Avoid Investment-Linked Policies. Buy Term Insurance


Tan Kin Lian wrote an excellent letter on term insurance to the ST, which today had an editorial article on the same topic.

If you don’t know him, Tan Kin Lian was the ex-CEO of NTUC Income, one of the largest insurance companies in Singapore. He served 30 years as CEO (!!) and retired in 2007. His website is tankinlian.com.

He should know exactly how insurance works and where the money goes.

Responding to SM Goh Chok Tong’s call for more affordable insurance protection, Tan Kin Lian wrote:

“An insurance agent can earn a large commission, amounting to several thousand dollars, by selling a whole-life or investment-linked policy to a consumer. The life insurance company also earns a large profit from each policy… If an insurer or its agent can earn so much by selling a whole-life or investment-linked policy, why should they want to sell term insurance?” (boldface mine)

In other words, it is not in the interest of your insurance agent to sell you term insurance. He would rather sell you something that makes him more money. Why wouldn’t he?

Tan Kin Lian further alluded that “consumers give away more than 50% of their accumulated savings” to insurers. He also gave an example with calculations to illustrate this shocking revelation.

More than 50% of your invested premiums goes to the insurance company!

Coincidentally, Great Eastern just announced a 500% profit increase.

See also my past articles on avoiding whole life insurance policies, term insurance policies and where to buy them.

What kind of insurance policies have you purchased?


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  1. I come to realise this 10 years ago. A friend of mine, Benny who was one of the top insurance agent, told me this himself. He say if he were to buy insurance, he will only buy 5 years renewable terms with H&$ rider. 5 year renewable is because your coverage needs change over time. And the value of money change over time as well. Till today, i followed his advise and buy only this, and it has served me well.

  2. I believe this aligns with Adam Scott’s principle of investment. If you have done your NS, you are entitled to very cheap term insurance and you can also have your dependants insured with the 30i rider.

  3. this should have come out earlier….i bought 500k life plans from my agent she must be laughing away…we have made way too many agents out there immensely rich and they hardly do anything…

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  6. actually everyone should know that whole life/ ILPs are scams. but surely Mr Tan is surely the last person that should get all indignant, coz he was after all the ex-CEO of NTUC insurance??

    (which sold truckloads of wholelife insurance which then paid for his fat paycheques and bonuses and allowed him to have a nice comfortable retirement???????)

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  8. I had bought an insurance policy from Great Eastern and I was told even if I did not continue on the yearly premiums, my policy would still be serviced and in forced. After 10 years, I could surrender and get back my surrender value, which I was told by GE agent I spoke to. However what I got back was not what the full surrender value but after deducting their interest charged at 8% for servicing my policy for the remaining years. I was not told that there would be such an exorbit interest charged, for serving the rest of the policy in force. Its so ridculous and made me so short changed for not being informed in the first place about the fees and charges imposed!! I got back less than 80% of my insured face value! This is really robbing me, as I am not being informed at the point of sale for this transition! Is that an honest day earnings, for such business ethics? Robbing the less educated to pay the rich?

  9. You said you were told. If it’s not in black and white it’s very hard to prove that you had been cheated. Take it as a lesson learned and don’t too easily trust people especially those whose income depends on how much sweet talk they say to you.

  10. Ya Even I feel mixing insurance and investment doesn’t make sense.

    Term insurance plan are a must these days. For a nominal premium of Rs 7000 a year one can get a coverage of Rs 1 crore (term of 30 years).

    I found Aviva’s i-life the best term plan currently in India.

    What do you think about it?

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