It seems I have become a magnet for people enquiring on being pushed or mid-sold insurance products, occasionally getting such enquiries.
So I thought perhaps I should write some pointers for customers out there:
1. Savings plans may not be for you
Savings plans, though seemingly safe, may not be for you.
“But savings is good for you, for future needs.”
Yes, it is good.
“Plus, there’s no investment risk..”
Yes, it would seem so. So where does the problem lie?
- Premium commitment. Often, customers are led to sign up a 20-year or 25-year plan. (Can you commit that long?)
- Inability to withdraw when needed. While it is a strength to discipline yourself to save regularly, it is also a weakness. (Is liquidity a concern for you, especially for the next 5 to 10 years?)
- High cost of early surrender. Life can be uncertain. Your commitment to the plan can be affected. (Will you be able to sustain the plan or flexibility to adjust is an important consideration? Is liquidity, again, a concern?)
I will continue in 2 or 3 subsequent posts touching on the other types of insurance products that can be mis-sold or pushed to the customers to buy.
Financial Planning with M Farhan 