Do not be locked into a poor return

I gave a talk on financial planning on Saturday.

During the question time, a customer asked for my advice. She has been paying premium for many years to an insurance company (not NTUC Income) that provide a poor return. What can she do now?

My reply is that there is nothing much that can be done now. The poor return is due to:

* high commission paid to the agent
* profit to the shareholders

It is quite sad that she has been locked into a long term insurance contract with a poor return.

My advice for the future:

* buy a decreasing term insurance to provide the coverage
* invest in a large, well diversified, low-cost fund