READ THE FINE PRINT! ASK THE RIGHT QUESTIONS! A MUST READ!

I decided to write this article after a very disturbing experience with an insurance agent from a prominent insurance company in Trinidad and Tobago and the Caribbean. I have worked in the insurance industry and my husband still does and this is why we decided to get some information on our own about a product that sounded too good to be true on the market.

I have done financial reviews for quite a few individuals who assured me that they have an insurance plan that promises them a return on 75% on their CAPITAL. I asked every single one of them - are you certain you were told that the 75% return is on your contributions and they ALL said yes and that it is guaranteed. With my knowledge of the economy and current returns as well as the products on the market I said that it impossible but I didn't push it further as they were ASSURED by their agents that is what they were getting and if that was true then I told them that's a fantastic addition to their portfolio. Unfortunately, my spidey sense that was tingling was right - there is no insurance product guaranteeing 75% return on contributions.

As luck would have it an agent from that very company contacted my husband to solicit business and in a very professional and cordial manner told him about this very product and how fantastic it would be for him! Naturally, he asked the exact same question I would have - are you guaranteeing 75% return on my contributions and without any hesitation she said YES. Of course he asked to see a proposal because I love to read every single word and look at every single figure and work out my own calculations to determine value for price. I forgot to mention that this is a 20-year endowment plan so they are promising a return 75% over a 20 year period.

The proposals came and I began to understand why so many persons have a hard time trusting some agents - after working in the industry I can say that there are some excellent agents that know their stuff inside out and offer full disclosure in their consultations and then there are agents such as this that give all the others a bad name.

There is a 75% on the insurance product but it certainly isn't on the contributions. You buy an insurance plan that endows for a very high price and at the end of 20 years your endowment is 175% of the sum assured. So my husband was quoted a $200,000 life insurance for 20 years with the endowment value at $350,000 for a price of $1,093. Sounds like a lot of money for a small plan, right? Now his contributions would be $262,000 therefore his returns definitely weren't 75% over that 20 year period - more like 33% but the agent assured him that it was 75% returns on his contributions - in the same way I met several persons that thought they were getting 75% on their contributions. Now I don't know if the agent is purposely misleading clients to close a sale or if the agents just don't know and understand the product that they are selling but let's give them the benefit of the doubt and assume that they just don't know and understand.

So as my husband still works with Pan American Life I told him to look at options for that same price and tell me what we can get. Firstly - he can a lot more life insurance coverage at that cost!!! He could have gotten a life insurance for $200,000 for just under $150 with accumulation of $36,000 in twenty years and put the remaining in an annuity and have an accumulation of $311,000 in twenty years and yes this is slightly less than the $350k but it had the flexibility to close off at any point before with a MUCH HIGHER VALUE and that insurance plan could be kept beyond twenty years and the accumulation would continue to grow! Or he could have gotten term to 80 insurance for a sum assured of $240,000 for $90 and put the rest to an annuity and accumulate that same endowment amount or just put that premium towards a life insurance with dividends with a sum assured of $850,000 and have dividends and cash value a little under $300k at the twenty year mark with the options to close or keep!

At no point did this agent ask about kids, loans, goals, other financial instruments to determine if he needed more insurance, more savings, a more robust retirement plan or looking at investments. In summary - ASK QUESTIONS! READ THE ENTIRE DOCUMENT!

If you are interested in meeting to have a financial review and look at options to enhance your portfolio feel free to contact me at 713 9403.