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.
What kind of insurance policies have you purchased?