Saturday, November 11, 2006  High commission for life insurance
products  Hi Mr Tan,  I enjoyed reading your blog.  You
mentioned that some insurance products have high charges that
take away 2% to 3% from the annual yield. Is this bad for
cosnumers? Can a consumer buy directly and avoid this high
charge, especially the high rate of commission paid to the
agent?    Dear TSB  When life insurance was first introduced
more than 100 years ago, the government (in most countries)
offered a tax incentive for people to buy life insurance. The
premium paid towards life insurance is deducted from taxable
income. The consumer is able to enjoy tax savings.  The tax
savings help to offset the high charges and still give a fairly
attractive return to the consumer. The high charge was required
to train and pay the agent to advice the consumer about the
value of this product.  About twenty years ago, most governments
withdrew the tax incentive. The high charge become a burden to
the consumers. Many insurance companies contin