Last Updated on 7, April 2014
Question: “Wilfred, recently my Prudential financial adviser recommended me the PruLife Limited Pay. He say this is the best product in the market currently for whole life policy. Is this really true?”
Answer:
Based on the PruLife Limited Pay benefit illustration you forwarded me, the parameters in the illustration were:
Death $100,000
Accelerated Disability $100,000 (coverage up to 29 years)
Crisis Cover Limited Pay III $100,000
PruLife Limited Pay is overpriced
I find it to be overpriced. The following is a comparison table with another competitor’s product using identical parameters:
Product | Premium term (years) | Monthly Premium |
---|---|---|
PruLife Limited Pay | 25 | 279.66 |
PruLife Limited Pay | 15 | 349.70 |
Competitor X | 25 | 217.70 |
Competitor X | 15 | 277.75 |
As it can be seen from the above that the PruLife Limited Pay is more than 25% more expensive than the competition. Most advisers will say that their product is more expensive because it comes from a branded company.
The following are the common tactics used by financial advisers when prospects raise the objection that the product is more expensive than others.
“My company is a branded company”
Consider the 25 years premium term. You will be paying a total of $18,588.00 extra over the entire premium paying period compared to a competition. I am not sure whether you want to pay more than $18,000 just for ‘brand’.
Why don’t you buy a $18,000 diamond for your wife or perhaps a $18,000 Rolex watch?
“My company is more stable than others”
All insurance companies are regulated by the Monetary Authority of Singapore. MAS requires insurance companies to have a certain minimum capital to meet its liabilities. Moreover, all life insurance companies in Singapore is insured under the Policy Owners’ Protection Scheme.
“My company will pay claim faster”
The truth many insurance companies put a lot of emphasis in sales but neglect their claims processing. This is not surprising because claims processing is a cost center.
“I will be there for you unlike others”
All financial advisers is likely NOT be there for you when you have a claim due to the following reasons:
- All financial advisers are human being with a limited life expectancy. They will die one day.
- All financial advisers will retire like you and I.
- All financial advisers are always looking out for greener pasture just like you. If they resign, they cannot be there for you when there is a claim.
- Financial advisers who do very well in their sales is likely engage in unethical sales tactics which means they will eventually leave the industry due to compliance issues.
- Financial advisers who do not do very well in their sales will leave the industry because they need to earn a living just like you.
I suggest you source for a better product and self-educated yourself in financial planning.
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