guaranteed values.

Once bonuses declared, it becomes the guaranteed portion.

Whatever they declared during the period is not significant. It's the last year based on the pic I showed that determines the final yield of a product.

 

[henrylbh]

This basically will not happen. MAS requires insurance companies to hold reserves sufficient to cover various extreme scenarios. SDIC also covers insurance policies (range from $50k to $500k). Lastly, if insurance company still manage to uplorry, MAS will step in and get another insurance company to take over.

No matter how big the insurance company is there is still a risk of failing and SDIC only covers a small amount and all your vested interest in medical coverage is gone.

You can only hope MAS that will step in. Nay, why would the government bail out an insurance company that fail, unless it's too big to fail, and only if it's a local insurance company or if many insurance companies fail the about same time. And why would any other insurers want to take over the liabilities of a failed insurer unless there is value to them, not to the insureds.

 

[bibu00]

Yup. Nothing wrong with what I said. Once non guaranteed value is declared out as bonus it forms a part of the guaranteed value.

Which I said they are obliged to pay out.

I mean to say if they give u 0 non-guarenteed value for 25 years straight, are they in the wrong?

My statement is clear, upon signing the initial policy booklet, any non-guarenteed value projected is non guaranteed. They are not obliged to pay out. By signing the booklet you have acknowledge this fact.

 

[MikeDirnt78]

Whatever they declared during the period is not significant. It's the last year based on the pic I showed that determines the final yield of a product.

Not all insurance companies practice like the one you showed. Meaning they try to give more bonuses at the maturity of the policy.

Some insurance companies practice "smoothing" across the policy years. Every year, they will give smaller and sustainable bonuses.

The way I see, your insurance company tried to over-project and under-delivered when it matured. This is a recipe for bad PR.

 

[thekang]

No matter how big the insurance company is there is still a risk of failing and SDIC only covers a small amount and all your vested interest in medical coverage is gone.

You can only hope MAS that will step in. Nay, why would the government bail out an insurance company that fail, unless it's too big to fail, and only if it's a local insurance company or if many insurance companies fail the about same time. And why would any other insurers want to take over the liabilities of a failed insurer unless there is value to them, not to the insureds.

There is no need to hope. Banks are far more likely to fail than insurance companies. Unless you are familiar with the capital requirements for banks and insurance companies, you just have to trust me on this.

The reason why MAS can transfer the policies to another insurance company is because MAS will be aware of the weakness of an insurance company long before it reaches a point where it will collapse (a lot of the payments happen many years later after all). At this point, they can easily revoke its insurance license and force the weak insurance company to sell its policies to another insurer at a low price. There are also insurers willing to increase their market share by offering to buy them at a loss.

 

[henrylbh]

There is no need to hope. Banks are far more likely to fail than insurance companies. Unless you are familiar with the capital requirements for banks and insurance companies, you just have to trust me on this.

The reason why MAS can transfer the policies to another insurance company is because MAS will be aware of the weakness of an insurance company long before it reaches a point where it will collapse (a lot of the payments happen many years later after all). At this point, they can easily revoke its insurance license and force the weak insurance company to sell its policies to another insurer at a low price. There are also insurers willing to increase their market share by offering to buy them at a loss.

I have seen an insurance co financial statements which made huge gain because it's investments appreciated during the good times. The money was 'distributed' or remitted. Then crisis came and suddenly itd investments were impaired and the loss was more than its equity. Had the crisis prolong surely some would face problems. There was another insurer whose impairment on its top ten investments would more than wipe out its equity had financial statements published at that wrong time.

 

[thekang]

I have seen an insurance co financial statements which made huge gain because it's investments appreciated during the good times. The money was 'distributed' or remitted. Then crisis came and suddenly itd investments were impaired and the loss was more than its equity. Had the crisis prolong surely some would face problems. There was another insurer whose impairment on its top ten investments would more than wipe out its equity had financial statements published at that wrong time.

I am interested to know what insurance companies these are. Please PM if confidential.

In Singapore right now, there are no insurers with a high concentration in one investment. If they did, they will need to hold extra capital for concentration risk, which doesn't make sense for them.

If you are referring to financial crisis in 2007, then banks were much harder hit than insurance companies. AIG failed not because of their insurance business, but because of their derivatives business dabbling in credit default swaps.

Edit: this has gone off topic, let's go back to the main issue.

 

[akwl88]

http://mobile.nytimes.com/2016/08/1...insurance-premiums-are-skyrocketing.html?_r=0

"After months of considering their options, the Cooks ultimately decided to drop their life policy, walking away from the $55,000 that they had spent on it over the last 25 years, Ms. Sparks said. They took the remaining cash in the account, which totaled $4,100."

Song bo how insurers try to squeeze u dry till you die!

 

[thekang]

http://mobile.nytimes.com/2016/08/1...insurance-premiums-are-skyrocketing.html?_r=0

"After months of considering their options, the Cooks ultimately decided to drop their life policy, walking away from the $55,000 that they had spent on it over the last 25 years, Ms. Sparks said. They took the remaining cash in the account, which totaled $4,100."

Song bo how insurers try to squeeze u dry till you die!

Normally I have no issue with your insurance bashing, but this time round you have stepped into an area you don't really understand.

Firstly, what is universal life? At risk of over-simplifying, you can see it as a US-style ILP invested in bonds, with a guaranteed minimum return (probably around 4% for the Cooks if they bought in 1990s as mentioned in the article).

Amazing right? Sounds like CPF SA! Are insurers earning from this? Of course not, the article itself already mentioned that they are losing money.

Secondly, why is their cash value so low? This is due to deductions for the cost of insurance based on their chosen coverage. The article mentioned that many people had a face value (i.e. sum assured) of $1 million or more, which is likely the same for the Cooks. This also explains why their premiums were increased drastically, since their cash value is too low to pay for $1 million coverage at their old age.

In this case, US insurers are trying to cut losses by making policyholders surrender. It's not as money-sucking as you make it out to be.

 

[icyboiz]

Normally I have no issue with your insurance bashing, but this time round you have stepped into an area you don't really understand.

Firstly, what is universal life? At risk of over-simplifying, you can see it as a US-style ILP invested in bonds, with a guaranteed minimum return (probably around 4% for the Cooks if they bought in 1990s as mentioned in the article).

Amazing right? Sounds like CPF SA! Are insurers earning from this? Of course not, the article itself already mentioned that they are losing money.

Secondly, why is their cash value so low? This is due to deductions for the cost of insurance based on their chosen coverage. The article mentioned that many people had a face value (i.e. sum assured) of $1 million or more, which is likely the same for the Cooks. This also explains why their premiums were increased drastically, since their cash value is too low to pay for $1 million coverage at their old age.

In this case, US insurers are trying to cut losses by making policyholders surrender. It's not as money-sucking as you make it out to be.

you said so much, he will just bring out the very first thing and repeat everything again. after awhile you will understand what i mean. already put him into ignore list 1-2 weeks ago, so i can't see whatever he post anymore. no point keep repeating.

 

[akwl88]

Normally I have no issue with your insurance bashing, but this time round you have stepped into an area you don't really understand.

Firstly, what is universal life? At risk of over-simplifying, you can see it as a US-style ILP invested in bonds, with a guaranteed minimum return (probably around 4% for the Cooks if they bought in 1990s as mentioned in the article).

Amazing right? Sounds like CPF SA! Are insurers earning from this? Of course not, the article itself already mentioned that they are losing money.

Secondly, why is their cash value so low? This is due to deductions for the cost of insurance based on their chosen coverage. The article mentioned that many people had a face value (i.e. sum assured) of $1 million or more, which is likely the same for the Cooks. This also explains why their premiums were increased drastically, since their cash value is too low to pay for $1 million coverage at their old age.

In this case, US insurers are trying to cut losses by making policyholders surrender. It's not as money-sucking as you make it out to be.

chiu ish insurance agent?

 

[akwl88]

you said so much, he will just bring out the very first thing and repeat everything again. after awhile you will understand what i mean. already put him into ignore list 1-2 weeks ago, so i can't see whatever he post anymore. no point keep repeating.

chiu still never ans me why agents are peddling lousy products with decreasing NG returns

 

[dendii]

Not sure how you are camping for these agents here.

Those who are wont be bothered to reply you.

Those are not not peddling these products wont be able to enlighten you since we are not doing it in the first place.

still camping for insurance agents to enlighten me why they are peddling products with large decreasing NG returns

 

[akwl88]

Not sure how you are camping for these agents here.

Those who are wont be bothered to reply you.

Those are not not peddling these products wont be able to enlighten you since we are not doing it in the first place.

you are an agent too?

 

[dendii]

Yes I am.

Anyway i think there can only be 3 reasons:

1) Greed
2) Brainwashed
3) Ignorant to other better avenues

you are an agent too?