High cost products

TWO COMMENTS POSTED IN MY BLOG (edited)

Examples of high cost products are limited premium critical illness plans, repackaged endowment like REVOSAVE, whole life plans and regular ILPs like ID2 and other s from other insurance companies, high expense ratio ILPs.

They have high distribution cost with part of it which goes to agents as commission. Because of high cost the return is affected.

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Since the critical year saga the insurance companies were rolling out products with limited premium on the premise that customers do not like to pay for life.

The question one should beg is "is it to the benefit of the customers"? The answer is yes and no. Yes, it benefits the high earners and the rich without their compromising their needs for high coverage. The rich never have this problem of servicing the premium.

For the poor it makes it even worse for them. Before this they were already struggling with the premium for a normal wholelife. Now the premium is even more menacing for them. Lapsing seems inevitable, just a matter of time. Why then insurance salesmen still recommend limited premium to the average income customers?

I am sure if they have done fact finding limited premium would never been recommended. As I have said insurance salesman is a salesperson. He sells with one objective, ie. to close the sale.

Does the agent bother whether the customer continues the premium for the next 20 years? He has collected the huge commission and if the customer should lapse he can sell him another one with high commission, an opportunity to make a sale.That is good strategy.

So what should be done to this type of insurance salesmen?