The current hot topic in the financial sector is “Insurance vs. Investment”. If I were to be honest, and having been in the industry for a while, insurance is not an investment. They are two completely different things.
It is amazing to me that my peers in the industry go out and sell Investment Products to clients. This practice can be considered mis-selling, in my opinion.
Why? Is this a question you would ask? We are experts in designing and catering for clients’ assurance needs, not their investment needs. We offer “Invesment-Linked Policy” options for clients, but our primary goal is to meet the client’s protection and assurance needs. Investment needs are secondary.
What is my flow when I meet with my clients?
It’s simple, I will ask them the first question: “What are you motives for owning insurance?” Protecting your capital or accumulating wealth? Then, I will do the necessary fact-finding to tailor a solution to the client’s needs. Any policies the client will soon have will be tailored to their specific needs.
It is sad to say, however, that the majority of agents don’t practice this. Instead, they focus on hard-selling and product pushing. Sad? If you can see the outcome for the client, it is worse than sad. I have received a lot of cases that were transferred to me from clients. And boy, am I shocked to see the types of policies they own. They were also shocked when I presented the case and conducted a policy review.
One of my transferred clients wants to be covered for Accidental Dismemberment. However, her agent told her that she should have an Investment-Linked Policy with Accidental Dismemberment Rider attached. This policy requires her to pay SG$150/month in premium while the Stand-Alone Accidental Dismemberment policy requires only SG$17/month. She was shocked when I showed it to her. The agent didn’t even bother to explain the differences between the policies to her and she believed that her policy only covered Accidental Dismemberment. Angry? Yes, she is. To the point where she asked to surrender the policy with the losses even though I advised her otherwise. With my help, she insisted on retaining the policy with losses and continued to purchase the Stand-Alone Accidental Dismemberment insurance.
People sometimes choose to let agents who are exceptionally gifted have smooth talking styles and have their sales goals at heart, over choosing those who can provide facts and figures to support logic. Who is to blame?
Now we are back to Insurance. Insurance will always be Insurance. Insurance will always refer to anything that is issued by an Insurance/Assurance Company. This applies to all types, including Investment-Linked Policies.
What is the difference? Investment-Linked Policies are different because, instead of your company investing premiums for non-guaranteed return on top of the sum assured you receive, you have the power to allocate premiums in any available funds and take full control over the non-guaranteed return.
Everyone gets scared when you mention “Non-Guaranteed”. Why? It is important to understand why this term was used in the first instance. Because the interest rates for the returns are constantly changing, it is why the term “Non-Guaranteed” is used. Therefore, the term “Non Guaranteed” is used. Your savings account will give you a non-guaranteed interest rate. Why should you be concerned about this term?
Warren Buffett said, “The only danger in life is when you don’t know what you are doing.”
Although it is a strong statement, many people don’t believe it. They have a product but don’t know what it is. They buy an investment product without knowing its architecture. They listen to their broker or agent and don’t know what it all means. Who is responsible when the bubble bursts?
So people, listen! You may get a cold-call or someone knocks on your door, or you meet someone at an event. Be informed, listen, and be aware before you buy insurance blindly. Before you sign on to the doted lines, make sure that you understand everything.
Let me end by saying that Insurance will always remain as Insurance. Insurance won’t make you rich, but it will ensure that you don’t become poor when you get sick or old.
I don’t sell insurance, and will not ever sell it. If there is a need, my job is to help clients get it.
