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Most investment linked policies marketed in Singapore have the following features:
a) designed to hide the high upfront charges
b) high charges for insurance cover
c) not tranparent
The upfront charge can be as high as two years of premium. If the savings is $300 a month, an amount of $7,200 can be taken away to pay commission and upfront charges. The consumer is not told directly about these charges. Here are the ways adopted to hide these charges, as adopted by different insurance companies:
a) The consumer is told that x% of the premium is allocated for investment. This means that (100-x)% is taken away. But the non-savvy consumer may not be aware about its significance.
b) The consumer is told that 100% is allocated for investment, but is not aware about the annual charge that is taken away to pay the distribution cost and the surrender penalty that is imposed if the policy is terminated within a certain period, say 10 years. Even if the consumer is told, the consumer is usually not aware about its significance. Read more...[caption id="attachment_3600" align="alignright" width="150" caption="Photo by kevindooley"][/caption]
Most investment linked policies marketed in Singapore have the following features:
a) designed to hide the high upfront charges
b) high charges for insurance cover
c) not tranparent
The upfront charge can be as high as two years of premium. If the savings is $300 a month, an amount of $7,200 can be taken away to pay commission and upfront charges. The consumer is not told directly about these charges. Here are the ways adopted to hide these charges, as adopted by different insurance companies:
a) The consumer is told that x% of the premium is allocated for investment. This means that (100-x)% is taken away. But the non-savvy consumer may not be aware about its significance.
b) The consumer is told that 100% is allocated for investment, but is not aware about the annual charge that is taken away to pay the distribution cost and the surrender penalty that is imposed if the policy is terminated within a certain period, say 10 years. Even if the consumer is told, the consumer is usually not aware about its significance. Read more...
[/caption]
Most investment linked policies marketed in Singapore have the following features:
a) designed to hide the high upfront charges
b) high charges for insurance cover
c) not tranparent
The upfront charge can be as high as two years of premium. If the savings is $300 a month, an amount of $7,200 can be taken away to pay commission and upfront charges. The consumer is not told directly about these charges. Here are the ways adopted to hide these charges, as adopted by different insurance companies:
a) The consumer is told that x% of the premium is allocated for investment. This means that (100-x)% is taken away. But the non-savvy consumer may not be aware about its significance.
b) The consumer is told that 100% is allocated for investment, but is not aware about the annual charge that is taken away to pay the distribution cost and the surrender penalty that is imposed if the policy is terminated within a certain period, say 10 years. Even if the consumer is told, the consumer is usually not aware about its significance. Read more...
