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No trace of the first instalment payment
20 Dec 2017 (200 views)  

Mr. D bought an special endowment plan from a large life insurance company. He paid a monthly premium of $1,000 for 5 years, making a total contribution of $60,000. The premium stopped after that. 

At the end of the 5th, 10th and 15th year, the policy was supposed to pay to Mr. D a cash payout of $24,000 each. The total payout would be $72,000. 

YIELD 
I calculated the yield on this policy to be 2.5% p.a., if Mr. D waited for the entire 15 years to receive the 3 installments. This is a rather poor yield considering that the savings were invested for 15 years. Although there is some life insurance cover, the amount that is covered is likely to be quite modest. 

FIRST INSTALMENT WAS NOT PAID
When Mr. D received the final payment of $24,000 at the end of 15 years, he was told that after this payment, the obligation of the insurance company would be fully discharged.

He remembered that he had only received one installment of $24,000 previously. After checking the policy benefits in detail, he realized that he did not receive the first installment that was due at the end of  5 years. 

He contacted the insurance company to ask for details of the first payment of $24,000 that was supposed to have been paid to him. The insurance company could not trace any record of the payment. 

MY ADVICE
Mr. D sought my advice on the step that he can take. I told Mr. D that he should visit the company and presented a letter to ask for proof of the first payment. He should ask the insurance company to acknowledge receipt of the letter. 

WHAT HAD HAPPENED
I suspect that the insurance company had sent out the cheque for the first installment at the end of the 5th year, but the cheque did not reach Mr. D and was not cleared. 

The insurance company should have contacted Mr. D to enquire why he did not clear the cheque. They might have tried to contact Mr. D but probably could not reach him. The insurance company probably wrote off the cheque and recorded it as part of their profit. This would be a most deplorable and dishonest practice.

Tan Kin Lian




 

No trace of the first instalment payment
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Mr. D bought an special endowment plan from a large life insurance company. He paid a monthly premium of $1,000 for 5 years, making a total contribution of $60,000. The premium stopped after that. 

At the end of the 5th, 10th and 15th year, the policy was supposed to pay to Mr. D a cash payout of $24,000 each. The total payout would be $72,000. 

YIELD 
I calculated the yield on this policy to be 2.5% p.a., if Mr. D waited for the entire 15 years to receive the 3 installments. This is a rather poor yield considering that the savings were invested for 15 years. Although there is some life insurance cover, the amount that is covered is likely to be quite modest. 

FIRST INSTALMENT WAS NOT PAID
When Mr. D received the final payment of $24,000 at the end of 15 years, he was told that after this payment, the obligation of the insurance company would be fully discharged.

He remembered that he had only received one installment of $24,000 previously. After checking the policy benefits in detail, he realized that he did not receive the first installment that was due at the end of  5 years. 

He contacted the insurance company to ask for details of the first payment of $24,000 that was supposed to have been paid to him. The insurance company could not trace any record of the payment. 

MY ADVICE
Mr. D sought my advice on the step that he can take. I told Mr. D that he should visit the company and presented a letter to ask for proof of the first payment. He should ask the insurance company to acknowledge receipt of the letter. 

WHAT HAD HAPPENED
I suspect that the insurance company had sent out the cheque for the first installment at the end of the 5th year, but the cheque did not reach Mr. D and was not cleared. 

The insurance company should have contacted Mr. D to enquire why he did not clear the cheque. They might have tried to contact Mr. D but probably could not reach him. The insurance company probably wrote off the cheque and recorded it as part of their profit. This would be a most deplorable and dishonest practice.

Tan Kin Lian




 

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