Monday, October 12, 2009

Earnings from a Shield Plan

I am quite disappointed when someone wrote in his blog as if agents are unethical by selling Shield Plans. I like to be transparent as of how much I will earn from a Shield Plan to illustrate that no adviser of sound mind will wants to be unethical using Shield Plans.

I hope those who read this posting understand that the adviser who took hours to patiently explain the features, who filled up 30+ pages of documentation works in compliance with MAS regulations, who negotiate with the underwriters for substandard cases, who helped with all type of queries, who helped with claims, who update on changes, etc are NOT earning a lot of money. He is really helping people and not trying to be unscrupulous by scaring people to buy a medical insurance. If he is unethical, he will rather spend his time telling them about ILPs or Whole Life policies.
I swear that it is a lot of work for an adviser who have hundreds of clients under Shield plans.

I take the Enhanced Incomeshield as an illustration based on age 1 and 55 for Plan Basic and Preferred.

Premium for Age 1
Medishield - $33(Not sure if they include GST)
Basic - $70 ($65.42 before GST)

My 1st Yr Earnings - ($65.42 - $33) x 30%(Commission Rate) x 145%(Over-riding) = $14.10 (Total paid to my company)
59% of earnings from my company will be paid to me which equates to $8.32.

My Renewal Earnings - ($65.42 - $33) x 5%(Renewal Rate) x 130%(Over-riding) = $2.11 (Total paid to my company)
59% of earnings from my company will paid to me which equates to $1.24

Premium for age 55
Medishield - $225
Basic - $340 ($317.80 before GST)

First Year Earnings - ($317.8 - $225) = $92.8 x 30% x 145% = $40.36
My Earnings = $40.36 x 59% = $23.82

Renewal Earnings - $92.80 x 5% x 130% = $6.03
My Earnings = $6.03 x 59% = $3.56


If based on Plan Preferred, I'll get more. Using the same calculation, I'll get
Age 1 - $22.95 First year / $3.42 Renewal
Age 55 - $90.72 First year / $13.56 Renewal

I have many clients below age 40 who like the plan preferred but very rarely for those above 50 who are willing to pay such premium.

Not only we don't earn much, our chances of not earning a single cent is very high, especially for clients above 50 as they would have many pre-existing conditions which make underwriting very difficult. The client may give up in the end.

I hope when you look at the advisor who are just doing your Shield Plan, treat him nicely and don't look at him as if he makes a lot of money from you. But of course, he must do his part as an adviser too.


Anonymous said...

These are agents who try to sabo you.

SGDividends said...

Agree that agents dont earn much selling such plans.I think that if an agent sells such plans, he or she is genuinely concerned as shield plans are a necessity.

Just think of the petrol to arrive to meet you, the time to fill up the documentation.

Im not an agent btw.


Anonymous said...

wow, that sucks.

I get much more from motor insurance.

financail freedom said...

It sucks to be selling shield plans and doing so much work for such little pay.

Take care bro.

Anonymous said...

yes... the sad thing is most agents only give shield plan a brush and focus on the higher commission earner plans. Its a fine balance between doing what is right but not making enough money.