Last Updated on 21, April 2014
NTUC Income frequently advertise its Letter of Guarantee (LOG) for its Enhanced Incomeshield. I saw the advertisement in the MRT and as well as on Income's website. However, this LOG is not guaranteed. There are some terms and conditions:
Today I had a client who requested for the LOG due to hospital admission. I was surprised when told by Income that as the plan was upgraded less than 1 year ago, the LOG cannot be issued.
Many advisers sold this plan because of the LOG feature. I had never mention this LOG feature to any of my clients because this is a benefit that is theorically non-existence. Why do I say that? It is because in the policy document, there is no mention of this benefit. If there is no mention of this benefit, there is not contractual obligation to provide this benefit. Advisers must tell their client the contractual benefit of the product rather then based on information outside the contract.
Secondly I found the LOG to be practically not so useful for many cases. To provide the necessary information, the insurer prefer to have the hospital name, reason for admission, estimated cost, ward number, etc. This information requires time to obtain. Also many hospital admission is just 1 or 2 days. The previous time I tried to arrange for an LOG, it took the insurer 24 hours to fax over the letter from the time I called. After so long, the client is either going to get discharged or has already fired the adviser for being "too slow".
Finally the LOG only waive the deposit but does not waive the settlement of the entire bill upon discharge. Actually this should not be called a LOG. It should be LODW - Letter of Deposit Waiver. A true LOG is one which the insurer agree to settle the entire hospital bil upon discharge and than claim the non-insured sum from the client directly.
Thus, the LOG is a liability to the adviser and a feature that is practically not useful. It is also a non-contractual benefit and hence cannot be relied upon when planning for one's wealth protection.
Advisers who sold this plan solely based on the LOG feature is akin to mis-selling.
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