A person named Eugene Yeo complained to the IM$avvy website that his insurance agent did not provide any follow-up or review for 11 years. He incurred 70% investment losses. Below is the full complain letter:
I purchased an ILP from an insurance company in 1999. However, I did not receive any follow up or review of my financial status from my agent or the company. As a result, I stopped making payments to the policy and have incurred 70% loss since then.
Can I sue the company for compensation based on non-fulfilment of service i.e. paying for financial advice and follow up but not receiving any? Submitted by: Eugene Yeo
The answer from Lia Insurance Association was shocking. According to the Life Insurance Association (LIA), life insurance agents are not required by regulation to monitor the performance of the fund in an ILP. In fact, LIA admits that the life insurance agent is not even an investment adviser.
The investment performance of the ILP is very important. If there is going to be a major investment loss, the future coverage is going to be jeopardized because insurance cost will exceed premiums in the future. When that time comes, the cost of insurance in excess of the premium will have to be funded by the investment value of the ILP. If the investment return of the ILP is poor, it implies that there is a high risk of the ILP unable to sustain resulting in termination of the policy.
According to LIA, although the life insurance agent is not required by regulation to monitor, “as the servicing agent, he should be encouraging the customer to allow him to review his overall financial plan on a regular basis.”
But my question is what can the insurance agent do since he is NOT an investment adviser. If he cannot advice on investments, how to follow-up and review with the client?
The conclusion of the matter is this: Is your adviser allowed by regulation to give investment advice? Secondly, if he is allowed to give investment advice, does he have the qualification to give investment advice?
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