I sent this letter to the Straits Times forum on 10 August 2010 but was rejected as they did not publish it. Perhaps it is just too boring. This is related to a blog article I wrote: LIA’s robust sales figure in life insurance unrelated to insurance.
I refer to the Straits Times article “Life insurers hit $2.6b in new sales” dated 6 August 2010. There are two abnormalities.
What the article did not mention was that the claims payout were $1.85 billion but only $210 million or 11% were due to death, disability or critical illness claims. The remaining 89% were unrelated to insurance claims although these products were manufactured by insurers.
In addition, despite 72% of sales done using partial or full-fact find, each regular premium policy being sold has an average sum assured of only $53,535. With such low coverage, how could any family last for more than a year? Perhaps financial advisers did the fact-find and analysis correctly but something very wrong happened in the recommendation stage.
The likely explanation for both abnormalities is that the life insurance industry has shifted its focus to non-insurance activities. Most of the products bought were meant for savings and investments rather than insurance.
It is no point trying to secure a good retirement through investments and savings when a family’s security for tomorrow cannot be assured. I appeal to all financial advisers to do the right thing in the way they conduct their recommendations by looking after the interest of their policyholders rather than their own interest. How would a widow feel when she receives such a pathetic amount from the insurance policy?
The soaring new sales and the fact that majority of the sales were done with some fact find are nothing to shout about.
Like this article? Subscribe to my newsletter below for more.