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Customer Advisory Against Prudential Agents

I’m not sure how many of you are on Prudential insurances but I’ve had two pretty bad experiences with them and unfortunately I still stupidly bit the bait. This is a post to prevent any of our BolehVPN customers from getting into this mess, or at least be aware of what they are getting into. I am not sure how this reflects Prudential agents as a whole but hopefully some of you can learn from my experience.

This plan is in relation with a PRUlink Assurance Plan, PruSaver, Accidental Death and Disablement, Crisis Shield, Accident Medical Reimbursement, PRU disability provider. PRUhealth, PRUmed, Enhanced PRUpayor Basic, Enhanced PRUpayor PSA and a weekly indemnity. This totals up to be a commitment of RM300.00 a month.

For those who are lazy to read and which may seem self evident but:

1) Do not subscribe to an insurance plan you don’t totally understand.

2) Don’t take your agent’s word for it, read the policy, and if you don’t understand it, don’t take up on it.

3) Be sure your plans are TOTALLY transparent without the need for you to check through your agent.

4) Keep investment as investment and insurance as insurance. Don’t mix them up.

Agent #1

Approached me and told me in no uncertain terms that I will be getting insurance benefits, I can get out at ANY TIME with no penalties and on top of that I will be getting 8% GUARANTEED on top of the money I put in due to investment. This sounded too good to be true and I told her that and yet she was still insistent that this was the case. I asked her to provide the policy terms, and she never got back to me so I stopped there and didn’t take up any insurance.

Agent #2

A year later, another agent approached me. I told her that I was familiar with the plan but I rejected it in the past due to the misrepresentation of the agent. She told me she was different and would make sure she explained everything to me. She then told me that a huge proportion of the 1st and 2nd year of the payments will go towards Administration Fees and Service Charges, but after that, my entire contribution each month would go towards my cash value.

As I saw how they could make money this time (the administration fee + the fact that they were holding on to my money) it made sense and hence I signed up. When I asked how much exactly the administration fee would be, I was told that she could not determine it straight away as each customer was unique and could only be confirmed later on. At this time alarm bells should be ringing, but I told her ok, please let me know as soon as possible. It didn’t help that she was also rather attractive. Men are weak. I also stupidly agreed to pay one year in advance to help her reach her target when she very nicely asked me (yes, stupid me). Apparently, she’s also the top seller in her region so I thought I could place my trust in her.

After trying to get these figures for a few months (the agent who was previously so available during the sales period was suddenly a lot more difficult to reach), I told her that I really wanted to know my administration fee and arranged a meeting with her. Prior to this meeting, I talked to another Prudential agent friend who told me that these admin fees should actually be in my policy and that the break even point was after SIX YEARS and not TWO YEARS as she represented. I quickly whipped up my neglected policy book and sat down to make sense of the rows and rows of charts…I then realized the meaning of these charts…

Basically, out of RM300.00 a month, RM220 goes into insurance + investment and then RM80.00 goes into a PRUSaver investment.

However from the RM220.00 portion, on the 1st year, 60% gets eaten up by service charges, then 50% in the 2nd year, 40% in the 3rd, 30% in the 4th, 10% for the 5th and 6th and only on the 7th year do you actually break even after which you’ve already been bled dry.

In real terms, out of RM300.00, for the first year, I only got back RM88 for the insurance portion and RM76.00 (not including any appreciation) for the investment. This totals up to about half of my insurance value disappearing. Out of the RM3600.00 I put in each year,  I get only RM1,968 in the first year, RM2,232 in the 2nd year and which continues on. I do appreciate that I’m getting about some protection but if I die, I get something in the region of RM100,000 which to me is not a significant amount considering the amout of money I”m pumping in each year.

Even for the RM80.00 portion, which is NOT guaranteed and is basically a unit trust, 5% of it also gets eaten up by ‘service charge’.

During the meeting with my agent, I told her that I wanted a re-explanation of the administration fees as she had not gotten back to me on it. I wanted to give her an opportunity to see if she could explain herself out of it before revealing what I had read. She then drew up a chart for me, which indicated that after 4 years, there would be no more admin fees. After she had completed her explanation, I told her that I had read the policy and it said 6 years. I also reminded her that when she was selling it to me I distinctly remembered 2 years being the ‘break even’ point. She told me ‘Oh, maybe this policy has been customized to you.’ I decided to keep my cool so that I could go home and recheck the policy again which confirmed my fears…I’ve been duped. I then asked her how was previous performance of the PRUSaver investment portion of the fund, I was not given an exact figure, instead I was told ‘it did well’ and that it would be difficult to check the price at which I bought the units for. I concluded the meeting on a good note, wanting to make sure I got my facts right before making any accusations.

I went back, sat down and thought about it and relooked at my policy and didn’t see how this could be anything else besides a misrepresentation. I gave my agent a ring and told her straight that I was very upset and that I felt cheated and I wanted to terminate my policy. She said that her supervisor told her it was for 4 years and she would have to recheck this tomorrow with her supervisor. I told her that this was a HUGE mistake and that the difference between 2 years and 6 years is pretty big. A customer should be able to trust his agent and it’s the agent’s duty to ensure that the information she gives is accurate. Yes my bad for not reading through the 100 page policy but it was just unbelievable that it could be so blatant. I was naive.  She thanked me for bringing to her notice this fact and I wondered straight away how many of her other customers were under the same misconception. I’m still exploring options on how to redeem the most out of this situation but I have accepted that the payments I have made are probably irrecoverable sunk costs and consider it an expensive lesson.

There is no other way to check your ‘cash value’ besides getting it from your agent. The lack of transparency, combined with misrepresentation led me to have a very bitter taste in my mouth.

I also saw some increasing rates and service charges as you aged (which is expected but was also not explained to me) and I still can’t fully figure out and at this point in time I can’t be bothered to. I just want out.

So let me repeat!

1) Do not subscribe to an insurance policy you don’t totally understand.

2) Don’t take your agent’s word for it, read the policy, and if you don’t understand it, don’t take up on it.

3) Be sure your plans are TOTALLY transparent without the need for you to check through your agent.

4) Keep investment as investment and insurance as insurance.

A term life insurance with a pure charge every year is much easier since there is no messing with ‘investment’ and cash value and much easier to understand. After all, why give your money to an insurance agency to invest for you and let them take a guaranteed 5% off your money and then you getting the leftovers if they make money or not on their investments? Keep insurance as insurance and investment as investment.

10 Comments

  1. arshavin says:

    Unfortunately most of the insurance companies have to invest the money in order to get a return. Whether you are buying insurance or investments the money ends up investing elsewhere (whether its mutual fund, real estate, etc).

    Since the AIG incident, I’m really begin to doubt insurance companies, not to mention high “service charges” and “fees” they get from their customers.

    Here’s a tip to ask your agent if you don’t understand any insurance policies, “What are you going to do with my money?”

    Just my thoughts!

    Arshavin

  2. alamak says:

    thanks for sharing the info. i m just about to sign to the policy u mention coz i think i trust my agent..

  3. ZeLeecher says:

    IMHO, Prudential is still one of the ‘best bang for your buck’ insurance company.
    If your agent is ethical and not just to make commission out of you, they will try build up a plan based on your budget.
    Give them a budget figure, and see what they can come up with.

  4. syaz says:

    thanks for the comments & i felt sorry after reading it.

    i m an agent from prudential.
    from my observation, the lack of training & asking to company trainer, will make an agent do a lot of mistakes.
    as an agent, if still NEW, and not really familiar with all the T&C by company to your customer,
    they should give a quotation to the customer & let them read and come out with any question they did not understand.
    but if the customer lazy to read the quotation given, then an agent should explain to them. (normally this will happen).
    i m practising that, if there is a question that i not sure about it (happened to all human if they are new in any career),
    just KIV it at say “i will come back to you & explain it”..

    why insurance nowadays mixed up with investment?
    because some people especially malay, always ask if they will get back some portion of their money rather than just pay every year without getting anything unless they die or sick. this is one of the reason, an insurance company designed such product to meet customer needs. different with chinese, they normally buy insurance to cover their medical expenses and left a big amount to his family if they die, without thinking about getting a portion of money thru the years of paying premium.

    i hope, this explanation will make people think positively to insurance industry.
    we want to help you save your money & at the same time get protections.
    it’s true, the best to save your money is in bank or unit trust purely, but they could not give you protections to release your family members from burdens if something happened to ourselves.

    thanks.

  5. Bar Fridge says:

    there are insurance agencies that are scam too so make sure that you deal with legit insurance agencies *:.

  6. Roy Steven Ung says:

    Its really unfortunate that you met agents who sells insurance plans as investments. Yes, insurance is insurance and it is meant for protection, NEVER for investments.

    The plan Investment link plan DOES NOT mean it is for investment, EVEN if the amount is being put into PRUsaver (which provides 95% premium alllocation). The main purpose of ILP over the traditional plan is that the premiums being paid are subjected to the performance of the underlying funds.

    Having said that, it does not perform like pure unit trust as the accumulated cash values are subjected to insurance charges when mutual fund is not.

    If you read the proposal form you will see a clear wording in bold that says that your insurance charges will go up by age. Even if your premium does not go up, your insurance charges will.

    You see when it comes to insurance the riskier we are the higher the insurance charges it will be. An example is our car insurance. For cars that are over 10 years and above the loading (extra premium) may be as high as 100%. Also, as long as you want to drive the car the premium will need to be paid.

    If the medical card cover term is up to age 80, the insurance charges will also need to be paid till age 80. Take note that I mention insurance charge, not the monthly premium.

    The projected insurance charges is outlined in the quotation together with the projected cash values (high and low). As I said, insurance charges goes up by age, for example when we are in our 30s, the insurance charges may be in the range of Rm 1500 per year. This means if we are paying Rm150 per mth =Rm1800 year, it is sufficient to cover for the insurance charges.

    However, when we are 60-65 the insurance charges is now Rm3,000 per year! This means our premium of Rm150 is not sufficient to cover for the insurance charges. When that happens, the variance of the insurance charges will need to be deducted from your cash values, or you will need to do top up in order to cover for the variance of insurance charges. Otherwise your policy may be at risk of lapsing even before the end of the term.

    Sure, some agents will say that you can opt to withdraw the accumulated cash values, this is pure sales talk, whereby clients always like to hear when they get money, who doesn’t, right? If you withdraw the cash values and when the insurance charges goes up, the policy may lapse prematurely and you’ll lose the protection benefits.

    Always buy insurance with PROTECTION in mind, NEVER for investments. There is no investments here in the context of insurance, only protection. To the original poster, it is sad when insurance product is being sold as investments, and it is not only being practice in insurance companies, but banks who sells insurance plans.

    Go up to any bank and ask for good savings plans, most prolly you’ll end up with an insurance plan that gives you exhorbitant returns but when you calculate the ROI, it may be worse than bank FD.

    However, my advise to you is that do not cancel the plan be it from Prudential or from other insurance company as no matter how good or bad the agent’s explaination is to you, one fact still remains, you buy it for its protection values. Also the claims are being paid by Prudential, not the agent.

    You can rage on the Prudential agent as much as you want but all of us are humans, and we are bound to need to use the medical card sooner or later. I frequent hospitals almost daily. Having seen a sight of relieve for having a medical card cover for having a heart bypass that costs RM50k is very common in any ICU ward. THIS IS WHAT INSURANCE IS ALL ABOUT.

    Feel free to leave a questions if you have any or drop me an email at stevenung1971 at gmail.com or 016-451 5957. My phone is on 24/7 including Public holidays.

    Regards,
    Roy Steven Ung
    Prudential Assurance (M) Bhd
    Penang/Butterworth

  7. Sonia says:

    I got cheated by Prudential. I have emailed them. The CEO of Prudential Malaysia replied to my email saying that the Director of Customer Engagement will get back to me. Unfortunately, they all have a habit of passing around my requests and they don’t honour their words. Just talking and not doing. They assured me this morning that I would get a reply. Too bad for me and my money.

    My advise to all, never invest your money with Prudential. Always get a time frame for reply or payment. Never trust these people, I have dealt with them and feeling cheated.

  8. Florence says:

    Wow, so sorry to hear that Sonia.

    I myself only bought Prudential medical card last Decemeber. A year later, I’m just not sure if it actually brings me benefits….

  9. ben says:

    i brought prudential insurance for 3 years and paid $300 a month
    for 3 years i have paid estimated amount of 13k and after my finding it is too late as they going to return only 3k and i have not even claim 1 cent of my policy and have been misled with premium insurance coverage but its turn out is the opposite of what you think you had after checking the policy you had.
    ”Prudential trained its agents to mislead, misrepresent and defraud policyholders,’
    Many insurers have been sued for similar practices, but the complaints have not been as widespread as those against Prudential.
    What was important,” he said, ”was getting these people back their money rather than be tied up in court for 7 to 10 years. A lot of these people were very elderly and they would never have gotten their money back.”

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