As a Singaporean, what comes to your mind when it comes to disappointments?
For one, these would be at the top of my list:
Signaling system efficiency of SMRT (How difficult can it be, really?)
My annual bonus (never fails to let me down!)
Needing a Committee to certify your ethnicity (I would just check my IC, duh)
Finding a heart bypass that costs only $8 (Can’t even get a movie ticket that cheap anymore)
Pokemon GO is still a “Thing” (SERIOUSLY, WHY!!!)
However as a Life Insurance educator, what disappoints me about Life Insurance in Singapore is totally different – with far more serious consequences.
Let the national sport of complaining begin.
Disappointment 1: Road shows are still a thing
Ever found yourself heading down to NTUC just to pick up a couple of groceries, but accosted by several well-dressed people wanting to conduct a survey?
Some insightful survey it turns out to be, and soon after you are led to some tables and chairs and made to sit through a presentation on how to best utilize your idle cash.
Seriously, this mode of selling insurance has to stop. I refer to all forms of unsolicited selling of insurance, which includes:
Street Canvassing (You see a lanyard, you run!)
Roadshows (No slow cooker is worth the agony of a wrongly bought policy)
Are these forms of sales effective?
As you can imagine, the rejection rates are crazily high. But since it is a numbers game, these practices persist to this very day, since there seems to be no shortage of energetic Insurance agents.It also helps that there is a certain someone born every minute.
Are these forms of sales professional?
Let’s answer this using a comparison with other professional fields.
- You won’t see any doctor standing on a street corner offering to take your blood pressure for free
- A lawyer won’t be going around door to door offering his will writing services to you.
- And when was the last time you heard of an accountant setting up a booth next to a supermarket to garner business?
If financial planners want to be properly regarded in the same breath as doctors, lawyers, and accountants, then these unsolicited sales practices have to stop.
I understand why these things are done, having been in the industry for most of my career. But moving ahead, it really has to stop. For the professional image of the industry. For the well being of the customer, who often buys something due to pressure (oh yeah, let’s not pretend that it does not exist) or due to a hasty decision.
Agents at these roadshows are pressured to sell, and sell hard, to cover their fixed costs. Customers are more often than not, enticed by freebies and have to discuss their financial matters in a noisy, crowded environment.
It may have worked before, but times have changed. Our policemen no longer wear shorts. So perhaps we should stop selling financial products out in the open, like unsolicited touts.
Disappointment 2: (True) Transparency is an illusion
Question: What do you think is as old as the concept of insurance itself? (BTW insurance dates waaay back to the Babylonian times, in 1750 BC)
Answer: Complaining about Insurance policies
A bit tongue in cheek, but I don’t think it is necessarily inaccurate. Why do we gripe so hard about Insurance policies?
The answer is deceptively simple. We didn’t really understand it before buying. We don’t really know the features, and we are not really sure about the returns.
The fault really lies with 2 parties – the buyer (us) and the seller (the insurer). (I’ll address the lack of understanding from the buyers in the next point)
The biggest complaints about Life Insurance usually are reserved for the poor rates of returns provided by par plans, which is no coincidence since the true level of transparency in these plans is lower than your average Zimbabwe politician.
Insurers are still using an outdated method of demonstrating potential returns by means of illustrated rates. This causes all sorts of problems because buyers usually see 2 rates (One high, one low) on the table itself – and guess which one is promoted more heavily by the selling party (agent)?
Worse still, the illustrated rates don’t correspond to the actual rates of return provided by the policy. I had to solve the mystery here on my own, and the true figure is not even close to illustrated rates.
Why is this a disappointment? Because I just think that it would be so easy just to be transparent and upfront.
Insurers should really tell us:
Thanks for your business and support.
You are buying into a par plan, which means some part of your premium will go into protection, and the rest will go into investment.
The actual rate of return will not be anything like what our par fund performs, so please set your expectations right.
We will provide a plain English version of the policy documents so you understand perfectly what is going on, but we will rely on our lawyered-up version should we need to make an official decision.
Throw out the silly illustrated rates that don’t matter.
Tell the consumer that mixing Insurance with Investment means generally lower returns compared to other asset classes.
It’s ok to come clean and be transparent since we are all adults.
Disappointment 3: Life Insurance Education is not available on a large scale
Everyone wants to get rich. And get rich quick. Hence there is no dearth of programs, training classes, systems, and what-have-you teaching people to multiply their investments and own property with no money down.
That’s great, because investing is how many of us get wealthy. But what about the more important (albeit less exciting) part about taking care of one’s personal insurance first? Who goes around teaching us how NOT to get poor, before teaching us how to get rich?
Think hard into the situation and you will probably see the magnitude of the problem. In all our years of schooling, we will hardly receive any financial education (not even on the perils of credit card debt). Once we are out into the working world, we are bombarded with get-rich-quick trading/property/cryptocurrency investment schemes – that’s our investment education right there. Not ideal, to say the least, but there are plenty to choose from.
How about Insurance education? That is left to the good (or otherwise) agent(s) that you may meet during the aforementioned roadshow/door knock. If you ask me, that really sucks. The bedrock upon which you will need to base your financial security on is left to a complete and utter stranger which may or may not be acting in your best interests. There are plenty of great agents around, but there are also black sheep which tarnish the reputation of the industry.
We should all learn how to manage risk (Insurance) before learning how to take on extra risk (Investment). But it has gone all lop-sided and topsy turvy.
If you ask me, this last point is really the crux of the matter. If we as a nation really started to pay more attention to financial education, with Insurance as the starting point, it would lead to a virtuous cycle which more or less eliminates the first 2 disappointments.
With the general populace well-versed in Insurance, people will become more receptive to it.
Agents will not have to resort to unsolicited selling but focus on giving good advice.
Insurers will have to be more transparent and not hide key figures behind useless tables.
Everyone lives happily ever after. End of story.
The point of all this?
It is ok to be disappointed. But the key is not to remain that way. Whether you are an agent, or an insurer, or a layperson, we can all do our part to make Life Insurance less disappointing and more celebrated.
As an agent, do consider the way you conduct your business.
As an insurer, do consider how you can start to present key data in a clear, concise, and truly transparent manner.
As a layperson, do consider putting in some time and effort into educating yourself about the importance of Life Insurance.
Till then, we will continue working with agents, insurers, and consumers to make Life Insurance more palatable.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.