Unethical practices

When I give financial planning talks to the general public, I get approached by many people who ask my advise on the insurance policies that they have bought.

Here are the common faults of insurance agents:

1. Over-selling. Selling more life insurance than is needed, e.g. too much critical illness coverage.

2. Unsuitable products. The agent sell products that earn a high commission, but do not serve the important needs of the customer.

3. Fail to explain the product. Many customers are not clear about the product that they have bought.

4. Unrealistic projections. For example, stop paying premiums on reaching the critical year.

Clearly, the high commission that is paid to the agent is responsible for these unethical practices.

The blame is not entirely on the agent. The insurance company that design the products and "motivate" the agents to sell aggressively and meet high sales target are also responsible.

Some agents act professionally and look after the interest of their clients. I hope that all agents can fall in this category - but this may be just wishful thinking.