Insurance & Costs of having and raising a child

[Traumfanger]

I have long ago given up trying to reason with insurance agents, because their livelihood depends on them not understanding. Because if they understand the logic, they have to agree, which means they have to admit that they are deliberately helping their clients to be worse off financially.

Every agent wants to believe they are helping other people while earning an income for themselves. So, they either pretend not to understand, or refuse to listen. Very similar to the Madoff case (although that was a Ponzi). But the same principles apply - the Madoff feeder funds were being paid huge sums a year (in one case, $280m) to feed money to Madoff. They had millions of reasons not to ask too many questions lest they implicate themselves. Ditto for the superstar insurance salesmen.

People who don't want to learn how to invest will end up poor because they will be steered into bad investments by all sorts of people. Some will mean well, others will not.

So tell your friends who want to buy endowments and whole life policies: Do they understand and accept that with their "outsourcing" attitude they will eventually end up poor?

Maybe they won't believe that their trusted friends/relatives will recommend poor investments to them. Maybe in 20-30 years they will change their mind, but it will be too late. Ask them: DO YOU DARE TO BET ALL YOUR FUTURE SAVINGS THAT EVERYBODY YOU MEET WILL HELP YOU MAKE THE RIGHT DECISION WITH YOUR MONEY? Because that's exactly the wager they are making when they "don't want to handle investment". Yes, they have to spend time and maybe some money to educate themselves. But... if you think education is expensive, try ignorance.

Thanks d.o.g.
I know what I am about to say next are tactics used by insurance agent, but I myself find it hard to refute.

On the red portion I highlighted in your appreciated response, my friend was showed data of endowment related policies and the clients are receiving more than the non-guaranteed percentage showed in their policy. So they seems to be making a return on their investment? And when this kind of information is showed it is hard to refute that you are making losses? Yes, it can be said that past performance is not indicative of future performance. But this argument is reflective of self-investment or funds investing.

Are we boiling down to one point? Which is the fees and charges involved are too high for investment conducted through insurance company than a fund manager of your choice?

And through conversing so far, I am starting to think that the guaranteed clause is used too loosely? LIA, MAS will only guarantee the principal when a insurance company fails. Other than that, the investments related policies are subjected to the underlying performance of the funds involved? Am I right?

---

Why do you want to discuss with your friend about this? You want to break his ricebowl? Causes him doubt, and make him feel bad for recommending sub-par plans?

If you want to look at guarantees, look at Maybank FD. 1.6%pa for 3yrs tenure. I don't think any insurers can beat that guarantee. Furthermore, interest upfront. No investment knowledge needed.

He is my best friend. And through discuss I see we are both tied to what we believe. I believe in being self reliant in terms of managing your finance. He believes that the insurance company can help those who are unable to do what I do. He won't recommend investment related to people who knows how to invest. But I want him to see where I am coming from with regards to the "help" the insurance company are offering. But like d.o.g. said it is the non-understanding element of insurance agents to these logics that insurance company continues to sell year after years for products that don't really benefit consumers.

But really some of the pointers they list out are kinda hard to refute.