What exactly is life insurance and how does it work?

[presssomemore]

What exactly is life insurance and how does it work?

I don't understand, won't you be dead or something so what does it do for you?

What happens if it doesn't get cashed in, what does that mean?

Sorry I don't understand, please explain.

You can take it that life insurance is like buying 4D or Toto. The difference is that it is sure win. But when you win, your family members will get the money. And depending on the type of insurance you buy, sometime even if you don't win, the money used will be return back to you with "interest".

 

[PUNISHER]

Of couse it can't. Those KJ and CSJ fans never tell you meh?

???? But my parents use their CPF to buy HDB . By the way what is KJ and CSJ ?

 

[Thick Face Black Heart]

You can take it that life insurance is like buying 4D or Toto. The difference is that it is sure win. But when you win, your family members will get the money. And depending on the type of insurance you buy, sometime even if you don't win, the money used will be return back to you with "interest".

This is bullshit. What company are you from?

Insurance is just an expenditure to safeguard your young kids in case anything happens to you. If you want to get your money back "with interest", that's a mistake.

 

[presssomemore]

And from the lengthy and passionate reply from presssomemore, I surmise that he/she is, or has been in the insurance business. Hope it's not Tan Kin Lian.

Oops... puah kang tao liao. But dun worry I'm not Tan Kin Lian.

The MLM you are talking about is using money from downline to pay upline with almost no other source money input.
Insurance is using pool of customers' money to make investment for profit then share between customers and company. Where big bulk of it goes back to customers.

 

[Thick Face Black Heart]

Oops... puah kang tao liao. But dun worry I'm not Tan Kin Lian.

The MLM you are talking about is using money from downline to pay upline with almost no other source money input.
Insurance is using pool of customers' money to make investment for profit then share between customers and company. Where big bulk of it goes back to customers.

Another pure load of bullshit. What company are you from again?

There is no transparency in the way client premiums are managed or invested. That's why there's so many opportunities for hidden fees and charges. The first few years of premium are also confiscated to pay agent commission and make even more profit for the company.

If you rely on such instruments as a savings vehicle, you're going to be sorely disappointed. All your friends who invest in real stocks and real bonds are going to do much better than you.

 

[Narong Wongwan]

Many people get conned into treating insurance as an investment. Never do that. Insurance is an expenditure to protect your loved ones whilst you are still accumulating wealth. Always have a policy covering death, critical illness, and a full medishield-hospitalization policy that covers you from the firs dollar. However, they should all be term policies, without cash value.

The worst policies are investment linked products that have plenty of hidden fees and charge the customer as high as 5.5% initial sales charge upon purchase of unit trust.

yes insurance should be just that and nothing else. just like you buy home and car insurance....its an expenditure to cover against unforseenable....even when you take out loans now there is loan insurance. term insurance is the only type of insurance you'll need. i never had insurance when i was working as i was covered under company's term insurance.....which was more than enough. now my kids are all grown up i dun need any insurance.

 

[laksaboy]

Another pure load of bullshit. What company are you from again?

Don't expect truth from an insider who vehemently defends the insurance business.

Fact is: nobody needs insurance, maybe except for those mandated by law e.g. car insurance. Insurance is a want, a want driven by fear of future uncertainty.

 

[presssomemore]

This is bullshit. What company are you from?

Insurance is just an expenditure to safeguard your young kids in case anything happens to you. If you want to get your money back "with interest", that's a mistake.

That's what I said...

You buy 4D or toto = "an expenditure"
You win = "anything happens to you".
when you win, your family members will get the money = "safeguard your young kids"

It's not wrong for wanting to get your money back if nothing bad happens to you. Who don't want money? There are policies that accrue cash values over a period of time. Of course, "interest" is not the correct word to use, that's why I put it quotes.

There are so many types of insurance policies. If your objectives is just for protection, then buy pure protection without cash value cos it's cheaper. If you have more budget or your objective is savings, then buy something with cash value.

Anyway, it's just a fun way to describe insurance. Why are you so worked up?

 

[yellowarse]

It's not wrong for wanting to get your money back if nothing bad happens to you. Who don't want money? There are policies that accrue cash values over a period of time. Of course, "interest" is not the correct word to use, that's why I put it quotes.

Insurance is NOT an investment. That's why Warren Buffett doesn't buy any insurance at all. He makes more on his own money than any insurance company can.

Insurance is meant to protect against catastrophic events like loss of income, death, loss of property, huge healthcare bills. It is an expense.

Only buy term insurance. Period.

 

[presssomemore]

Another pure load of bullshit. What company are you from again?

There is no transparency in the way client premiums are managed or invested. That's why there's so many opportunities for hidden fees and charges. The first few years of premium are also confiscated to pay agent commission and make even more profit for the company.

If you rely on such instruments as a savings vehicle, you're going to be sorely disappointed. All your friends who invest in real stocks and real bonds are going to do much better than you.

You are right that how the premiums are being invested are not easily available to customers, if you bought traditional policies. Because you cannot affect how the investment is being made in traditional policies. But all charges deducted (or deductible) will be clearly stated. If you bought investment linked policies, how the premiums are being invested will be made know to customers either on the policy contract or regular statements. In fact, most of the time customer decide what to invest and how much to allocate for investment.

Part of the first few years premium goes to agent commission not all of it. I already said agent have to jadi makan, nobody works for free. Agent only take commission for first few years only, then have to work for you for life. You tell me wu hua bo?

It does not matter which company I'm from or whether I'm in the business or not, because I'm only speaking out in my personal capacity. It does not represent the views or any other parties.

At the end of the day, know what you need, know what you want and know what you bought. That's about it.

Peace!

 

[Poomer]

You buy 4D or toto = "an expenditure"

4D or TOTO can tio beh sai(win small every now and then), insurance can anot?

You win = "anything happens to you".

When something happens to us, is no more win le. Is this what you every time you siao kian your customers, as if there is a silver lining in every grey cloud?

when you win, your family members will get the money = "safeguard your young kids"

What if you family don't know you have insurance? Will the insurance company call them to ask them to make a claim? The truth is they won't. So how does that safeguard the kids when they are clueless and poor?

And for example, after a year, your family realise they can claim and do so, can they do so if they are past the claim by date (I know NTUC maybe can if a couple of days but) by a couple of months?

No it's not. Life insurance make use of your money to invest is real investments and actually give you back profits. Ponzi doesn't.

&

I don't think there's any fix deposit in sinkie land that gives you 5%. Not even 1 or 2% if I'm not wrong.

For the record, Ponzi also does give you back your profits. (other people's money) Life insurance also cannot guarantee 5%.

Agent got to eat, company have to survive. Nobody work for free. Whatever commissions and fees are not substantial amount compared to the total amount of premiums paid.

&

There are actually many millionaire agents around.

Agents need to eat, that I do understand, the amount they earn, not substantial, I also understand, but I don't understand this part, if they need to eat and don't earn substantially, how can there be many millionaire agents around? They got do sideline?

The money in the insurance, the fund manager will invest the money . If lost in value u insurance payout will be less than what u invest.

It's true only if you are talking about investment linked policies or unit trust of lumpsum payment. If other type, it will depends on alot of other factors.

It's also true that many insurance agents will try to sell you investment linked policies first and foremost, thats how they get to draw big cars. Another point to note is that all insurance companies have internal fund managers to manage their cash on hand, to invest and all. They will raise insurance premiums each time they lose money, under the pretext of 'rising costs of living' or whatever.

 

[presssomemore]

Insurance is NOT an investment. That's why Warren Buffett doesn't buy any insurance at all. He makes more on his own money than any insurance company can.

Insurance is meant to protect against catastrophic events like loss of income, death, loss of property, huge healthcare bills. It is an expense.

Only buy term insurance. Period.

You are right that insurance is not an investment per se. But it can be beneficial to add it as part of your investment portfolio. But that's a whole different story and out of my league.

I also agree that term insurance is what you should look at first, make sure you are adequately covered before looking at something else. The problem is people always want to see the money, they don't want to pay pay pay but get nothing back. If today car insurance is not compulsory, you think how many people will buy car insurance? Yet always when my friends got into accident, they said heng ah got insurance.

There's many ways to "make use" of insurance. There's different people with different needs. You cannot say that everybody should buy this or everybody should buy that.

 

[fukyuman]

I got this to add. Lets say you just got married, or your wife having a baby. You thought you need life insurance. You are like the Jack and the beanstalk story, your mother asked you to sell the family cow, instead you kenna conned into buying a bunch of useless beans. You go to the agent, who instead sold you the idea that you need not pay a cent by investing into a investment linked fund, which is what Tan Kim Lian told his agents to do. You are given a illustrative table which is entirely bull-shit, with the connivance of MAS, showing you extra-ordinary returns (ask NTUC about their Takaful fund). Your are encouraged to pay in monthly or yearly premiums, the agent reaping 30% in the first year. All your own money. The fund manager is your typical chin chong mei fung type. Buying and selling based on market rumors, or just following market trends instead of out matching it. If he did, he would probably be churning it to pay for his car, bonuses and salary. If he is anything better he would not working in pee-sai land. Meanwhile your investment is open to all the downside risks.

Always remember that most policy lapsed within 7 years, people do come into hard times now and then, meaning low surrender values. If you think you can afford $1.000 a year, buy only half or a quarter of what you can afford. Get a whole life policy with dreaded disease cover for the least premium as it offers you the highest protection. We wish our wife and kids have a chance to live comfortable if we die prematurely. But for that you will need at least a million dollars. Opt for a lifeboat instead so our family can adjust while without a breadwinner. Those stupid plans are good to buy life jackets. While 'whole life' seems to be a turn off. When you are old you can surrender them for a decent value, or your survivors can use it in your will. There is a concept of 'term rider' missing from most agent vocabulary. With a very small outlay, you can buy insurance for the same amount. Not only that, you have the option of converting it to a full plan or drop it if you think its not worth it. Riders of these are non commission-able so the agent steer you away from them. Remember, you are planning for your retirement, not your agent. The insurance company is just a necessary evil who got very rich helping you.

 

[presssomemore]

4D or TOTO can tio beh sai(win small every now and then), insurance can anot?

Insurance also can. Example if someone buy a life policy with accident benefit and met with an accident but not die, you can claim certain amount. You win beh sai lor. Best of all still got chance to win 1st price.

When something happens to us, is no more win le. Is this what you every time you siao kian your customers, as if there is a silver lining in every grey cloud?

Its just a fun way to talk about taboo subject like death. Just like sometimes people say gao teng ki (submit IC) or go see ah kong. No disrespect to anybody of course. We all come SB here to siao kian siao kian only anyway.

What if you family don't know you have insurance? Will the insurance company call them to ask them to make a claim? The truth is they won't. So how does that safeguard the kids when they are clueless and poor?

The insurance company will not know something has happened to you if nobody make a claim or inform them. If your agent knows that something happens to you, he/she will contact your family to assist with the claim. The thing is, if you have any insurance, you should let a 3rd party (other than the agent) know about it. Be it your wife, your mother, your close friend or put it in your will. You have to be fair. If you don't know you win 4d, how singaporepool knows who to pay the money to?

And for example, after a year, your family realise they can claim and do so, can they do so if they are past the claim by date (I know NTUC maybe can if a couple of days but) by a couple of months?

Don't quote me on this... but depending on type of claim, your family should be able get the claim.

For the record, Ponzi also does give you back your profits. (other people's money) Life insurance also cannot guarantee 5%.

Yeah right, only for the top tiers and before they are exposed.

Agents need to eat, that I do understand, the amount they earn, not substantial, I also understand, but I don't understand this part, if they need to eat and don't earn substantially, how can there be many millionaire agents around? They got do sideline?

I said agent don't earn substantially compared to the premiums paid. That does not mean it's not a profitable business. Also there's actually more non-millionaire agents than millionaire. Millionaire agents most of the time only mean they are better sales man and have a lot of customers.

It's also true that many insurance agents will try to sell you investment linked policies first and foremost, thats how they get to draw big cars.

Not true. In fact some company's investment linked policies have lesser commissions compared to traditional policies. Some agents really belief in investment policies.

Another point to note is that all insurance companies have internal fund managers to manage their cash on hand, to invest and all. They will raise insurance premiums each time they lose money, under the pretext of 'rising costs of living' or whatever.

SO NOT TRUE. If fund managers don't perform well, they will be sacked. Depending on the type plans you bought, most of the time premiums is fixed, whether level thoughout or increase according to age. Mortality charge and mobility charge are not guaranteed. Some plans, like medical related or critical illness plans, the premium is also not guaranteed. But whether is increase or decrease, it's not due to company lost money or because of rising cost of livings. Most of the time is due to claims experience. It doesn't happen very often also. Its not easy for company to increase premiums or charges from what I heard. They have to explain to MAS till the cow come home for the increase of charges or premiums.

 

[Thick Face Black Heart]

Talking in circles. Agents disclosing how much commission they receive is not the issue. We know exactly how much they get. I am talking about exorbitant sales charges levered upon unit trust inv within ILP and all the hidden fees in traditional policies.

All these charges and commission deducted makes the client financially poorer. Anyone who markets them as saving or investment instruments ought to be tarred and feathered. Only a fool would allow the ins company to make such a profit but render himself poorer off.

You are right that how the premiums are being invested are not easily available to customers, if you bought traditional policies. Because you cannot affect how the investment is being made in traditional policies. But all charges deducted (or deductible) will be clearly stated. If you bought investment linked policies, how the premiums are being invested will be made know to customers either on the policy contract or regular statements. In fact, most of the time customer decide what to invest and how much to allocate for investment.

Part of the first few years premium goes to agent commission not all of it. I already said agent have to jadi makan, nobody works for free. Agent only take commission for first few years only, then have to work for you for life. You tell me wu hua bo?

It does not matter which company I'm from or whether I'm in the business or not, because I'm only speaking out in my personal capacity. It does not represent the views or any other parties.

At the end of the day, know what you need, know what you want and know what you bought. That's about it.

Peace!

 

[jw5]

Talking in circles. Agents disclosing how much commission they receive is not the issue. We know exactly how much they get. I am talking about exorbitant sales charges levered upon unit trust inv within ILP and all the hidden fees in traditional policies.

All these charges and commission deducted makes the client financially poorer. Anyone who markets them as saving or investment instruments ought to be tarred and feathered. Only a fool would allow the ins company to make such a profit but render himself poorer off.

Scroobye

You don't mind I tell you something hor?

I can tell when your real life ka kia (the guy who registered nickname TFBH) is posting and when your manipulative cheebye self is posting. It's the same with internet moniker Hawkeye1819.

 

[jw5]

Scroobye

No more of your smartass motherhood statements using your ka kia's internet moniker?

Awwwww, poor bastard got pawned.....................................

 

[Poomer]

Insurance also can. Example if someone buy a life policy with accident benefit and met with an accident but not die, you can claim certain amount. You win beh sai lor. Best of all still got chance to win 1st price.

Erm, if you buy 4D and TOTO, once a week, it is more likely that not you will strike at least once a year. Now can you imagine losing a hand, leg, finger or toe every year, just to tio bei sai? In this case, no one will be buying insurance, if their aim is to tio bei sai.

Don't quote me on this... but depending on type of claim, your family should be able get the claim.

Should is not confirm. And cannot quote u means, you also not confident. I know people handling claims, and they tell me that even in NTUC, which is supposed to be the nicest insurance company around because of their links to the government and hundreds of supermarkets, there is a claim by date, and if you overshot, each one is considered on a case to case basis. They do get rejected.

Yeah right, only for the top tiers and before they are exposed.

Wrong, also for those who invest early. To sustain the ponzi scheme, they must show that they can payout.

I said agent don't earn substantially compared to the premiums paid.

50% for the first year, not substantial? Then what you want? 100 or 200%? Your grandfather insurance company ah?

Not true. In fact some company's investment linked policies have lesser commissions compared to traditional policies. Some agents really belief in investment policies.

Keyword : some, some is a very subjective word, 1% also some, 99% also some. Most investment linked policies give more commission, as compared to life or term.
I know agents who believe in all sorts of things. And I know agents who drive big cars, and I can tell you, they obviously do everything, but investment is where the real money is. One person will only have one term policy and/or one life policy, yet they can have lots of investment policies though.

SO NOT TRUE. If fund managers don't perform well, they will be sacked. Depending on the type plans you bought, most of the time premiums is fixed, whether level thoughout or increase according to age. Mortality charge and mobility charge are not guaranteed. Some plans, like medical related or critical illness plans, the premium is also not guaranteed. But whether is increase or decrease, it's not due to company lost money or because of rising cost of livings. Most of the time is due to claims experience. It doesn't happen very often also. Its not easy for company to increase premiums or charges from what I heard. They have to explain to MAS till the cow come home for the increase of charges or premiums.

Fund Managers get sacked, you joking? How many out of work fund managers do you know? A fund manager can lose money for three years straight, but if he made a bundle in the fourth, he becomes a legend. Do you know insurance companies reserve the rights to change the premiums? Do you know half the insurance companies are government linked, what till the cow come home? The cow haven't wake up they pak kat already. Just look at our telcos and our public transport operators and, you will jolly well know that government institutions are very good in serving the interests of the affected GLCs above all else.

 

[Thick Face Black Heart]

So far, no rebuttal on my assertion that whole life policies and ILP incur very hefty charges, much of which is non-transparent. I'm not talking about agent commission which is transparent. I'm talking about fees charged to the managed pool of premiums, the admin costs of running the float, the initial sales charges of unit trust within the ILP structure, and a whole plethora of hidden costs which very few are aware of.

No rebuttal also on my assertion that these commissions and costs hurt clients financially. Why take up whole life and ILP policies when almost any other savings or investment vehicle is superior. Even a simple Fixed Deposit will serve to protect wealth.

Only reason for insurance is to safeguard your loved ones when you are starting out in life. Term is the only viable way of doing so without incurring a huge chunk of unnecessary financial losses. If you want to recover the premiums "lost", just reinvest the remaining amount in high quality blue chip stocks and low-cost unit trusts sold by discount brokerages with dollar cost average. None of these needs financial advisers. Save yourself the money and the embarrassment when you tell your friends you participated in some stupid scheme dreamed up by an insurance company designed to cream you of your savings.

 

[ykhuser]

???? But my parents use their CPF to buy HDB . By the way what is KJ and CSJ ?

kj=big nose
csj=big spectales