The policyholder took this policy 5 years ago. She asked me if she should continue the policy.

I looked at the benefit illustration issued at the point of sale. The surrender value projection is shown below.

For the first 5 years, she paid a total premium of $9,401 and have a surrender value of between $2,887 and $3,346.

I asked her to get a "Post Sale Benefit Illustration" from the insurance company so that she will know what is the current surrender value and if it is closer to the lower or the higher figure.

Before the updated figure appears, I will assume that the surrender value is the average of the two figures, i.e. $3,116.

The policyholder paid $9,401 and get back a surrender value of only $3,116. She lost over two thirds of the premiums.

What is the benefit that she gets back in return? The policy pays out $210,000 in the event of death. The cost of this insurance should be $210 X 5 = $1,050 for 5 years (based on a Term insurance policy).

Why should she lose $6,300 for this meager insurance protection?

I did a further calculation. If she keeps the policy for another 5 years, what will she get?

The surrender value at the end of 10 years is $6,815 and $8,336 based on the two projections. I will take an average of the two figures, i.e. $7,575.

The premium paid for the next 5 years is another $9,401. The surrender value is expected to increase from $3,116 to $7,575, i.e. an increase of $4,459. Something is not right.

I looked at the rest of the pages of the benefit illustration. Are there other benefits under the policy that I was not aware of?

I could not find any other benefit.

I have to conclude that this is a very bad policy and the policyholder is making a very bad investment. The cost of insurance is too high.

It is better for her to terminate the policy now. Maybe, she should lodge a complaint about being "fleeced" by the policy.

If there are other benefits that I am not aware of, the insurance company should point them out. If not, the insurance company should justify why they are offering such a bad policy to the public.

Tan Kin Lian