The report that an administrative executive had to pay an insurance premium higher than her salary has left me dumbfounded ("Insurance premium higher than her pay"; Monday).
It is clear that someone oversold a policy to earn a commission, instead of offering a plan that fulfils the customer's needs.
A few questions come to mind. First, was the policy objective explained in detail, especially the part about the guaranteed and non-guaranteed returns?
Second, did the agent look at all the customer's insurance policies, as part of the financial needs and risk assessment, before recommending the policy? Did the agent take into consideration the fact that the customer could not afford to pay her future premiums? A good agent will look not just at the money a customer has, but also future income.
Third, as the premium is higher than the customer's pay, did the agent explain to her the consequences of not being able to pay future premiums and the impact of reduced premiums?
Fourth, have the banks put in place measures to ensure that any customer diverted from normal banking activities into buying an insurance or wealth management product is protected from overselling or misrepresentation, especially when it comes to older and/or poorly educated customers?
Lastly, what recourse does the customer have in this case, other than to apply to have her premium reduced?
I hope the bank will review her case favourably and perhaps allow her to cancel the policy or reduce her premium without any penalty, as a goodwill gesture.
Leong Kok Seng