Switching to a new policy with special benefits

Sometimes, a new life insurance product is introduced with an additional benefit, such as the waiver of premium during retrenchment.  This type of rider usually has small print to restrict the entitlement to the benefit, such as circumstances of retrenchment or the waiting period.

While the value of this type of rider is debatable, it should not be used as a reason for a policyholder to terminate an existing policy to switch to this new policy. The policyholder will incur a large loss on the existing policy by making this switch, and will have to pay the upfront cost again on the new policy.

Switching policies is a costly exercise and should be avoided. An ethical agent will not give this type of wrong or harmful advice to their customers.

Tan Kin Lian