Fundsupermart sells insurance with 50% commission rebate

[iAdvisor]

IIRC, you threw one a table, showing that the surrender value of whole life has surrender value 107424, compared to the extra 16k paid. My table was created in response to show that you failed to factor in the time value of money. By talking about surrender, arent you the one starting the talk on money making purpose of whole life?

I mentioned in that post. The purpose is only to prove that WL is not exactly useless as compare to term plan. I also mentioned many times, it does not means that WL plan is superior or better. If your purpose is to prove that BTIR is a better strategy, then its a different topic.

An average Singapore female that has survived to age 70, has 12.6% chance of dying by age 75. This average is the aggregate of smoker and non-smoker, healthy and non-healthy female. So given the rigor that insurance has in underwriting, the chance of dying between 70 and 75 is actually less than 12.6%.

Did I say that the person passed on? I put in a case if the insured survived, not die.

If the female continues to survive, the investment portion can continue to compound, at a rate faster than whole life, percentage and absolute wise. There is a good chance of the compounding overtaking the total death benefit by the time of death.

Like you mentioned, IF the investment compound at a rate faster than WL. Can you guaranteed the investment will grow at 8%? I did not ignore the last column, that's why I mentioned the investment has to do better than 7% in-order to be higher than the WL coverage.

Do also remember to factor in time value of money and liquidity in your comparison. Investments are relatively liquid and can be easily converted to cash to cover expense. Whole life is only paid at death, and in the meantime, if the insured is short on cash, they have to borrow, and for some, they are looking at 24% interest.

WL do not only pays on death, but on TPD and CI as well. Talking about liquidity, again, this is not the purpose of having insurance. If you keep using insurance for money making purpose, of course its useless. Once again, if you want to highlight, I'm the one to use the cash value of a WL plan as comparison, I only do it to show that the product is not totally useless.

BTIR strategy, is a method, that of course, make WL is useless. I have nothing against that idea, except the crucial point of after the term coverage, and if the insured investment failed, then there's no turning back. Can you guaranteed your investment performance of 8% pa as you claim?

To start with, insurance investment return of 5.25% is not fixed either. Insurer themselves also invest partly in equity, and hence there are variability to their return. I also believe the surrender benefit at age 70, 107,424 is a projected return, and not guaranteed return...

Yes the surrender value is not guaranteed. My statement is referring to the 200k coverage.

Just a few months ago, Olam guaranteed annual return of 8%, for debt of 5 years. Greek government guaranteed annual return of 10%, for investment of 10 years. So yes, returns of such scale exist, and of course, you have to factor in loss from default.

I'm not sure why are you stating this. To prove that achieving 5-8% is not impossible? can you invest in greek gov? anyway, I did not say it's impossible to make such returns, I'm stating the fact that investment can fail or perform not up to expectation, that could result in your 5-6% investment returns projection, or lower, and as such, the insured will not be in as favorable position.

My table is created on the basis of long term return, not annual fixed return. My table, neither does the insurer guarantees the return next year will be 5.25/6/8%. Law of law numbers will guarantee that if you invest long enough, your investment will earn at the rate close to market.

If thats the case, why there are people went bankrupt, commit suicide, or resulted in other situation, that is not painted as you wish? Insurer guaranteed the payout of the sum assured. Once again, look at the purpose of insurance. If your statement is so true, and you are confident in it, why not you personally guaranteed an annual return of 5% or (just 4%) over certain number of years, say, 15-25 yrs, I will pump my money in, the difference of 6% pa, is your management fee.
I believe you will be able to have quite a number of forumers coming to you, so you would not need to afraid of the bulk.

You seems to have ignored the last column of my table in your argument, which compounds at 8%. It will show that even at the age of 70, the investment portion is more than death benefit. Hence, the BTIR investor will have both the amount, and liquidity; truly superior to whole life insurance.

Is 8% reasonable? S&P 500 has a total return of 10% annually for the past 25 years. This 10%, has included losses from default. Apparently, these defaults are not enough to kill S&P 500, due to the magic of portfolio. Yes, the investment will be rather heavy on equity. Does the person need the liquidity from age 30 to age 70 in the first place when it is not offered by whole life?

I have already answered that I did not ignore that columns, and also, if you are confident about those numbers, the option to prove it is as above. This will be great for many who do not dare to take risk, since to you, its no risk.

The expense ratio for traditional ETF is 0.3%, far from unit trust or life insurer participating fund, which is looking at more than 1%, probably 2-3%.

Yes, funds from insurer are useless. Thats why, I'm totally against ILP. Protection insurance is about coverage, not the cash value, so the performance of those par fund is not the main consideration in the product.

Why did you bring self-insured into the picture? for age 30 to 70, both plans offer the same protection quantum, using insurer.

Self insured in the future, not within the 30-70s.

Yes, uncertainty is part of life, and so perhaps, we should be riding part of the uncertainty, expecting some fluctuation. It is too costly to insure everything to have a constant life. We have law of large number to provide certainty into long term.

Lastly, I hope no hard feelings. I respect people with their own ways to manage funds. If you are confident about the performance of your investment, and sure that you will be better off using BTIR, goes with it. At the same time, I hope you can also respect those who can't invest. That's why I talk about purpose. Can BTIR benefit people who do not dare to invest? not to say, blindly invest in ETF, STI, S&Ps etc. I know many risk adverse investor, felt that, such tools are almost risk-free, but emotionally, many can't take such risk. Should I advise/support/force my clients to goes into BTIR even if they are 0 risk takers?

I'm not actually challenging you, to guaranteed 4-5% pa returns. I'm trying to say, its easy for investor to claim that >5% returns are easy, as other investment tools can easily earn more than 10%, and low risk also can have 5%. (First State dividend fund, pays 4% dividend annually) But if the funds is not yours, would you say the same thing? if you are confident, you dare to invest for others? many would not, as deep inside, you know there is a chance of losing as well.

Thanks for the investment knowledge though. I really din know greek gov bond can pays 10%, but again, erm, current situation, really hard to say.

 

[chopra]

lets focus on the said topic. wl vs term can be discussed somewhere else.

my view

 

[SpinFire]

Waiting for insurance companies to launch their online portals for direct sales of term and WL insurance...
At least FSM made the first move, but was denied by MAS.

Is there a guideline for when insurance companies need to provide direct selling of their products? I believe if there's no deadline for them, they'll drag their feets because its not in their interest to provide such services.

 

[limster]

Waiting for insurance companies to launch their online portals for direct sales of term and WL insurance...
At least FSM made the first move, but was denied by MAS.

Is there a guideline for when insurance companies need to provide direct selling of their products? I believe if there's no deadline for them, they'll drag their feets because its not in their interest to provide such services.

ok back to the topic


Insurance policies are also quite complicated, with exclusions, riders etc. Very key issue is that you have to declare previous condition as failure to declare can result in refusal of claim. Hence the belief that an "agent" is required to explain the product.

Whether an online portal can provide an adequate level of explanation, I don't see why not. Perhaps by phone call.

I have no issue with that. However, the agent should be given a "fixed fee" for explaining the policy. The fee can vary depending on number of hours used in explaining or complexity of the policy.

 

[Saj.Mahal]

i wonder why government never help to sell us cheap insurance if insurance is essential

There's the DPS and medishield and eldershield I guess..

What do you have in mind for cheap and essential?

 

[SpinFire]

i wonder why government never help to sell us cheap insurance if insurance is essential

Our caring government enforced annuity liao, CPF life.

P.S. Seem like every insurance thread got all the tables, spreadsheets and essays. It's no wonder layman find it so confusing and complicated.

 

[Sinkie]

There's the DPS and medishield and eldershield I guess..

What do you have in mind for cheap and essential?

Critical illness + hospitalization plan but payable by Cpf lor

 

[sanzhu]

CPF is not for you

CPF uses buy CPF life

but where does the money go?

do you know?

medisave. . . where does it go? its as good as useless.

 

[iAdvisor]

Waiting for insurance companies to launch their online portals for direct sales of term and WL insurance...
At least FSM made the first move, but was denied by MAS.

Is there a guideline for when insurance companies need to provide direct selling of their products? I believe if there's no deadline for them, they'll drag their feets because its not in their interest to provide such services.

Seriously, fee based is good. Direct sales, I dun think so.
1) Firstly insurance is still sold, not bought. Not many will diy on this.
2) people in the forum, considered knowledgeable. At least, you guys know how to search for information. How about others? Will they know what should they buy?
Just the above 2 case, will give MAS a big headache. Consumer issue.

 

[iAdvisor]

Guaranteed 4% pa interest, 25yrs, minimum 10k

By the way, I've received a pm stating to give 4% pa, guaranteed for 25yrs. The situation is, it's personal, not a financial institution, no collateral. Just a contractual agreement. Failure to fulfill the contract, you can sue the provider and claim from his /her assets (if any) After 25yrs.

What you all think about it? And any takers?

 

[bleeze]

Seriously, fee based is good. Direct sales, I dun think so.
1) Firstly insurance is still sold, not bought. Not many will diy on this.
2) people in the forum, considered knowledgeable. At least, you guys know how to search for information. How about others? Will they know what should they buy?
Just the above 2 case, will give MAS a big headache. Consumer issue.

There are 2 sides to it. Direct sales could leave some consumers lost. However, the current situation with FAs is hardly optimal. Many Consumers are buying unsuitable policies being recommended by FAs with self serving motives. Still, there are honest FAs but rare. Best is to have option of FAs and direct sales. With potential savings from direct sales, that may just spur consumers to educate themselves better on what they really need. Could finally provide some catalyst for FAs to be more client-serving than self.

4% pa over 25yrs is definitely doable even in bad years. I'm hardly surprised that somebody would take up on it. There is of course a risk that the returns may be less than 4% in some years but a prudent investor wouldn't have much issues meeting the target. Would I not take a degree just because I fear failing exams? Of course not, I weigh and evaluate the pros and cons before in. Similarly for investments, it's all about risk management. Where there is more upside than downside, it's only logical to take the calculated risk. Would I take up the 4% offer? I wouldn't but that is because I prefer to invest myself and learn along the way. On the same note, I believe the 4% offerer is sincere and able to deliver on his/her promise.

 

[Sinkie]

By the way, I've received a pm stating to give 4% pa, guaranteed for 25yrs. The situation is, it's personal, not a financial institution, no collateral. Just a contractual agreement. Failure to fulfill the contract, you can sue the provider and claim from his /her assets (if any) After 25yrs.

What you all think about it? And any takers?

Bro, you really spoilt your reputation by saying this Leh. You sound as guillable as the Aunty or uncles on the street Leh.

Like that how people and your clients trust you??

You are supposed to know how to "judge" leh. Omg

 

[iAdvisor]

Bro, you really spoilt your reputation by saying this Leh. You sound as guillable as the Aunty or uncles on the street Leh.

Like that how people and your clients trust you??

You are supposed to know how to "judge" leh. Omg

Well, i'm polling response from you people, i did not say i'm offering this or even recommending it.

Apparently, due to my previous post, some people wants to challenge me. My feedback is, what sorts of guarantee is this? And thereafter my inbox got flame... so just want to see if its just me.

Someone did post that the offerer is sincere and true. Seems like you disagree with that?

 

[bleeze]

There are different types of consumers - conservative, non-conservative and the in-betweens. Hence, challenge is a strong word to use on types 2 and 3 which the offerer likely is. For the saavy type, average returns over 25yrs will highly likely be much more than 4%. For type 1, challenge is an irrelevant adjective.

Well, let's await the response...

 

[Sinkie]

Well, i'm polling response from you people, i did not say i'm offering this or even recommending it.

Apparently, due to my previous post, some people wants to challenge me. My feedback is, what sorts of guarantee is this? And thereafter my inbox got flame... so just want to see if its just me.

Someone did post that the offerer is sincere and true. Seems like you disagree with that?

Well, you mentioned you received a pm and in your opinion it seems legit and attractive but it's too good to be true that you are seeking a second opinion

 

[Sinkie]

Actually 4% return p.a is not alot lahh

When I invest in shares with my cash, I expect at least 10% within a year or >40% within a few years type of investment lahh

Anything lower than that, I don't really like to put my money in them but in my star saver account nia

 

[DevilCurseYou]

I can keep it simple and just say "good" or "not good". Someone can come along and give the opposite view. So how do we resolve this difference in opinion? Through a democratic polling? Or by delving into the reasons behind our different views? For me to improve, please point out anything that I said which purpose is to merely confuse.

Some assumptions, such as assuming 0% rate of discount for time value of money, will simplify the calculation. But these assumptions are quite unrealistic, leading to very different view.

Waiting for insurance companies to launch their online portals for direct sales of term and WL insurance...
At least FSM made the first move, but was denied by MAS.

Is there a guideline for when insurance companies need to provide direct selling of their products? I believe if there's no deadline for them, they'll drag their feets because its not in their interest to provide such services.

Aviva and NTUC Income have online portal for selling insurance. They do not offer substantial discount probably because parity issue with agents. If they offer heavy discounts, their agents cannot sell and with agents abandoning them, the insurers stand to lose more than the online sales can capture. This goes back to iAdvisor point that insurance is sold and not bought.

Asia Direct seems to be cheaper since they have no agents to compete with. Even then, it still does not fully pass all the saving to consumers. Some of the saving is retained by the company.

 

[limster]

FSM also got problem if want to branch into insurance, because the insurancesupermart link and name already taken:

Insupermart.com – Your one-stop insurance hub

Better start registering all the ___supermart.com domains that have not been registered yet....

 

[Sinkie]

I can keep it simple and just say "good" or "not good". Someone can come along and give the opposite view. So how do we resolve this difference in opinion? Through a democratic polling? Or by delving into the reasons behind our different views? For me to improve, please point out anything that I said which purpose is to merely confuse.

Some assumptions, such as assuming 0% rate of discount for time value of money, will simplify the calculation. But these assumptions are quite unrealistic, leading to very different view.



Aviva and NTUC Income have online portal for selling insurance. They do not offer substantial discount probably because parity issue with agents. If they offer heavy discounts, their agents cannot sell and with agents abandoning them, the insurers stand to lose more than the online sales can capture. This goes back to iAdvisor point that insurance is sold and not bought.

Asia Direct seems to be cheaper since they have no agents to compete with. Even then, it still does not fully pass all the saving to consumers. Some of the saving is retained by the company.

Actually a way to make a table self explaintory is to label n explain accordingly on the table itself

like for example

i still dont know how you derive future cummulative value at 5.25% though lol

 

[FP_IFA]

hmm.... I created a table that factored in time value, with 5.25%, 6% and 8%. 8% still sounds reasonable because equity suits an investment of 40 years, and STI has a total return of 12.7% for the past 10 years.

It appears the investment value of spare cash from buying term is still more than the surrender value, even with 5.25% as compound rate.

STI also has a return of less than 5% over the past 20 years and a negative return for the past 6 years so using 8% return is really stretching. We are no longer in the 1990s where every year our GDP is growing double digits.

And no investment cost? And we all know investment has its up and down. First year going up by 5-10% and first year down by 5-10% has a significant different in future value.