Tuesday, June 26, 2012

Benefit illustration are not contractual

Hi Mr. Tan,
I have a question about the recent AIA caseI'd like to clarify that a benefit illustration does not count as a legal contract (as the AIA's defence suggests). If this is true, does that mean the numbers shown in the benefit illustration can be changed by the insurer at any time? 

REPLY
The benefit illustration said that the benefits are projected and are based on the projected future investment returns. If the actual investment returns are lower, the actual benefits will be lower. If the actual returns are higher, the actual benefits should be higher.

They cannot be changed at the whims of the insurer. However, the insurer may not give the fair distribution of the actual results. It is better to invest in a more transparent way, e.g. through an ETF.

12 comments:

Anonymous said...

The contract is stacked high against the buyer. Imagine the BI doesn't form the basis of the contract but the lies of the insurance agents decided the contract. It will be a test case and I am not surprised the case will throw up many issues the consumers should be interested just like the bomb of 160% of the premium MAS exposed.
The case is just the tip of the iceberg. There will be many more to come in the later years. The consumers will then know the truth of who their so called trusted insurance agent really is. They will find out they have keeping a thief in charge of their bank books

yujuan said...

The only term in a benefit illustration of any insurance plan is the word "guaranteed",then it is contractually binding.
Other misleading terms like "projected" or "may have extra pay out after x years", are all bullshit
out to snare us.

Anonymous said...

Already said the BIs not contractual and whatever in there is also not contractual.Guarantee or projected no difference the insurer can still deny

Anonymous said...

Let me share with you my experience. I bought 2 similar endowment policies from one with the lion, few months apart, back in the 1980s. On the BI it stated the benefits are subjected to changes due to yearly performance, I agreed. Upon maturity I will get all etc including a 10% maturity bonus, crediting back to my CPF.
When it matured this year, it paid me 5% on the maturity bonus. I called the lion it said the 10% is for illustration only. I told the lion only the benefits vary but declared PERCENTAGE maturity bonus should not, might as well it declared maturity bonus at 50% then 20-30 yrs later say its for illustrations only!! Answer was "sorry can't help you." D.A.M.N..!!!

My next policy matures next month, same same. No one can help, In total cheated closed to $20k. That's why someone here said insurance agents and their companies are scams, I agree. The insurance is a good thing, I agree too. Its the people behind them are unscrupulous.

If you have insurance with endowment, please go check with the agent AND the company which you should believe. Pity those life insurance holders, when they pass on, no one can speak with the dead.

Want me to sue them like the lady? It's against a giant and I'll be feeding those lawyers. Suay lah!!!

Anonymous said...

Educate others about your experience
and as many people will learn. Hopefully, they will avoid buying policies that are not to their advantage.

My favourite counter question to agents is:

" I have only $500 to afford annually
you come up with a plan that meets this. That is your job and if you cannot convince me, go away."

If the actuary cannot support the agent to cook up a policy, then it is a lousy company with out of date products.

Walk away.

The best insurance is your own bank account & savings.

Anonymous said...

Yes, how to fight the giant? Even it's a class suit, it's difficult to win because we are talking about policies which one pays for more than 15/20/25 years! Someone such case will fight for long time.

Recently my wife's endowment's reaches critical year. According to my wife, she said can stop paying and every year can collect fix amount of money (not much, few hundreds a year) until the day she dies...

Then her sister (financial planner) warned her not to be happy too early as when the sister read the contact, it did not state the actual year was referring to which year. My wife still insist that from the illustration, it's 2012! Then the sister told my wife to call up the insurance call center to check whether still need to pay premium after certain month of this year as mentioned in the illustration....

Guess what she heard? The person told her the critical is not what stated in the illustration and she will still need to pay premium for another 3 years!

Then the sister asked my wife to cash out the benefits and put the policy to rest as it does not make proper financial sense after calculation the benefit/yield... further more, paying for another 3 years does not mean it will be guaranteed as the critical year! It may end up telling her each time the critical year be extended until the time my wife is very old and the few hundred dollars means nothing.

Somehow the insurance agent who sold her the policy heard my wife's intention to cancel blood-su.*****ing policy and told her that she should continue paying the new policy until the new critical year reaches. But when my wife asked, "Can XXX give me the guarantee in writing/contract?", know what the agent says?

He said, "This type thing cannot guarantee one lah. Trust me, the critical year will definitely be ..."

So would you trust the agent?

Both are agents, one is my wife's long time friend and the other was my wife's sister. Who to trust?

Anonymous said...

Don't trust the insurance salesmen and the companies. Both are in cahoot to rob their customers to enrich themselves.
In Mr. Tan's time I heard he received only a paltry salary of 250K a year but his successor is getting 8 times his, according to rumor.
From this you can see cost has shot through the roof. It means your insurance coverage and return of your saving have to decrease.To get around the high cost some insurance companies make high projection which they know they cannot keep to cheat the customers.
But it shocking to know that what is shown in the BIs are NOT to form the basis of the contract.People buy because of what is stated in the BIs, right?
Or on the lies of the agents?
So , how can we trust the insurance companies and the agents. Both are liars.

michael13 said...

My wife bought a 20 years endowment policy from AIA in 1983. Upon maturity in 2003, she experienced a deep cut of S$11,500.00 of terminal bonus(which is non-guaranteed). On her appeal to the GM of AIA, the company cited a reason of poor investment returns(stated in two-sentences of their letter of reply). Since then, we do not want anything to do with AIA.

Anonymous said...

There are 2 worse insurance companies in Singapore. They are A&P.
Let me qualify my statement. The rest are slightly and marginally better. THERE IS NO ONE GOOD INSURANCE COMPANY IN THE ABSOLUTE SENSE; ie none is good.
To protect yourself please avoid them and their agents for your own good.

Anonymous said...

I agree. Like ntuc may be alittle bit better but their agents or the salesmen are not qualified . They push products like koyok.

Anonymous said...

NTUC agents are koyok salesmen and women? They got fierce titles, you know. Executive Financial Consultants? I wonder what they consult? commission? I met one auntie consultant, got many titles, logos. When I saw I got scared. I was told she earned the titles by earning lots of commission. But why successful EXECUTIVE FINANCIAL CONSULTANTS have to peddle on the street? Why?

Weng Mao Fa said...

My endownment policy number is
L1771024. Yesterday was the matured date after 20 years. The foreign insurance company had informed me I will receive $X which is $12k lesser. I am yet to see the $$.

In past 20 years, my policy has been passed from X local bank to Y company and finally Z company.

I urge readers to tell my story to your friends. BUYER BEWARE.

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