Poor return from endowment policy

Dear Mr Tan,
In 1995, my mother was sold an endowment product. The policy is maturing in about 5 years time. By that time, she would have paid a total of $16,000 in premium for the life policy and $2,000 for the critical illness rider. The insurance company said that the guaranteed payout after 21 years is $14,000 and the projected payout is about $16,000.


This is really a ridiculous situation. If she had left her money in FD over 21 years, she would have got a better return than this endowment product. This product is giving a negative returns over the 21 year period! At that time, my mother was not working and the premium was all she could afford. It is sickening that there are people out there who will even try to milk money out of such poor people, as the agent sold the policy as a "savings plan".


Is there any action that I can take against the insurance company? The agent who sold the policy has long since vanished.


MY REPLY
I agree with your views. A fair return for 21 years should be 3% p.a. This would give a maturity benefit of $21,800, instead of $16,000. Another insurance company has advertised that it gave a return of more than 5% over a similar period in the past. This would have produced more than  $27,200. 

I suggest that you write a complaint to MAS and to the newspaper.