I wish to advise consumers to avoid insurance agents (unless this is someone that you know and can trust). I have seen too many cases of insurance agents cheating on unsuspecting consumers by telling blatant lies. (There are many cases where they used half truths, which is also dishonest, but not as bad as blatant lies).
This statement may be unfair to some agents who act honestly and take care of their customers' interest. But it is difficult for consumers to tell the honest agent from the dishonest ones. This situation is made worse when the the dishonest agents are allowed to get away scot-free by asking consumers to sign blank forms. Some of the life insurance policies are clearly unfair to consumers, with excessive charges that seem to be designed to rip off the unwary consumers.
I urge MAS to investigate complaints of dishonest practices, rather than let the matter be decided by FIDREC as a dispute. FIDREC takes a long time to decide, and does not have the disciplinary power.
Tan Kin Lian
Sunday, December 5, 2010
Blatant cheating (2)
I helped the consumer to write the complaint the insurance company and MAS. She was cheated by an insurance agent who sold her an annual premium investment linked policy for $40,000 (the actual amount is higher). She did not receive the policy document or the benefit illustration showing the charges.
A few months after the policy was issued, the investment dropped by 14% (but I don't know if there is a front end charge of 5%). The surrender value, which she did not understand, was only 5% of the invested sum, presumably due to the back end surrender charge. All of these facts were not explained to the consumer. She did not know that she was sold an annual premium policy that had a high back end surrender charge. Clearly, the agent cheated her.
Well, she did sign a blank form - and she admitted that it was a mistake. She admitted that she was naive for parting with such a large sum of money to a person (from a well know insurance company) who promised a higher return than bank interest. She had also invested in unit trust before, but the bank did explain the details to her. In the case of the agent (actually called financial services consultant), she thought that it would have been like a unit trust, but she never knew that it would be an annual policy that had a big back-end surrender charge.
I tried to look for an e-mail in the MAS website for her to send her complaint. There is no such e-mail address. There is a prominent message that all disputes with financial institutions should be sent to FIDREC. MAS should realise that that there is a difference between a dispute and a blatant cheating case, and should have an avenue for consumers to address MAS directly.
I wonder why the insurance company never made any enquiry about an annual premium policy of $40,000. The consumer is clearly not in a position to afford such an annual premium. It represents a large portion of her her hard earned lifetime savings, which is now going up in smoke.
MAS has been relying on financial institutions to act in the best interest of consumers and consumers to be educated. No amount of education can help consumers who can be easily cheated by crooks. I hope that MAS will make an investigation into such types of cheating cases.
Tan Kin Lian
A few months after the policy was issued, the investment dropped by 14% (but I don't know if there is a front end charge of 5%). The surrender value, which she did not understand, was only 5% of the invested sum, presumably due to the back end surrender charge. All of these facts were not explained to the consumer. She did not know that she was sold an annual premium policy that had a high back end surrender charge. Clearly, the agent cheated her.
Well, she did sign a blank form - and she admitted that it was a mistake. She admitted that she was naive for parting with such a large sum of money to a person (from a well know insurance company) who promised a higher return than bank interest. She had also invested in unit trust before, but the bank did explain the details to her. In the case of the agent (actually called financial services consultant), she thought that it would have been like a unit trust, but she never knew that it would be an annual policy that had a big back-end surrender charge.
I tried to look for an e-mail in the MAS website for her to send her complaint. There is no such e-mail address. There is a prominent message that all disputes with financial institutions should be sent to FIDREC. MAS should realise that that there is a difference between a dispute and a blatant cheating case, and should have an avenue for consumers to address MAS directly.
I wonder why the insurance company never made any enquiry about an annual premium policy of $40,000. The consumer is clearly not in a position to afford such an annual premium. It represents a large portion of her her hard earned lifetime savings, which is now going up in smoke.
MAS has been relying on financial institutions to act in the best interest of consumers and consumers to be educated. No amount of education can help consumers who can be easily cheated by crooks. I hope that MAS will make an investigation into such types of cheating cases.
Tan Kin Lian
Indisputability clause in insurance policies
This article explains the indisputability clause, and how consumers can be protected under this clause against unfair rejection of claims.
Ask Mr. Tan
Ask Mr. Tan
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Blatant cheating
Some insurance agents cheat their customers blatantly. I have just received an e-mail from a consumer who was asked to invest $40,000 from cash. Originally, she was supposed to invest from the CPF account but was later persuaded by the agent to pay in cash.
She was shocked to learn that the investment had depreciated by a lot for 1 year. Now, she received a notice to pay an additional $40,000. The agent must have sold her an annual premium policy. She certainly could not afford this amount of annual premium.
From her e-mail, she is quite ignorant about the policy, and signed for the policy only on the vague promise by the agent that it will earn a higher interest rate than CPF (which is also a blatant lie, as there is a large amount deducted to pay commission).
I advised the consumer to write a letter of complaint to the insurance company and to MAS and will assist her to draft the letter.
She was shocked to learn that the investment had depreciated by a lot for 1 year. Now, she received a notice to pay an additional $40,000. The agent must have sold her an annual premium policy. She certainly could not afford this amount of annual premium.
From her e-mail, she is quite ignorant about the policy, and signed for the policy only on the vague promise by the agent that it will earn a higher interest rate than CPF (which is also a blatant lie, as there is a large amount deducted to pay commission).
I advised the consumer to write a letter of complaint to the insurance company and to MAS and will assist her to draft the letter.
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Pay premium for the whole of life
The insurance agent says that you need whole life insurance, because the cash value is so poor that you need to continue paying the premium and be insured for the whole of your lifetime.
If you buy a 25 year term insurance and invest the savings in an indexed fund, you can accumulate sufficient savings over 30 years to stop your life insurance policy. You would have accumulated sufficient savings that will be more than the sum assured. You will not need life insurance any more.
Remember, if you listen to the bad advice of an agent, you will certainly need whole life insurance, because you will never be financially independent. But, if you invest your savings in an indexed fund, you do not need life insurance after 30 years!
If you buy a 25 year term insurance and invest the savings in an indexed fund, you can accumulate sufficient savings over 30 years to stop your life insurance policy. You would have accumulated sufficient savings that will be more than the sum assured. You will not need life insurance any more.
Remember, if you listen to the bad advice of an agent, you will certainly need whole life insurance, because you will never be financially independent. But, if you invest your savings in an indexed fund, you do not need life insurance after 30 years!
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