A very poor deal

A mother bought a life insurance policy for her son. After 13 years, the cash value was only $2,700. The total premiums paid was $5,600. The policyholder suffered a loss of $2,900 plus the investment gain for 13 years.

For the next five years, the additional premium is $2,160. The increase in cash value is only $1,480. The policyholder will suffer a further loss of $580. The policyholder decided to give up the policy.

I consider that the policyholder has been given a very poor deal. It seems that, after the policy was taken, the policyholder is at the mercy of the life insurance company.

I advised the policyholder to seek an explanation from the insurance company, and later to lodge a complaint with the Monetary Authority of Singapore. The insurance company is a large company which has many hundred of thousand of policyholders.