Insurance. Your classmate is selling it, your ex is selling it, heck now even your auntie is also selling it. Almost EVERYONE is selling it now. When they’re not selling it they’re selling property. Can’t say we blame them, after all we’re all just trying to make a living in this weak economy. But if insurance companies are allowing just about anyone to be an insurance agent, how do we know who to trust?
We hear so many horror stories of how agents misrepresent insurance products, how they prey on the elderly, how they sour friendships. Yet, the thought of not being insured and staying in C class wards at the brink of death is just…saddening?
I mean come on, I’ve only been working so hard chasing after moons for so long. Don’t I deserve to at least have a nice stay on my sickbed? It is the last few moments of my human life and I don’t even know if I’m eligible for heaven. The truth is everyone needs insurance. Hence, I attempt to navigate the insurance world and hopefully, we’ll be less traumatized by insurance to actually get one. Here’s my homework:
Types of insurance agents in Singapore
You know we all have those few friends that work in banks (whoohoo! So atas right) and hold fancy titles like “relationship manager”, “financial advisor”, “personal banker” etc? When you ask them what exactly they do they’ll tell you things like “oh. I’m managing clients’ portfolios” only to find out later that the bulk of their income comes from pushing insurance products?
Apparently there are many types of agents out there, the difference is in where they work! There are the ones in insurance companies (insurance agents or financial planners), the ones in the banks (personal bankers) and the independent financial advisors.
Types of planning (full/ partial)
What all these ‘species’ of agents have in common is that they do two types of planning: partial and full. Well, at least they pick one of the two anyway. The old way of partial planning was just to focus on a specific area such as protection. But these usually result in the agent pushing just a few products that may not take into account other aspects of the client’s life.
These days, there’s more emphasis on a customer’s every financial need. Most insurance agents, the good ones at least, use full planning to give clients a more all-rounded picture. The general idea to cover all basic areas of your life and to determine the most appropriate products you should take after factoring in your targets and concerns.
How do agents earn their commission?
I used to think all agents earn an equal amount of commission whichever plans they sell. Sell a plan, they get a small percentage of the premium we pay, that percentage is paid out within the first few years. The truth is the system doesn’t work that way. Certain “star” products the banks/ insurance companies are promoting give agents a higher payout due to the higher profit margin.
If you’ve read our detailed article on how insurance agents earn their commission, it’ll make sense that longer term insurances are more profitable since you’re paying your premium for a longer period of time. Hence, if an agent is pushing you products that you feel you do not need despite you already stating your needs repeatedly, it’s probably a sign to get out NOW.
To put it in a different perspective, it’s also not so nice of us to squander someone’s time if we’re not interested in anything they’re selling. Staying longer is sort of asking for it cause it makes sense if someone wants something for spending time with you they could’ve better spent someplace else. There’s no free lunch in this world you know.
Qualifications of agents
M5, M8, M9, HI, PGI, BCP, ComGI…Sounds like superspy terms from the James Bond movies hor? Well, they aren’t actually. These are in fact examination modules that most insurance agents have to go through (depending on the type of insurance they’re aiming to sell) before they can even “catch up” with you.
|Module Name||What it stands for?||Who must take it?|
|M5||Rules and Regulations for Financial Advisory Services||All agents|
|M8||Collective Investment Schemes||Agents or bankers selling unit trusts|
|M9 and/or M9A||Life Insurance and Investment-Linked Policies (I/II)||All agents|
|HI||Health Insurance (HI)||All agents|
|PGI||Personal General Insurance||Agents selling general insurance|
|BCP||Basic Insurance Concepts and Principles||Agents selling general insurance|
|ComGI||Commercial General Insurance||Agents selling general insurance|
That said, most listings I’ve searched through on job search sites tend to put only “21 years old and above” and “diploma and above required” as firm entry requirements. I’ll let you be the judge of how stringent these requirements are.
What is in place to protect us as customers?
The Policy Owner’s Protection Scheme (PPF), guarantees a 100% payout of your guaranteed benefits, with some caps to policy holders if the insurer stops operation. Hence, there should not be any worry about insurance companies closing down since you will still get your benefits.
In cases of dispute, you can also file a claim with the Financial Industry Disputes Resolution Centre Ltd (FIDReC) for free. A Case Manager will attempt to facilitate a resolution, and if the results are not satisfactory, you may still choose to pay an administrative fee of $50 to have your case decided by an appointed adjudicator or panel of adjudicators. It’s safe to say we’re pretty covered here.
So… should I buy that insurance policy or not?
To be honest, no one can actually make that decision for you. But here we would advise you to go to your next consultation with this word in mind: discernment. In my time researching this article, I’ve realised that not one agent I met could be representative of the entire population of agents here. There are bad apples in the bunch of course, but it’s hardly fair to use these to pass judgement on other agents as there are others out there who genuinely care.
To better observe if yours is acting on your best interests, try asking yourself these questions:
- Is your insurance agent sincerely listening to your needs?
- Is he/she too insistent on you buying a particular product?
- Is he/she aggressively trying to make small talk/ contact you?
- Are you feeling obliged to buy so he/she can make a living?
- Do you really need the product he/she is selling?
Of course in the first place, being able to be discerning needs to come from a place of knowledge and information. Follow us on Facebook as we help you navigate the tricky world of insurance with more articles.
What do you think of the insurance industry in Singapore? Let us know in the comments.