Same apple that cost so different

When I was a tied agent, I often thought that premium of similar coverage from different insurance companies should be somehow similar. Pricing difference are expected but shouldn't be too far apart. I thought that the market is efficient enough to identify rapidly if a plan is over or underpriced. I thought the market is somehow competitive and Insurance companies should be pricing their plans approximately the same. But I was dead wrong...

I had a busy weekend making plans comparison from different insurance companies. I realised the difficulty in comparing plans because insurance companies like to attach some features unique to the plan. By doing that, they can price their plans differently as nobody will know how much the unique feature cost. Its up to the Adviser's capability to sell on the unique feature which normally come at a price. This is normally the case for Traditional Policies like Whole Life and Education Plans.

To make a more direct apple to apple comparison, I decided to illustrate a Critical Illnesses Term Insurance here. Just to quote an example of a 30 yrs old male getting a 30years $250k CI, death, PTD coverage. The lowest I get is $1,084.60/yr and the highest I get is $1,854.00. The rest are in the region of $1,300 and $1,400. Some are guaranteed renewable, some are not. There are some difference between each plans but not as complicated compared to Traditional Policies.

After making these comparisons, I am more convinced on the importance of an IFA. I am wondering if I am the Tied Agent of that particular company that quote $1,854/yr for the same $250k CI cover that everyone offers, am I really caring for my customer by selling that Term Plan? If I am the tied agent of a company who only carry a few investment funds, am I really caring for my customer when they are forced to invest into regions that they are not comfortable with? As an IFA, we are able to help the customer save nearly $800/yr x 30yrs for the above case. This money can be well invested for better returns.

Since joining the industry, I had heard of many Sales Managers trying to justify the higher cost of insurance by comparing people buying Cars. There are people buying Mercedes and people buying Toyota, etc. They will create an impression to their new agents as if their plans are Mercedes and the lower cost plans as Perdua or QQ or whatever. I feel that all these comparisons are craps. Cars are something people judge on the price because of how they feel and the thousand factors behind the cost like Engine and fuel efficient, etc. Whereas Insurance are all similarly regulated in Singapore. Die means die, PTD means PTD. Whats there to feel about it and why should they be priced so differently.

However, IFAs have our problems too. This morning, one of my prospect I knew months ago called me and wanted to take up an annuity plan. We arranged for an appt this Friday. Before I hanged up the call, I told her honestly that I am in an IFA now. I spent nearly 5 minutes explaining what an IFA is and why we are actually of insignificant difference from a tied agent. She consulted her friends and called me shortly that she decided to cancel our appointment because I am not direct with the company anymore. She claims that I will not be able to help if there are problem with the proposal and future problems of the policy. This simply shows that many consumers are still not aware that IFA exist in Singapore and the part they play in the advisory process...