Fundsupermart sells insurance with 50% commission rebate

[SpinFire]

Finally, an online portal to buy insurance directly. In short, it bypasses the middleman (insurance agent) so that end-consumers save more. The downside is that consumers would not get insurance advice from agents.

FSM: Protect yourself for $1,000,000 and save over $2,000! | Fundsupermart.com

Investmentmoats Blog Article: Fundsupermart sells insurance now! Rebates 50% of commission back to you

There's a table showing the lifetime commissions of wholelife vs term. WL insurance commissions is 10x more than term insurance.

 

[eyeburn]

wow this is a good thing. Great move FSM!

 

[simpledom]

"There's a table showing the lifetime commissions of wholelife vs term. WL insurance commissions is 10x more than term insurance. "

Please note that WL Insurance COST 10x more than term insurance, therefore isn't it natural that commissions are 10x more ? You can't be expecting that its less right ?

Anyway, its a great initiative from FSM, it will really drive consultants like us harder to provide better value.

 

[chopra]

fsm doesnt really indicate the underlying company insuring this, right?

will contact them soon anyway. the 50percent rebate -- wonder issit one time or what.

 

[SpinFire]

fsm doesnt really indicate the underlying company insuring this, right?

will contact them soon anyway. the 50percent rebate -- wonder issit one time or what.

From their website:
Do note that rebates will be made via cheque, and will only be given at the end of each policy year (not calendar year), regardless of the premium frequency you have chosen.

If I'm not wrong, for term insurance for example, the agent gets commissions of the first 4 years of the policy. Thus, I suppose we'll get rebates annually for the first 4 years.
Will have to contact them to find out more.

 

[chopra]

sf, thanks =)

 

[WindBoi]

thnk it shouldn't be indicated that this is an online platform. we should really share our experience when dealing with them. there will definitely be pros and cons.

 

[sneggg]

Thank you for the enquiry. This 50% rebate is based on the commission amount that we received from the insurer and we rebate 50% of the amount back to you on an annual basis. If the plan does not pay any commission back to us after a certain number of years than the rebate will stop. In addition, the rebate amount is an estimated figure and in the event of any discrepancies, the insurer will decide on the final amount.

 

[iAdvisor]

Thank you for the enquiry. This 50% rebate is based on the commission amount that we received from the insurer and we rebate 50% of the amount back to you on an annual basis. If the plan does not pay any commission back to us after a certain number of years than the rebate will stop.
In addition, the rebate amount is an estimated figure and in the event of any discrepancies, the insurer will decide on the final amount.

Fantastic way to get contacts.

 

[chopra]

Fantastic way to get contacts.

any cons to retailers?

 

[limster]

Please note that WL Insurance COST 10x more than term insurance, therefore isn't it natural that commissions are 10x more ? You can't be expecting that its less right ?

This kind of reward structure isn't natural to me.

A natural reward structure to me is a fee based system, where the IFA is rewarded according to hours worked.

Under a fee based system, an IFA will assess your needs and if term is really more suitable for you, he will not hesitate to recommend term since his fee is the same.

The unnatural system is the one that encourages agents to recommend unsuitable products.

 

[gt_5454]

Totally agree.... It markets itself as cheap .. Haha I think they are cheap really

 

[iAdvisor]

any cons to retailers?

The 50% discount is really a catchy statement.For many who thought agents earns huge commission, this is really attractive.

Firstly, different products gave different comms, and it only last for the first few years (mostly 5 yrs, except for shield plan which is lifetime comms.I heard some companies offer lifetime comms for rider as well).
The comms amount is the highest for the first year, thereafter, it will be reduce to about 10-20% of the premium, and 3rd year on, something less than 10%.

For the fsm case, in short, I believe buyers can expect a 25% discount for the first year, something less than 10% on 2nd year, and less than 5% from third year on till roughly the 5th year.

I believe there are still advisors involved. Fsm likely to have partnered with an ifa firm, and since fsm able to provide the firm with bulk, the firm gave discount. (If someone provide me with such bulk, I can also do the same. Haa)

The cons I see is that buyers have to be aware how much rebate are they receiving and how much they will pay. Years back there is a firm who gave first year premium waiver to client. Many just thought it's free and took up the plan. Subsequent year, they forget what is it, and maybe too expensive, they terminate the plan.Axa made a huge loss due to this, and a big hooha occur.

Next con, most importantly, there is still an agent to the policy. Now, you have not seen this person, and not able to tell if you can trust this person.

I believe, after someone purchase a plan, the agent can still push other product to the buyer, or add on unnecessary riders that are not eligible for the discount to the product.
Just my thoughts

 

[iAdvisor]

Finally, an online portal to buy insurance directly. In short, it bypasses the middleman (insurance agent) so that end-consumers save more. The downside is that consumers would not get insurance advice from agents.

FSM: Protect yourself for $1,000,000 and save over $2,000! | Fundsupermart.com

Investmentmoats Blog Article: Fundsupermart sells insurance now! Rebates 50% of commission back to you

There's a table showing the lifetime commissions of wholelife vs term. WL insurance commissions is 10x more than term insurance.

I believe there are still agents involved.Likely ifa. 50% commission rebate, where the other 50% goes?At least for now, MAS would not allowed buyers to do so.

Yes, wl Insurance has higher commission, due to wl Insurance is more costly.From the example table, the policy span for 25 years, so the term also last only for 25 years.Wl insurance covers for life.
Base on the example, fsm did not mention, after 25 years premium payment, if nothing happens, your term plan will just terminate.For the wl plan, it will be a fully paid up policy, and coverage for a lifetime, with cash value.
(Ntuc, tm, manulife all have limited payment plans)
I have, in another thread, listed the cost for both, and how wl plans can be of worth when terminated compare to term.

Once again, just want to highlight, term and wl plan are for different purpose.It's not fair to compare them, basing on the same purpose.one should question in details what is both product meant for. The advisor must be able to state clearly the difference and advise accordingly.

 

[moonstarz]

I have, in another thread, listed the cost for both, and how wl plans can be of worth when terminated compare to term.

can share the link to your thread?

 

[iAdvisor]

can share the link to your thread?

I realized that is quite sometime ago, might as well do up a new comparison.

Base on female age 30 non-smoker.
Getting a AXA term plan that covers her 200k on death/tpd and CI till age 70 cost $1008 pa

From TM Legacy plus, a whole life plan covers her 80k for lifetime (200k till age 70) on death/TPD and CI, cost $2271.20.

Both products will cover her 200k on death/TPD and CI till age 70. These is to have a fair comparison of both products. Why term till age 70, is not of discussion here, there are several threads where I commented on these. Basically I believe we need coverage at all age, just how much it cover and how much it cost.

So refer to the picture url, showing the values.

[/URL][/IMG]

Firstly, premium is not 10x more, but about 2x. It depend on which company are you buying from. Different companies products' premium can differs more than 20%.

I highlighted at age 46, you would have paid AXA $16,128, or to TM $36,339.20. A premium difference of $20,211.20, but your surrender value for TM is $20,862. Meaning, if you decided at at 46, you do not need any coverage at all, you would have paid $650.80 lesser in premium on TM compare to AXA.

I forget to add on. At 60 years old, your surrender value on TM is $69,454. Premium paid on AXA at 60, is $30,240 and TM is $56,780. For those who advocate BTIR you would have earn $13k more on TM, and yes, comparatively, you would have 26k more to invest.

[/URL][/IMG]

At age 70, Total premium paid on AXA is $40,320 and TM $56,780. This is no longer double premium amount. This is because, TM is limited payment of 25 years only. Surrender value is $107,424.

If at 70, you decided, you can be self insured, surrender TM plan, get back 107k. The difference between the premium paid is only 16k, but with TM, you can decide if you want to continue the coverage or terminate it. With a term plan, you got no other option.

Let me ask, if you have such confident to be able to self-insured at old age, what difference will it make for 16k more over 40years period. A lot of people think they are god-like, when they are young. Trust me, when you reach 40s, you realize your body system deteriorate faster than any china product (oops sorry for the generalization). If by age 70, nothing happens, your 40k would be safely in insurer's hand using only term plan. If you keep the WL plan, you guaranteed a payout of 200k range (you will die.) your 56k, earns 200k without any risk involved to be left behind for your dependent. How bad can that be?

Having said all this, I do not mean that WL is better than term. Like I say, they are for different purpose.

 

[simpledom]

Great comparison iAdvisor!

The issue is that people are very short sighted, and look at the current yearly premium difference, instead of the long term total difference.

Moreover, they use exponentially increasing term policies like saf group term and ntuc luv to do the comparison, which look very cheap now, but escalating premiums will happen at a much later age.

If everything can be put into proper perspective, singaporeans would be properly and well insured!

 

[moonstarz]

thanks iAdvisor for the detailed comparison between taking up a WL and a term plan!

 

[tanyokli]

Buying a life insurance is unlike buying electronics at IT/Electronics fair where we only pay once and get the goods.

It is about funding the premiums for a much longer period time (e.g. 5 years or more...), and bear in mind it's 50% comm rebate, not 50% reduction in premium perpetually.

As consumers, we should focus on the long term in funding the premiums, instead of being enticed by a carrot that is dangling for a limited period.

Just my 2 cents worth.

 

[Sinkie]

Great comparison you have there

But if we base on time value of money so basically a term plan allows you to pay lesser (less constraint to your budget) now and even lesser in the future (due to time value of money) compared to a wholelife plan which makes you pay even more now (base on time value of money) and less or no need to pay when the money get smaller

So in this case, a wl will be more attractive if the yearly payment needed for a term plan is required to be adjusted base on inflation which is not the case.

I realized that is quite sometime ago, might as well do up a new comparison.

Base on female age 30 non-smoker.
Getting a AXA term plan that covers her 200k on death/tpd and CI till age 70 cost $1008 pa

From TM Legacy plus, a whole life plan covers her 80k for lifetime (200k till age 70) on death/TPD and CI, cost $2271.20.

Both products will cover her 200k on death/TPD and CI till age 70. These is to have a fair comparison of both products. Why term till age 70, is not of discussion here, there are several threads where I commented on these. Basically I believe we need coverage at all age, just how much it cover and how much it cost.

So refer to the picture url, showing the values.

[/URL][/IMG]

Firstly, premium is not 10x more, but about 2x. It depend on which company are you buying from. Different companies products' premium can differs more than 20%.

I highlighted at age 46, you would have paid AXA $16,128, or to TM $36,339.20. A premium difference of $20,211.20, but your surrender value for TM is $20,862. Meaning, if you decided at at 46, you do not need any coverage at all, you would have paid $650.80 lesser in premium on TM compare to AXA.

I forget to add on. At 60 years old, your surrender value on TM is $69,454. Premium paid on AXA at 60, is $30,240 and TM is $56,780. For those who advocate BTIR you would have earn $13k more on TM, and yes, comparatively, you would have 26k more to invest.

[/URL][/IMG]

At age 70, Total premium paid on AXA is $40,320 and TM $56,780. This is no longer double premium amount. This is because, TM is limited payment of 25 years only. Surrender value is $107,424.

If at 70, you decided, you can be self insured, surrender TM plan, get back 107k. The difference between the premium paid is only 16k, but with TM, you can decide if you want to continue the coverage or terminate it. With a term plan, you got no other option.

Let me ask, if you have such confident to be able to self-insured at old age, what difference will it make for 16k more over 40years period. A lot of people think they are god-like, when they are young. Trust me, when you reach 40s, you realize your body system deteriorate faster than any china product (oops sorry for the generalization). If by age 70, nothing happens, your 40k would be safely in insurer's hand using only term plan. If you keep the WL plan, you guaranteed a payout of 200k range (you will die.) your 56k, earns 200k without any risk involved to be left behind for your dependent. How bad can that be?

Having said all this, I do not mean that WL is better than term. Like I say, they are for different purpose.