Future of Life Insurance Sales

An agency manager of a large insurance company sought my advice on his future career goals. He has worked in that company for more than 10 years and has accumulated over 1,000 clients who bought life insurance policies from him in the past. The insurance company has reduced the bonuses on most of these products which has caused him to face complaints from his clients.

The agency manager, who has several active agents under him, is now considering to move to another insurance company. He asked my views on the company to move to, and the future prospects of the life insurance industry.

We discussed the following issues for about one hour:

• How will the move affect the existing clients?
• How he can help the existing clients by remaining with the same company
• Which life insurance company offer the best prospect for an agent or agency manager
• Should he move to an independent financial adviser firm?
• Can he provide advice to clients for a time based fee?

After the discussion, he became clearer about the options and will be giving more thought to the matter. He appreciated the advice and my time and decided to made a donation of $100 for FISCA (financial services consumer association).

Tan Kin Lian

Invest in Property

Investing in property is a hot topic. Many people have seen the property price appreciated significantly in recent years and are worried that the price will increase further, due to limited supply and high demand.

I have written a FAQ to give my views about how to approach this situation and to avoid paying too much for a property that may become a burden to your finances for many years.  Go to my website and search for "Property".

www.tankinlian.com

Talk on insurance

A reader want me to give a talk on insurance. I can summarize the key points as follows:

• Buy 25 year term assurance for 5 to 10 years of your salary. 
• Opt for SAF group insurance or other similar group insurance or personal accident insurance
• Buy insurance for your vehicle (compulsory) and for your home (optional for HDB flat). 
• Buy MediShield insurance, but it is all right to be self-insured
• Invest your savings (15% to 25% of your earnings) in a low cost investment fund
• Avoid all types of high cost life insurance policies (i.e. no need to spend time to study them)
• Get three quotes for your insurance directly from the website of insurance companies

There is  no need to attend a talk to learn about the different types of life insurance polciies, as most of these products are high cost and not suitable for consumers. Apart from term or accident insurance, it is better to have adequate savings in a low cost investment fund that can be withdrawn in an emergency, without any loss.

But I am now planning a FISCA talk on the following types of insurance: motor, fire, personal accident, term insurance, Medishield, private Shield, Eldershield, CPF Life, home protection (for HDB flats), depedent protection (under CPF). I need a knowledgeable person to work with me on these topics by searching the internet. If you are interested, send e-mail to kinlian@gmail.com

Loss of NCD

Mr. Tan
I met with a small accident with a motor cyclist two years ago. The insurance company did not pay any claim to the motorist but kept a reserve of $3,000 in case there is claim for medical expenses. They reduced by NCD from 50% to 20% and my revised premium jumped from $1,000 to $1,800, which I consider to be quite high. 


Almost two years have passed and the motor cyclist has still not submitted a claim. How long will they keep the reserve and penalize me on the NCD? Why should the motor cyclist take so long to submit a claim? If there is no claim, should the insurance company refund the difference in premium to me?

REPLY
It is not fair for the insurance company to penalize you by reducing the NCD when they have not paid any claim. You should ask the insurance company to allow you the full NCD (and give you a refund on the difference in premium for the past year). If a claim actually materialize, they can impose the reduction in NCD at that time. I think that the insurance company should adopt my proposed approach, as it would be fairer to the consumer.

Singapore's reputation

Read this article in the Guardian, UK.

Residual market for motor insurance

Published in St Times

Madam Phyllis Oh ('Insurance dilemma when repairs are costly'; July 10) found it difficult to obtain renewal of her client's motor insurance. 

In America, there is a system of the 'residual market'. The purpose is to make insurance available without giving too much hassle to motorists who cannot get cover from the free market. The residual market is managed by an underwriter and the results are shared by all the licensed insurance companies. 

I suggest the Monetary Authority of Singapore or the General Insurance Association consider the feasibility of introducing this concept in Singapore.

Tan Kin Lian

Financial sector and profits

The financial industry is making too much money at the expense of ordinary people. This article explains why you should invested in a low cost indexed fund, or an exchange traded fund, like the STI ETF. Don't pay high fees for actively managed mutual funds or unit trust. The average expense ratio in USA is 0.81%, which the article considered to be high. In Singapore, most funds have expense ratio of 2% to 3%. Imagine how much considers in Singapore are being charged !!!