Many people are often sold products that are not ideal for them. A lot of times, people don’t purchase insurance policies. Instead, it’s something that’s sold to them.
Most people also do not read the terms and conditions of the policy. It’s because it’s very daunting. You could spend three hours reading it and still not understand it. There are a lot of jargons that the lay person will not understand.
Knowing what’s right for you
People looking to buy insurance should look for products that are catered to their needs, affordability and type of coverage. An insurance agent should be able to explain in detail what the policy is about and not just sell it to the customer.
Insurance industry was a sales-orientated one, with lucrative commissions and attractive incentives. The education level of agents - some are part-timers, housewives or have SPM-level education.
Can they truly understand things like internal rates of return (IRR) and other technical terms?
Generally, Malaysians are not that financially literate and rely on agents to propose plans.
The word “guarantee” was a common word used within the insurance community. The word “guarantee” is a magical word. Insurance is probably one of the only financial tools (besides fixed deposit, of course) where the word is used by agents in some of their proposal plans to clients.
Better education
At the end of the day, efforts need to be made to educate the public when it comes to buying insurance. After all, a person’s livelihood is at stake. Tan says educational talks, public forums and road shows should be organised by financial institutions in collaboration with the regulators for the interest of the general public.
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