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Why clients don't read the documents given to them? |
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Written by Wilfred Ling
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Saturday, 22 December 2007 |
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Someone asked me what are the pros/cons of an Investment Linked Plan (ILP) from a particular insurer. Knowing that the client has already spoken to an adviser who attempted to sell her an ILP, I knew that my job is to highlight the “bad” points about the plan (I was very sure that all good points have already been mentioned by the other adviser). I just used the insurer’s benefit illustration and zoom in to the mortality and morbidity tables:
Assuming $100,000 of death coverage and $100,000 of additional critical illness coverage, the insurance cost of the plan at age 80 is (55.37 x 100) + (41.60 x 100) = $9,697 per year! The client almost fainted upon knowing this figure. Since this insurance cost is much higher then the premium of $1200 annually, the shortfall has to be either funded by selling the underlying investments or the policyholder needs to increase the premium. The client asked me why she was not told of this… but I was thinking why client don’t read the documents given to them? (Figures based on female, non-smoker. Mortability and morbidity tables are not guaranteed and subjected to change) |
