Commission-free Insurance: too good to be true?

So recently in an industry update, we were told starting 1st Jan 2017, there will be COMMISSION-FREE insurance offered!

celebrate

What this means is customers can get insurance up to 30% CHEAPER!

shut-up-and-take-my-money

Isn’t this good news?!?!

good-news

Ok, this is the part you go, “Sounds too good to be true, what’s the catch?”

whats-the-catch

This is part of Bank Negara’s LIFE Framework,
http://www.bnm.gov.my/guidelines/02_insurance_takaful/03_prudential_stds/nt_life%20framework.pdf

life-framework

The timeline is:
1st January 2017 – Commission-free Term insurance
1st January 2018 – Commission-free Critical Illness, Medical & Health insurance

So the first catch is that only Term insurance is offered commission-free next year.

ouran_sweat_drop_by_animesweatdropplz-d39bsrh

Ok, no prob, still a start right?

But the biggest catch is: consumers will have to get it… BY THEMSELVES, and… ONLINE ONLY.

shocked

Let’s face it, insurance is not something sexy everyone get excited to buy by themselves.

No one wakes up one day excited and says:” You know, I feel like buying insurance today, let’s go on the internet and look for one.”

Nope, not going to happen. In fact, most of us probably bought ours from an insurance agent.

 

And when we bought it, we bought it VERY reluctantly, kicking and screaming all the way.

 

So here’s the rub, most of us don’t have the initiative to buy insurance ourselves.

We were not educated on insurance, we don’t know what to look for, and we can’t even begin to compare them.

So what can we do?

From this point on, there are probably 3 options going forward.

  1. Continue buying from insurance agent and let them earn their commission.
  2. Buy by ourselves from a website, possibly an insurance aggregator website, which may pop up in the future, letting the website to use its algorithm to sell us something.
  3. Buy based on advice by a fully licensed and independent financial advisor who can look at your overall financial circumstances to recommend a wide range of suitable products from all providers, recommend optimum coverage and educate you every step along the way.

What will be your choice?

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