Adjustible premiums

Dear Mr Tan,

I am offered a valueplus plan which extends the benefit under Eldeshield from 72 months to 120 months. It looks attractive. The premium is quite low at the younger ages, but increase sharply at the older ages.

Furthermore, the insurance company stated that the premium rates may be subject to adjustment in the future. Is it safe to buy such a plan?

REPLY:

Generally, it is all right to buy an insurance plan that have premium rates that are adjustible according to the actual claim experience. This allows the insurance company to offer competitive rates, as they do not have to guarantee the current rates in the future.

The problem is, will the adjustment be carried out fairly? If the insurance company is profit driven, they may take advantage of this right to adjust the premium to make more profits, at the expense of the consumers.

If there is transparency and consumer oversight over the adjustment, or if the insurance company is operated on a non-profit basis, then this arrangement is all right.

Tip: Insure with an organisation that acts fairly in the interest of consumers.